“A Tale Of Two Kart Tracks” (#business, #customerservice)

The following is a talk I gave to a retail sales team on the subject of customer service:

Today I want to share a “Tale of Two Kart Tracks” with you. The two kart tracks are “Simraceway” in Sonoma, CA at the Sonoma Raceway, and “CalSpeed Karting” in Fontana, CA, at the Fontana Auto Club Speedway. I visited Simraceway with some friends a couple weekends ago, and I visited CalSpeed last year with a group of employees across our organization.
First, let’s talk about what it was like to arrive at each facility. At Simraceway, we entered the main gate for the Sonoma Raceway and informed the gate attendant that we were here to do some gokarting. He looked at us with a puzzled expression and admitted he wasn’t sure if there was any karting going on. After going back and forth, he suggested that, if there was a place to do gokarting, it might be inside and up at the top of the hill inside the track, but he emphasized he really didn’t know what we’d find up there.
At the Fontana Speedway, the gate attendant knew exactly where the kart track was, offered us a map and explained where we were on the map and which way to go down the road to get to the kart track without getting lost.
Next, let’s talk about checking in and paying. At Simraceway, we pulled up and parked in a general parking lot and wandered around for a bit trying to figure out, due to poor signage, where we needed to go to get karting. An employee finally noticed us and asked if she could help and then pointed at a shed some ways off from where we were standing as the place to go to buy our race admission. She didn’t seem particularly busy, but she was apparently too busy to escort us. I had seen on the internet that the track was offering a buy 3, get two races free package. When I asked the employee about this, she informed me that she didn’t know about that deal because it “Wasn’t her department.” Please keep in mind that over the course of the day we saw THREE employees total at the track, so this didn’t appear to be a mega corporation. When we made it to the cashier’s booth, the employee on duty seemed frustrated to have to explain the pricing options to us. When we attempted to upsell ourselves on an icy cold beverage in the refrigerator, he seemed confused as to how to process the transaction. He didn’t seem very excited for us to be there doing business with him. Keep this young man in mind because I will say more about him in a bit.
At the Fontana Speedway, we arrived in a clearly demarked holding pen. Uniformed employees came out, greeted us and set our expectations about filling out required paperwork and waiting for the track marshals to be ready to get us for orientation. Everyone smiled and offered their help as we waited. There were about four or five employees just handling checkins for our large group.
When everything was ready and the attendees were assigned to heats w/ separate colored arm bands, we were invited in, one team at a time, to the training room to receive a welcome from the track marshals, who described the kind of karts we’d be driving, the organization of our practice, qualifying and racing sessions, safety standards of the track, flags and signalling on the track and a basic walkthrough of the best line to take on the track. Then, everyone suited up with jumpsuits, headsocks, helmets and neck braces which were in good condition and of a similar brand and style to avoid confusion.
Can you guess how this was handled at Simraceway? There was no orientation. There was no explanation of the karts, of signalling on the track nor of safety. We were shown to a small, dingy closet and left to figure out the equipment on our own. When my friend emerged with a helmet that was clearly too big for his head and shook his head back and forth to show how the helmet swiveled, the track attendant told him it “should be fine.” When I asked what the best line was on the track, the track attendant told me, “I don’t know, I am sure you’ll figure it out.”
We were led outside to our karts and the young man who first took our money. He looked sullen and pointed at the karts we should ride in which were lined up side by side in the pit. I noticed there were just enough karts for our group of 5– what if other customers arrive? I asked, looking at another set of 7 karts pulled off on the gravel. “You’ll probably be the only ones” we were told. We climbed into our karts (without any explanation of the safe way to do so, for kart and driver alike) and then, as we waited for our engines to get started, I chatted with the young man. Did he live around here? Does he like it out here? Etc. He complained, “I have to work 3 jobs right now, one of them is bartending in town. I am really tired.” I took mental note of that.
At CalSpeed, the attitude was fun, but serious. The track marshals demonstrated how to safely climb in and out of the karts. Where not to put hands and feet, at rest or in motion. What to do if they stalled out on the track. We had a group of about 45, and there were enough karts for everyone (3 heats of 15). The track marshals led the teams in the first couple laps out on the track in their own karts to demonstrate a good racing line and how to drive the track. Then we were “off to the races!”
At Simraceway, I asked if the track attendants could help us line up and do an organized start so we could race for position. Despite being their only customers, this seemed like an inconvenient request and after some badgering, the young man finally accepted that if we lined ourselves up as we came down the final straight away, he’d wave a flag to signal the race was on. It wasn’t exactly what you’d call organized, and it didn’t seem like he cared much if we had the experience we wanted. In our 5 races, he didn’t manage to start us the way I had asked even once– and in the first lap of the first race, two of our racers stalled out trying to line up for the final straightaway start.
