Widely considered Mises' magnum opus,[1] it presents the case for laissez-faire capitalism based on praxeology, his method to understand the structure of human decision-making.

In Mises's view, government interventions that distort market prices always result in misdirections of resources, including labor, and malinvestments of capital, leading to inflationary upswings followed by inevitable economic downturns.

[47] Lastly, the notions of progress and retrogression only make sense in the context of an actor's plan, and the fatal flaw of 18th- and 19th-century rationalists and (classical) liberals was their faith in the decency and wisdom of the common man.

[52] Mises explains that actors must choose between various outcomes that all consist of countable supplies of different goods, and that the fundamental act of choice always involves a purely ordinal value judgment.

[98] If people expect the purchasing power of money to change, they will adjust their cash holdings accordingly and speed up the process, which may result in the abandonment of the currency causing the "crackup boom" (Katastrophenhausse).

[108] In a market economy free from government expansion of the money supply, prices would generally fall over time,[104] and the gold standard marked the hallmark of classical liberalism.

[129] In credit expansion, the government artificially increases the money supply by lowering interest rates, which leads to a boom period with malinvestments, and ultimately to a bust phase.

[127] In credit contraction, the government artificially reduces the money supply by increasing interest rates, which leads to lower prices but has no lasting ill effects.

[141] The classical trichotomy of land, labor, and capital is shown to be untenable,[140] and modern economics uses a single theoretical framework to explain the prices of each productive factor.

[156] With the rise of modern industry, the call for equal redistribution of property became impractical, and the idea of socialization of the means of production arose, with the state handling all economic affairs.

[159] The lack of economic calculation in socialism means that planners cannot compare the benefits and costs of different uses of scarce resources, making planning impossible.

[160] The failure to conceive of this problem is attributed to the focus of mathematical economists on static-equilibrium states in their formal models, which do not require entrepreneurship and can be achieved without the use of money.

[159] The schemes proposed by socialist theorists to address the problem of economic calculation, such as valuing goods based on their inherent labor content or units of "utility," are argued to be untenable.

[163] The differential equations of mathematical economics do not provide guidance for how the planner should move toward the desired end state while maintaining a satisfactory condition during the transition phase.

[168] He also explains that the concept of "laissez-faire" does not mean doing nothing in the face of unsatisfactory social conditions, but rather it is about allowing individuals the freedom to plan their own lives versus granting all power to the government.

[169] Finally, Mises suggests that a voluntary system based on ethical or religious ideals could be a possible social arrangement, but specific guidelines would be needed to ensure its success.

[171] The chapter also explores the concept of a total tax, where the government confiscates all income or wealth and redistributes it back to its subjects,[172] and the fiscal and nonfiscal objectives of taxation, which can sometimes be in conflict.

[182] The international gold standard emerged as a result of classical liberalism, but governments sometimes used legal-tender laws to relieve the plight of debtors, which led to monetary inflation.

[184] The gold-exchange standard gave governments more flexibility in inflating the money supply by weaning the public from its holding of actual gold in cash balances.

[184] Governments hoped that currency devaluation would achieve various objectives, such as reducing real wage rates, raising commodity prices, and encouraging exports, but these goals were often unsuccessful.

[186] Socialists and interventionists blame recurring depressions on inherent failings of the market economy, but they don't recognize the role played by government credit expansion during the boom.

[188] It also highlights how interference with market outcomes, such as breaking up larger farms or imposing progressive income taxation, can reduce efficiency, hamper growth, and benefit a few unproductive farmers or the rich.

[195] During wartime, the government must divert resources from consumer goods to military production, and entrepreneurs are best equipped to handle this switch if they are allowed to earn profits.

[196] However, the government's attempt to maintain workers' real take-home pay during World War II led to market intervention, including rationing schemes and price controls.

[202] Regarding poverty, Mises argues that capitalism and the rise of industry have allowed for more people to work and support themselves, while interventionism has hindered private charitable efforts.

[200] Inequality in incomes and wealth is an inherent feature of the market economy, and the only path to rising standards of living is through the continual increase in capital per capita.

[201] Finally, capitalism does give rise to income and wealth insecurity,[202] but this is not the fault of capitalists but of consumers who each day seek the products and services that best satisfy their wants at the lowest prices.

[202] The modern welfare theorists are superior to older schools of reformers because they acknowledge that the only metric for a social system is their ability to allow men to achieve their ends.

[208] The chapter concludes by criticizing the old liberals for assuming that the majority would support capitalism based on its benefits and their ability to reason correctly, without anticipating the success of anticapitalist propaganda.

[209] Chapter 38, "The Place of Economics in Learning", explains, firstly, that the establishment of an institute for business-cycle research is not sufficient to find cures for business cycles.