Mises is a great thinker but not a great writer – or at least his translations in English are not easy reading. The first part of Human Action by Mises is painfully slow.

Why does Mises call his book "Human Action" and not "Political Economy" (on the pattern of similar books by Mill or Ricardo) or even, simply, "economics" as Marshall dubbed the new discipline?

That's because Mises sees economics as a sub-discipline of a broader discipline of praxeology – the general theory of human action. According to him, the general theory of choice and preference (which is about human choosing and acting) goes beyond political economy or economics.

Carl Menger, an Austrian, was the first to clarify the concept of diminishing marginal utility. This was the foundation of the subjective theory of human action which led to modern price theory. Mises was one of the early students of this new subjective discipline. Human Action by Mises is perhaps the best description of praxeology available today. Not many people understand it (I don't), perhaps because Mises is so tedious as a writer.

But for those with limited patience (like me), I found this excellent lecture by Hans-Hermann Hoppe today. (I chanced upon it through FB.) This lecture is 50 minutes long and although it can appear, at times, to be repetitive and slow, it is amazingly insightful. Hoppe is a good teacher.

After you've understood this lecture, you'll smile at the delusion of any Keynesian (like Krugman) "prescribing" solutions for an economy. Even Friedman's monetarism becomes suspect (and indeed, has been overtaken by rational expectations models, which, in turn, are largely suspect; any aggregation of human behaviour is fraught with huge methodological problems) .

If you know about the Hawthorne effect, you perhaps realise that it not only applies to psychological experiments but has distorted results in many"altruism" experiments conducted by naive and confused experimental economists. This is one more obvious implication that you get from Hoppe. If only these "scientists" had studied Mises and understood Hoppe. A lecture of just 50 minutes would be enough to eliminate their fundamental methodological mistakes.

The point Hoppe is making is that human action is influenced by a myriad of factors and is therefore constantly changing, making prediction (almost) impossible. Most importantly, people learn through experience. This means (for all practical purposes) that concepts of bounded rationality (e.g. the Kahneman and Trversky effects) aren't readily evident in real life. On the other hand, significant human error (where people overcome bias but still make errors of reason due to over-confidence, for instance) is found. Economics can't explain that, but praxeology can. 

Hoppe's talk will significantly sharpen your understanding of Mises's work (and hence of Hayek). 

Let me end by quoting a short section from Mises's Human Action. You will understand this short section MUCH better after listening to the talk, above:

The transformation of thought which the classical economists had initiated was brought to its consummation only by modern subjectivist economics, which converted the theory of market prices into a general theory of human choice.

 

For a long time men failed to realize that the transition from the classical theory of value to the subjective theory of value was much more than the substitution of a more satisfactory theory of market exchange for a less satisfactory one. The general theory of choice and preference goes far beyond the horizon which encompassed the scope of economic problems as circumscribed by the economists from Cantillon, Hume, and Adam Smith down to John Stuart Mill. It is much more than merely a theory of the "economic side" of human endeavors and of man's striving for commodities and an improvement in his material well-being. It is the science of every kind of human action.

 

Choosing determines all human decisions. In making his choice man chooses not only between various material things and services. All human values are offered for option. All ends and all means, both material and ideal issues, the sublime and the base, the noble and the ignoble, are ranged in a single row and subjected to a decision which picks out one thing and sets aside another. Nothing that men aim at or want to avoid remains outside of this arrangement into a unique scale of gradation and preference.

 

The modern theory of value widens the scientific horizon and enlarges the field of economic studies.

 

Out of the political economy of the classical school emerges the general theory of human action, praxeology[1].

 

The economic or catallactic problems [2] are embedded in a more general science, and can no longer be severed from this connection. No treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part, although the hitherto best elaborated part, of a more universal science, praxeology.

 

[1] The term praxeology was first used in 1890 by Espinas. Cf. his article "Les Origines de law technologies," Revue Philosophique, XVth year, XXX, 114-115, and his book published in Paris in 1897, with the same title.

 

[2] The term Catallactics or the Science of Exchanges was first used by Whately. Cf. his book Introductory Lectures on Political Economy (London, 1831), p. 6.