Needless to say, our small party went off the track and into the dirt, weeds and brambles quite a bit over those 5 races. In each race we had at least one complete stall out where a driver’s kart died on the track and he had to pull off to the side and wait for someone to come out and jump it. On one occassion, that driver was me and my friends completed four or five laps before an attendant got to me, then another 3 while the attendant tried and failed to pull the jump cord (no offense to our female friends, but she just didn’t appear strong enough and somehow was surprised by this fact despite not being able to jump start anyone’s karts in the pits, either). I essentially sat on the outside of the track for half a race! When one of my friends complained about this happening to him and asked for a partial refund, the track attendant first argued and told him “Well, you only missed 5 minutes”… of a 12 minute race! And when he asked to speak to a manager, she got on her walkietalkie right in front of him and made it sound like he was asking for the world and the manager denied the request. Then, when he asked to see the manager in person, she got back on the walkie talkie and the manager could be heard saying, “Alright, just give him $10” It was ridiculous and arbitrary! During each of the 5 races, one driver had to rotate through the kart that we all agreed was slower by half than the other karts– despite my consistently turning over faster lap times in the first four races, I could not make this kart go any faster, which my friends gleefully told me was a sign of my hubris for thinking I could beat them in the “slow kart.”
How was this handled at CalSpeed? Needless to say, there were very few problems to address, because the staff was prepared and they had prepared us in return. Most problems that could’ve occurred, were avoided. And when someone’s kart did become inoperable occassionally, they were promptly moved off the track, returned to the pits and put in a new kart and sent back out into the melee. Simraceway couldn’t even do this because more than half of their karts were in disrepair!! Overall, CalSpeed was extremely accomodating of our needs and wants. We were their “only customers for the day” and they treated us like we were special and created structure and order to our race activities that really enhanced the fun. No one seemed surprised at anything.
The last thing I noticed was about how we left. I noticed a race podium near the cashier shack, but no one on duty ever offered to take our pictures there afterward to commemorate the days events at Simraceway. Instead, our final memory of the place is one of absurdity– after never receiving a safety briefing the entire time we were there, one of my friends was scolded in the pits about some hand movement he had made out on the track because, as the employee said, “Safety is our number one priority here and that just isn’t safe.” She said this as we were climbing out of our karts after the FINAL RACE OF THE DAY. Talk about bad timing!
At CalSpeed, the day was not complete before the top three finishers of each heat were stood up on the podium and cheered by the entire group. Pictures were taken and everyone chattered excitedly about all the fun they had and all the interesting things they learned about racing that day.
What lessons can be learned in comparing these two facilities?
First, let’s consider the value of preparedness. With appropriate levels of trained staff, a fleet of well-maintained karts and an organizational structure for the day, the CalSpeed group demonstrated that they were professionals who expected our business and were prepared to deliver us an excellent experience. At Simraceway, the poorly trained staff, with rundown and inoperable karts and no real racing structure or organization for their services (we were told at various points that our race sessions would be 10, 12 and 15 minutes long… they ended up being about 13 minutes) demonstrated that they were surprised to have customers and not really in a position to serve more than the 5 of us who happened to show up.
Second, let’s consider the value of consistency. From arrival and check in to departure, the smiles, attitudes and helpfulness of the CalSpeed group were consistent. It gave us the sense we working with one team, who loved their jobs and were dedicated to our enjoyment at their facility. It was, of course, just the opposite at Simraceway, where the gate attendant didn’t even know there was karting on site, the track attendants didn’t know their roles only what they weren’t responsible for (apparently, customer service…) and the fun and excitement of karting was always tempered by the disillusionment and cluelessness of the staff serving us.
Third, let’s talk about opportunity. If the people at CalSpeed are working other jobs, I didn’t hear about it. Their sole focus was on the job they had to do right then, in that moment, with us, their customers. They probably don’t have to work other jobs because CalSpeed is a successful operation that keeps them all busy. It is hard to feel sorry for the young man at Simraceway working three jobs to get by. He is standing on top of what Earl Nightengale would call a “Field of Diamonds”, he just doesn’t seem to recognize the opportunity.
In parting, I’d like to ask you to think about the following:
Of these two kart tracks, which do you think is more profitable?
Of these two kart tracks, which do you think has an easier time with marketing and generating new and referral business?
Of these two kart tracks, which do you think has higher customer satisfaction and loyalty?
Of these two kart tracks, which would you rather visit as a paying customer?
Of these two kart tracks, which would you rather work at as an employee?
Of these two kart tracks, which would you be most proud to own?
Final thought: both of these kart tracks are on the grounds of a larger race operation; both have access to the same go kart technology and safety systems; both of these kart tracks have the opportunity to charge the same amount to their customers; both of these kart tracks are in California and both of these kart tracks are selling the same service at the end of the day– the experience of racing with friends.
So what is it that makes these two kart tracks different?
In my mind, the “Tale of Two Kart Tracks” is really “The Tale of Two Attitudes Toward Customer Service.”

