By Lic. Federico Esteban Herrera, Federalismo y Libertad.
The components of human action
Continuing with our discussion from the previous article (We are all entrepreneurs: Part I) and to recapitulate; entrepreneurship (human action) consists of a continual eagerness to seek out, discover, create, or identify new ends and means to better fulfill our needs and desires. Austrian economics studies this procedure; in other words, it studies human action itself.
Human action is any deliberate behavior or conduct taken by a human being and involves the search for the best ways to achieve our goals, by analyzing benefits and costs. To better understand human action (entrepreneurship), we shall analyze its components.
The first one is the END, goal or objective, which is the thing that a person wants to achieve or accomplish by acting. And why do human beings pursue ends? This brings us to the second element, which is value. VALUE is the subjective and unmeasurable, objectively speaking, appreciation the actor assigns to his or her end. The third element is the concept of MEANS, or better known as factors of production or resources (though means is a much better concept because of its wide range); means are anything the actor subjectively believes will permit him to achieve his ends; and which are also assigned with a value; this is the fourth element, UTILITY.
The utility, to the means, depends on the value of the end and on the personal belief of the usefulness of these means to accomplish the end. Then, ends go hand in hand with values, and so do means with utilities. We can easily say that value and utility are the two sides of the same coin, because the actor projects the value of the end onto the means, through the
concept of utility.
The fifth component is SCARCITY. Scarcity is yet another subjective concept and can not be measured from the outside; meaning, the tools or things we use to satisfy or achieve our ends are, by definition, scarce and cannot be quantified from an objective point of view. Means are
Scarcity signifies that the actor subjectively believes that the means available to him areinsufficient to achieve his ends. What is not scarce is not taken into account by the actor when he or she acts, therefore it is not a mean. Without scarcity, there is no human action. For instance, in a giving situation, say in the day to day life, we may consider air not to be scarce, therefor not a mean, but in a different situation, say while traveling to space or in a plane, air could turn into a scarce resource, becoming a mean.
As soon as scarcity comes to play, human action (entrepreneurship) appears. These limited resources then become of interest in Austrian economic analysis and, through human action, individuals put themselves in finding ways to better come to those means since they help them to achieve their desired ends. To illustrate, a mean is a sort of bridge that connects us with the end we want to achieve.
The sixth element is a PLAN OF ACTION; which is the perspective mental picture the actor conjures up of the different stages, elements, and circumstances that may have a bearing on his action. Therefore, the plan consists of a personal arrangement of the practical information the actor possesses and progressively discovers within the context of each action. What procedure should be followed, what actions would reduce efforts and costs while increasing benefits and what teachings have been learned from previous actions are all considered in this plan.
The final stage, once all the elements are ready, is the PERSONAL ACT OF WILL. Once the actor feels he has discovered which ends are worthwhile to him and which means are available to enable him to reach those ends, he incorporates them into a plan of action, and then he needs to have the willingness to act. Without this crucial element, the entire system would not work.
It is crucial to understand and to make clear that all the definitions analyzed previously: ends, means, value, utility, scarcity, plan of action and will are subjective concepts and cannot be, objectively speaking, measured from the outside, and are present every time a human being acts.
Therefore, every time a human acts is an entrepreneur, and all these concepts are present. Understanding them is crucial in order to know us all better.