Notes from Sam Walton’s “Made in America” (#business, @WalMart)

These are notes I used for a talk I gave on Sam Walton’s business principles as evidenced in his book Made in America:

  1. “COMMIT to your business. Believe in it more than anybody else.” If you love your work, other people will sense that, including co-workers and customers, and catch the passion from you, like a fever.
  2. PARTNERSHIP. Take MENTAL OWNERSHIP of your business, and treat the people around you at work as valued partners in your enterprise. Seek input from others, work together to achieve common goals and make decisions that you’d be happy with over the long-term, which will help you accrue the benefits over time.
  3. MOTIVATE your partners. Find different ways to keep score and new ways to challenge each other to new personal best records. Encourage your partners to ever greater heights and they will do the same for you.
  4. COMMUNICATE openly. Share information with your partners about your business and ask for information about theirs. The more everyone knows, the more able they are to act to the benefit of the entire company.
  5. APPRECIATE everything your partners do. Sharing praise and congratulations costs us nothing, but it is worth a lot to the people who receive it and will make you feel better for having shared it, too.
  6. CELEBRATE successes and don’t take yourself too seriously. Find what is funny about your failures. Have fun. At the end of the day, it’s only work and you’re only human. Such enthusiasm and energy is engaging to all.
  7. LISTEN to everyone in your company. Everyone has a different and potentially valuable perspective, from managers to cashiers, sales people to valets. Everyone sees a different part of the business and a different side of the customer experience. By getting the people you work with talking you might learn valuable information about how you could improve your customer service and meet the needs of more customers to hit more of your goals and make more money in the process.
  8. EXCEED your customer’s expectations, this is what will bring them back again and again. Have a personal standard, explain it to your customers and apologize and make it right if you ever fail to live up to it. Think about how you’d handle situations that arise if your personal motto was “Satisfaction Guaranteed.” You don’t have to do anything wild, you just have to do a little bit more than your customers were expecting.
  9. CONTROL your processes to avoid costly mistakes. Even if you do not carry a personal Profit and Loss statement with cash expenses, you can still reduce your profitability by making choices that are inconsistent with your goals and less efficient than following a consistent, well thought out process. Create a discipline that accrues every small advantage in your favor and avoids needless leaks that cost you deals and gross. These little errors can add up to thousands of dollars and hundreds of potential customer relationships missed over time!
  10. SWIM UPSTREAM. Sometimes you’ve got to go the other way to find your niche. Be ready to see people waving you down, telling you you’re going the wrong way. But realize finding what makes you unique and sticking to it is what gives you your edge, and gets others to follow you, whether they’re customers, co-workers or your family and friends.
Quote: “My life has been a tradeoff. If I wanted to reach the goals I set for myself, I had to get at it and stay at it every day. I had to think about it all the time. I had to get up every day with my mind set on improving something. I was driven by a desire to always be on the top of the heap. But in the larger sense, did I make the right choices? I can honestly say that if I had the choices to make all over again, I would make just about the same ones.”

Notes on Success & Happiness with Vance Caeser (#happiness, #success)

From a talk given by Vance Caeser
  • “To create abundance in life, you must give more than you expect to receive”
  • “How Will You Measure Your Life?” book by Clayton Christiansen
  • Your only job is to make your boss happy without losing your integrity; you are your own boss
  • High achiever definitions
    • relative position in peer group versus peers
    • quantitative measures
    • typically, top 3% of any group
    • but you can be your own judge of high achievement
  • Synonyms for success:
    • peace
    • freedom
    • helping others
    • for some it is a #
    • it’s always inside of a person; individual, diverse answers for each person
  • Leadership is based on emotional intelligence, which is built on self-awareness
  • Families based on gratitude (thankfulness, acknowledging successes, etc.) help children to grow up w/ a mindset of exploring internal happiness
  • Emotions create the drugs in our bodies; belief systems strongly conditions the kind of emotions we have, therefore beliefs lead to the drugs that are in our bodies
  • On an annual basis, review “What are the beliefs we’ve operated on in this past year?”
  • Purpose creates abundance
  • Purpose, beliefs, who we associate with, are the three keys to development of our lives and happiness
  • When life decisions aren’t working, that is the time to sit down, listen to yourself, take inventory of your beliefs, examine which ones are creating anxiety for you
  • “Some day I’m going to be happy when…” means you’ve given up on being happy today
  • “I get to do this today” vs. “I have to do this this today”, demonstrates responsibility versus victimhood mentality
  • Viktor Frankl, use your vision, see success, let it guide you through the daily clutter which will seemingly take care of itself as you focus on envisioning your success
  • Balanced life involves managing energy, not time (see HBR article)
  • Brands: distinctive, relevant, consistent
  • Relationship-building, not networking; connection, not contacts
    • knowing a name
    • knowing their story
    • earning their trust so they want to be around you, too
  • It’s really important to know what your story is, what your values are, what your role in the world is; develop your signature story, can deliver it in 10 seconds or talk about it for 2-3 hours
  • Sharing stories and looking for overlap builds trust with others
  • You can’t trust what a person does, only who they are
  • Leaders are distinguished by the fact that they have followers; leaders are followed for:
    • technical skills
    • authority, title
    • respect, reverent power
  • Cheryl Sandberg, lean-in circles, Nat Geo “blue zone” longevity studies, people with long lives join authentic communities and give to them
  • How do you deal with “poison”?
    • fear and love are our basic emotions
    • hire for character 1st, energy 2nd, competency 3rd
    • you are the CEO of your life, stay away from people committed to living in fear
    • you “hire” your boss, your friends, etc., you can pick different ones
  • It’s important to feel like you’re in charge, cultivate a free agent mentality
  • Nordstrom once encouraged its managers to seek an outside position and get a job offer once a year to give themselves options and work in that free agent spirit
  • It’s important to learn how you learn, and then only work and learn in that way
  • Great leaders are always great educators, they focus on listening to people to use their own brilliance to help them grow faster
  • You have all the answers already, the answer isn’t out there, it’s inside of you
  • Be clear on why you’re here, know why first, then how, then what
  • Have clarity about your vision so you know what you need to do to get there; you vision will serve you if it’s inspiring
  • Live a conscious life, be aware of what you do, use your heart as a scorecard, listen to your feelings
  • Do what you love, with people you love ~Steve Jobs
  • You choose your consequences, choose wisely; Stoic philosophy
  • Toltec, 4 beliefs:
    • Be impeccable with your word
    • Don’t take anything personally
    • Don’t make assumptions
    • Do your best, learn from your efforts
  • Simon Sinek, TED talks
  • Human connection is invaluable
  • Don’t bet the farm on your vision, you can have multiple visions and you can update them over time; life is the journey of moving from vision to vision, you can always have more
  • Impediments to integrating these lessons:
    • fear
    • ego-centrism
    • relying on others for answers
  • Purpose can be updated, continual growth of self, embracing one’s flaws along the way
  • For kids
    • get really clear about the life you want to live
    • talk about values
    • talk about roles you want to play
    • structure your life around these things
    • make decisions based on these criteria
  • Discover your purpose, we all have one but we have to find it
  • The questions I ask myself define my life by virtue of the answers I give
  • Examine periodically the questions you spend your time thinking about and make sure they’re the right questions to be asking

Profiles in Heroism: Ayrton Senna (#hero)

(Ayrton Senna can be seen periodically in the rotating masthead of this site)

Ayrton Senna was a Brazilian F1 driver, three time world champion and former go-kart racer who died in a crash during a race at the San Marino GP (May 1st, 1994). Tragically, he was the second driver to die at the track that weekend, the first being Roland Ratzenberger during qualifying earlier in the weekend.

Senna was a devoutly religious individual who attributed much of his success to the influence and providence of god. This may have been an irrational flaw of his, but it seemed balanced by his rational characteristics– humility, honesty, discipline, perseverance and determination to continually improve himself both as a driver and as an individual.
Senna was fiercely competitive and hated the politics of the F1 world, which put many drivers like him at risk all in the name of making the sport more entertaining and sensational. His original relationship with teammate and former world champion French driver Alain Proust quickly turned from a seasoned pro mentoring the young upstart rookie into a battle for survival and supremacy that ultimately resulted in a nasty and dishonest move by Proust in an attempt to deny Senna a chance at the championship title. Secure in his points leadership so long as Senna did not finish the race, Proust forced a collision that disabled his car and nearly eliminated Senna from the race several laps before the finish, pushing both cars off a chicane and into a safety tire barricade.
Undeterred, Senna restarted his vehicle from a standstill, navigated around the tire barrier and back onto the track and ultimately won the race. Still, he was denied the championship by inside F1 politics revolving around technical interpretations of the governing regulations whose interpretation had no prior precedent.
Senna got his revenge the following season when the roles were reversed. Secure in the points lead himself so long as Proust did not finish, and having won pole position in qualifying but having been relegated to the outside of the track at the start of the race because of insider politics, Senna took matter into his own hands by forcing a collision between he and team mate Alain Proust moments after the start. Proust was finished and Senna claimed his title at the end of the day, though he would’ve preferred to win in an honest fashion.
A proud Brazilian, Senna finally won the Brazilian GP in 1993 despite a failed gearbox which locked his car into 6th gear for the final few laps of the race. Luckily, his lead was so great that even with the inability to utilize any other gears, Senna was able to achieve victory. He was so excited upon finishing that he first passed out, then suffered debilitating shoulder weakness that caused him to be almost unable to raise the trophy above his head in the winner’s circle. The lesson to be learned? Never take the lead for granted, push for every marginal advantage you can find because you never know when you’ll be incapacitated and have to rely on coasting to the finish for victory.
Senna was not perfect. He attributed part of his success to a faith in a make believe entity in the sky. He was not above playing dirty if that was what it took to get revenge against those who had done the same to him.
But he was still a hero. He followed his passion in life– to be a championship racer. He refused to give up. He spoke his mind about the realities of F1 politics and the dangers of his profession and was not afraid to defend his understanding of justice. He was committed to personal excellence because he realized that even if his career would be short, his life might be long, and self-improvement was a journey he could carry on with for his entire life no matter his circumstances.

Human Action, Part I Summarized (@mises, #economics)

Introduction
Economics is a young science offering knowledge which did not fit into the existing disciplines of logic, mathematics, psychology or history. Its methodology is different, examining acting individuals and not historical events or social aggregates. It demonstrates social regularities or “laws” which can not be legislated out of existence or ignored, like gravity. The conclusions of economic science threaten many partisans and have led to the first debates about the validity and universality of logic itself in response. Despite the claims of critics, economic theory has achieved a lot of practical success, such as the liberalization that allowed for the “Industrial Revolution” to transform Western civilization. Knowledge of economic theory is directly intertwined with the flourishing of mankind anywhere.
Part One, HUMAN ACTION, I. Acting Man
Psychology examines WHY a man acts, praxeology studies, deductively, what we can know from the fact THAT a man acts. It views action as effective, or ineffective, never rational/irrational or “good”/“bad”. Human action requires knowledge of causal relationships and a belief in man’s ability to influence them. All human action seeks the removal of felt uneasiness.
II. Epistemological Problems of the Science of Human Action
Economics and history are the two main branches of praxeology. History is an arrangement and interpretation of data concerning human action in the past; it is not predictive but descriptive. Human action is a complex, multi-causal phenomenon and thus can not be studied according to the “empirical” methodologies of the natural sciences requiring a single variable amongst innumerate constants.
Economics demands methodological apriorism, or the acknowledgement that it is impossible for man to conceive of a reality in which the fundamental logical understanding of causality does not hold. All of his experience must be filtered through pre-existing logical (theoretical) categories, i.e., understanding money requires knowledge of the concept of money to make sense of data concerning money.
 
Methodological individualism asserts action can only be studied through the behavior of individuals. This is not violated by the fact that man puts meaning in collective entities and aims his actions in certain ways operating under these beliefs. Praxeology is also methodologically singular and causal-realist— it examines specific actions carried out by specific individuals at specific places and points in time. “A cathedral is something other than a heap of stones joined together. But the only procedure for constructing a cathedral is to lay one stone upon another.”
Historians can only achieve “verstehen”, or understanding, by selecting certain data as valuable and excluding other data as irrelevant to their inquiry. They must utilize the best theories of other intellectual disciplines (economics, physics, biology, etc.) to interpret the data and its significance. History is “open to interpretation” only when the underlying theories relied upon are still controversial and debated. There are no constants in the history of human action.
“The end of science is to know reality”, economic theory is developed to better understand practical economic problems men face, and this fact guides man’s inquiry into the discipline although it does not change its aprioristic character. Economics studies real acting man as he exists, not an ideal type, e.g., homo economicus.
 
III. Economics and the Revolt Against Reason
Socialist philosophers could not defeat the logical theories of early economists so they turned to the undermining of reason itself as a method of defending their ideas. Without any biological evidence, Marxian polylogism asserts that every class has a unique logic derived from its class consciousness. “Ideology” is any idea which deviates from pure proletarian logic but is nonetheless useful to the class espousing it. Polylogism scan not explain why people of the same social class nonetheless arrive at different conclusions about the truth.
IV. A First Analysis of the Category of Action
Man refers to an internal, ordinal scale of values when acting. Action can be thought of as an exchange of one set of conditions for another, more satisfactory, set of conditions. Economics examines the meaning men give to things, as translated through their actions, not what various 3rd parties observing might think about such action in accordance with external value systems. Value is within men and therefore subjective, not within things, intrinsically, and therefore objective. Economics examines what man DOES (and DOES NOT, but could have…) do, not what he ought to do. Cost is best thought of as the value of the next best thing given up.
V. Time
Action is always aimed at the future. “The present” is a praxeological category and a conceptual ideal used to examine discrete, continuous actions. In physical reality, only the past and the future exist. The future is uncertain, implying we aren’t even sure in the moment how much of our action belongs to the present versus other time periods. Time must be economized like any other scarce resource. Actions can not happen synchronously, always either sooner or later. Man’s values can and do change over time, and with it, his actions.
VI. Uncertainty
Metaphysically, the world may in fact be deterministic; but man’s experience is one of choice. In matters of uncertainty, man faces class uncertainty (the qualities of the members of the class are known, but the character of a specific event which might take place within that class are unknown; e.g., dice roll) and case probability (some causal factors guiding the outcome are known but others are not and the case itself is unique compared to other events; e.g., presidential election). Human action falls under the rubric of case probability. Case probability can not be statistically quantified because it would involve summing items with no common denominator. Game theory is also an inappropriate means for studying human action within the market economy because it adopts the metaphor of combat when the competitive division of labor is cooperative and positive-sum. All praxeological prediction is based on “understanding”, not quantification.
VII. Action Within The World
Utility is how we describe those things which help remove felt uneasiness. Subjective utility is different than objective, or technological, utility. Man does not choose between total supplies of goods but only those discrete amounts of the supply useful to his specific end. He satisfies his most urgent wants before his less urgent wants and therefore values the means “at the margin” of what less urgent want he has to give up (Law of Diminishing Marginal Returns). Supply is a set of homogenous goods which could equally satisfy a given end. Technological recipes are not part of supply because they are inexhaustible once discovered. The Law of Returns identifies the fact that there is always a most efficient, or optimum, way to utilize scarce means to achieve a desired end; but this optimum can only be discovered through experience because of the uncertain nature of human action.  “Men do not economize labor in general, but the particular kinds of labor available.” The supply of labor available is conditioned upon genetics, social conditioning and innate human subjective preferences for labor vs. leisure. The potential supply of labor for each kind of work necessarily exceeds the demand in the long run because labor can be shifted and retrained to perform new tasks. Labor is always more scarce than the material factors of production (land, capital). The substitution of “labor saving” machinery for human labor does not render labor abundant so long as there are still more material productive factors available to combine with the freed up labor to pursue additional human well-being. Activities which provide immediate gratification are not labor nor work but consumption goods themselves, of the first order. Production is not a creative act but one of rearrangement of already existent phenomena. Man is creative only in thinking, not rearranging the world according to his thoughts. The material changes of man’s economy are due solely to the ideas he holds in his head about what is desirable. “Production is alteration of the given according to the designs of reason.”
Full notes:
Introduction

The introduction of the book is Mises’s explanation for why he wrote the book— to ground economics in the science of praxeology and to refute the various anti-economic philosophies. It seeks to answer the simple question, “Why did Mises write this book?”
1. Economics and Praxeology
Economics is a young science. It introduced new knowledge about human society that did not fit into the existing disciplines of logic, mathematics, psychology, history or biology. It stood in opposition to earlier methodologies for explaining social phenomena, such as historicism, which focused on social aggregates and metaphysical supernaturalism. Other social philosophers focused on practically changing society through forms of social engineering, believing any kind of regularity to social relationships was non-existent and thus not worth considering in their schemes. The discovery of social regularities contained within economic study proved an intellectual revolution. But the revolution was limited in scope until a general theory of human choice (praxeology) could be developed.
2. The Epistemological Problem of a General Theory of Human Action
Economic study suffered a serious early crisis during the “Methodenstreit” in which the epistemology of economics was argued between historicists (economic history), logical positivists (emulators of the natural sciences) and praxeologists (methodological individualists and deductive logic). These economic methodology debates quickly became radical in nature, leading to the first charges against rationalism in all of scientific debate which up to that point had accepted human logic as universal and immutable. Such criticisms bring into question ALL scientific findings, but they are really aimed only at economics specifically. Thus, Mises wants to ground economic theory in the general theory of human action to demonstrate it’s universality and defend it from polylogist and anti-rational criticisms.
3. Economic Theory and the Practice of Human Action
Economics receives criticism as being an imperfect science. All science is imperfect, and is subject to change and improvement over time. One major school of criticism comes from naturalist scientists who blame economics for not adopting their own methodology— they suffer from a narrow focus and can not see the virtue in doing things any way but their own. The other major school of criticism is that economics hasn’t solved all social problems, so it must be barren. This perfectionist fallacy ignores the great progress economic theory in action has achieved so far, such as the “Industrial Revolution”, which was directly enabled by progress in economic thought applied to the political realm which freed the energies of entrepreneurs and creators. The modern era is characterized by ignorance and hatred toward economic science, it is also an era of social disintegration, wars and mass social calamities. The fate of civilization’s progress and the progress of economic science are directly intertwined.
4. Resume
Mises wrote this book to situate economic theory within a wider body of human choice, known as praxeology. He did this to defend it from its critics, but also to expand the breadth and knowledge of the science to gain new insights on social phenomena. In that sense, Mises’s book is both reactionary, and revolutionary.
Part One, HUMAN ACTION, I. Acting Man
Human action is the study of means used to obtain certain ends. It does not study the ends themselves nor does it administer judgments about personal values. Human action is purposeful action, it is not animal action, instinct or reflex. And it does not concern itself with the reasons for ends being chosen. Within the framework of human action, all actions taken are either effective, or ineffective, they can never be judged as irrational or rational. For man to act, he must be aware of causal relationships that he believes he can influence. Human action demands methodological dualism— human action is assumed as an ultimate given, it is beyond the scope of praxeology to investigate causes antecedent to it. Human action is a necessary category of the life of man, he can not avoid choosing in the act of living, life itself being a choice over death. What man strives for in acting is to relieve felt uneasiness— some call this happiness but it is not an objective category and can best be thought of as an improvement in his position as judged by himself, though happiness is a commonplace referent for the concept. Positivism demands an experimental, inductive, natural sciences approach to knowledge of human action yet it tacitly accepts the methodological dualism of praxeology in appealing to man’s rational mind to consider an alternative way of performing economic science.
II. Epistemological Problems of the Science of Human Action
Praxeology and history are the two main branches of the science of human action. History is a collection and systematic arrangement of data of human action experience in the past; it can not tell us anything that is valid for all human action and thus can not predict anything about the future, it can only tell what has taken place before. Complex phenomena with interlaced causal chains can not be used to validate an existing theory— the natural sciences require the ability to set constant all entities but one variable which is then tested. All human experience is filtered through human reason, which is a priori valid and universal to all individuals. It is the unique structure of the human mind and it is impossible to conceive of or interpret human experience other than through the logical structure of man’s mind. This gives rise to methodological apriorism, which means that it is impossible for man to conceive of a reality in which the fundamental logical relationships of his mind and his understand of causality do not hold. “Human knowledge is conditioned by the structure of the human mind.” Primitive man who is said to understand miracles is a man who has a difference of content of thought, not of the process of thought itself— the attribution of miracles to life phenomena was an early attempt at establishing causal relationships in the world around man. The concept of action implies belief that the means chosen are valid and that the end sought is valuable— it does not imply that the action is guided by a necessarily correct theory or appropriate technology for achieving the end sought. Action == reason, action is how man effects his reason in the world around him. All human experience must be filtered through pre-existing logical categories, for example, experience of money requires knowledge of the theory of medium of exchange to make sense of the data of money. “It is the meaning which acting individuals and all those who are touched by their action attribute to an action, that determines its character.” In this way, collective entities can have meaning for man’s actions even though methodological individualism holds, which implies that only individuals are capable of acting. “There is no social collective conceivable which is not operative in the actions of some individuals.” Methodological collectivism is revealed to be a false idol when considering the fact that there is a multiplicity of coexisting social units and mutual antagonisms— which social collective is “acting” in this case? Human action also follows methodological singularism, it is convened with concrete action of a definite person, at a definite date and a definite time, not action in general. Praxeology is causal-realist— what happens in acting? what does it mean to say that an individual did X, at Y place and Z time, and not A at B place and C time? What is the result of him choosing one thing and setting aside another? Human life is an unceasing sequence of individual actions, though these actions may be taken in the context of a larger project to which they belong. For example, “A cathedral is something other than a heap of stones joined together. But the only procedure for constructing a cathedral is to lay one stone upon another.” Historians must select which data are valuable to study by referencing a specific end or theory which they are using to make their choice. The historian seeks at “verstehen”, or understanding, he does not make up facts or interpret data as he likes but applies all his best knowledge of existing science in other branches to understand the “meaning” of the data he looks at— its implications and significance. However, this “understanding” is always limited by the current state of the underlying sciences he depends upon. Empirical data by itself is seen to be hollow when we acknowledge the recording of miracles and witchcraft by numerous human witnesses in past history— these events can not have logically occurred even if we have collected data of people verifying them in the past. Where the underlying science is unsettled, history may prove to be “open to interpretation” as to the significance of events recorded. There are no constant relations in the field of economics and so establishing things such as the “elasticity of demand” of a good are nothing more than historical facts, not future-predicting theories of human action. “Happiness” is not an inappropriate measure of human action due to technological limitations but because it is not objective and universal in its implications— it means different things to different people. Logic, mathematics and praxeology are universally valid for all humans capable of reason. “What counts for history is always the meaning of the men concerned.” All historical events are described and interpreted by means of ideal types, e.g., general, president, businessman, entrepreneur, doctor, tyrant. But ideal types belong only to history— human action concerns itself with real acting man as he is, which is the mistake made by the German Historical School or the American Institutional School, which built their theory around the “ideal type” of “homo economicus”. This was a make believe intellectual phantom with no connection to real, acting man. “Praxeological knowledge is within us” and is in this sense experience based, but it is something that belongs to everybody who is capable of human reason, and no amount of experience or description to an entity not capable of it could lead to their understanding. “The end of science is to know reality”, and we use our experience of daily life to decide what interests us and what we should explore, but not how we should explore it (theory building). Economic theory refers to practical problems simply because that is what man is concerned with understanding. Economics is necessarily politically contrarian because it serves to provide knowledge of the limitations of human action and thus the necessary restraints that exist for human legislators and warlords in their social engineering endeavors. Economics is holistic, special theories of economics must be encased in a greater framework which is itself consistent in order for special theory to be valid. Praxeology belongs only to man— superhuman entities capable of anything would not fit into a theory involving entities which have limited means of satisfying their ends.
 
 
III. Economics and the Revolt Against Reason
The classical economists destroyed all socialist theories and demonstrated their impracticality. Instead of admitting defeat because they could not construct a logical theory, the socialists turned to questioning the efficacy of human reason itself. They decided to substitute mystical intuition for universal logic (similar to divine right of kings for monarch). Marxian polylogism states that every social class has its own distinct logical structure within the mind. There is no biological support for this assertion and Marxists make no attempt to establish anything beyond this assertion. Marxian “ideology” is a doctrine which is incorrect from proletarian pure logic but which is beneficial to the class interests of the one who espouses it. Marxists provide no explanation for why minority policies which are deemed injurious to the wider social body nonetheless come to pass without the majority stopping them. “The fundamental logical relations and the categories of thought and action are the ultimate source of all human knowledge.” We can not even imagine a system that operates otherwise without referring to this logic in our inquiry, and we can not explain logic without using logic. This means logic is an ultimate given. Polylogism scan not explain why people of the same social class nonetheless arrive at different conclusions about the truth.
IV. A First Analysis of the Category of Action
Economics concerns itself with the way thinking man turns things into means by way of action. It is concerned with the meaning men give to things through their action and not what third parties think about such action. Man’s ends can be thought of as existing on a scale of values, which are ordinal. It is a simple rank of things he’d like more over things he’d like less, the satisfaction of which serve to remove felt uneasiness. These scales don’t exist in any real sense and are simply a tool used to understand the concept of action, and they are revealed definitely only through concrete action. The values that things have are within the person of whom action is taken, they are not intrinsic to the things themselves. Economics concerns itself with what man DOES do, not what he should or ought to do, e.g., prices of “sinful” goods must be explained from the way men value them, not how an ethical system claims they should. Action can be thought of as an exchange, where a less satisfactory set of conditions is given up for a more satisfactory set of conditions. Costs are the value of the next best thing given up. Profits are the excess of gains over costs. Anytime costs exceed gains, loss is incurred.
V. Time
Change and time are two aspects of the same phenomenon. Thinking takes time and is itself an action. Action is always aimed at altering the events of the future because the present moment is fleeting. The present is an ideal boundary line separating the past and the future. The past is designated as the place where opportunity to consume or do has passed. The future is designated as the place where the opportunity to do or consume has not yet taken place. The present is the place in which it is too early to do some things and too late to do others. The uncertain nature of the future means that we have a vague notion at any given moment of how much of our action we can consider “now” or present. Time must be economized like any other good due to the fundamental nature of reality. Actions are never synchronous, they always are in a relation to one another of being sooner or later. Man’s values and thus actions can change over time. There is a difference between logical consistency, and praxeological constancy. Irrationality does not apply.
VI. Uncertainty
“To acting man the future is hidden”, it is possible in a metaphysical sense that events are entirely deterministic but this is not the experience that man himself faces; he faces an experience of choice. In matters of uncertainty, acting man faces two kinds of probability, class probability and case probability. In class probability, the actor knows all qualities of the class itself, but knows nothing of the character of any specific event which might take place within that class. In case probability, he knows some of the factors guiding the outcome of a specific event but not all of them and the outcome itself is unique and not categorizable with other “class” events. The case is characterized by its uniqueness, not its similarities, to other identical events. Human action is based upon case probability, where no safety or stability can be purchased or achieved— all human action is inherently speculative with regards to the likelihood of a given action achieving the aimed at end. Case probability can not be quantified because it would require the summing of non-identical items. And game theory is an inappropriate means to study human action because human action in the division of labor aims at benefitting all participants, not just sum (i.e., zero sum game). Competition has been wrongly characterized as a form of combat when really competitors win their customers by achieving excellence and preeminence. All allusions to military terminology or characteristics is purely metaphorical. Because praxeology studies multi-causal events, its prediction is necessarily qualitative and reliant on “understanding” (verstehen), it can never be quantifiable or mathematical in nature and there can never be any certainty with regards to its outcome.
VII. Action Within The World
Utility is that which has causal relevance to removing felt uneasiness. Subjective use-value utility is different than objective (or technological) use-vale utility. Objective use-value may be obscured, incorrectly utilized or multiplicitous in comparison to subjective use-value. Acting man does not choose between total supplies of various goods serving as means— he chooses only between the relative, discrete amounts for his purposes against other ends he could pursue. And because he satisfies his most urgent wants before his less urgent wants, he values the means “at the margin”, meaning in consideration of the value of the least urgent want he’d have to give up. The law of diminishing marginal utility is implied in the category of action. It is futile to attempt to calculate composite values of total supply based off of knowledge of partial supplies— this is not how acting man utilizes discrete amounts of supply. Supply itself is characterized by a set of homogenous goods which could equally satisfy a given want. Technological recipes are not part of supply, once known they are inexhaustible and can be used as many times as is desired— however, the action leading to their discovery does involve scarcity and supply. The law of returns simply states that for any combination of real factors of production there is an optimum in relation to the productive end desired with regards to most efficiently utilizing scarce resources. It can only tell us that there is an optimum. It can not tell us how to arrive at it— this is something that must be achieved through experience (technological vs. teleological knowledge). The law of returns applies to all branches of production equally. The indivisibility of certain means of production is what gives rise to the fact that often large-scale production is more efficient and therefore optimum than small scale variants. Labor is the employment of human physiological capacities as a means of obtaining desired ends. Leisure is preferred to labor and labor itself suffers from the law of diminishing marginal utility. Additionally, not all labor is equal in quantity and quality within an individual or population. “Men do not economize labor in general, but the particular kinds of labor available.” The supply of labor available is conditioned upon genetics, social conditioning and innate human subjective preferences for labor vs. leisure. The potential supply of labor for each kind of work necessarily exceeds the demand in the long run because labor can be shifted and retrained to perform new tasks. Labor is always more scarce than the material factors of production (land, capital). The substitution of “labor saving” machinery for human labor does not render labor abundant so long as there are still more material productive factors available to combine with the freed up labor to pursue additional human well-being. Activities which provide immediate gratification are not labor nor work but consumption goods themselves, of the first order.  Mises believes the creative genius is a special case which does not subscribe to the praxeological laws conditioning labor and is more equivalent to “manna from heaven” in that he toils under different conditions, for different reasons, and he can not be substituted, ordered/planned nor replaced. Production is not a creative act but one of rearrangement of already existent phenomena. Man is creative only in thinking, not rearranging the world according to his thoughts. Man’s capacity to work is a given much like the state of natural resources and animal substances. The material changes of man’s economy are due solely to the ideas he holds in his head about what is desirable. “Production is alteration of the given according to the designs of reason.”