Profit and Loss

In Profit and Loss, Mises explains how cost accounting is the critical institution that ferrets out social waste and ensures that resources are directed to their most highly valued ends, and how entrepreneurs respond to price signals. His presentation is systematic, relentless, and logical — Mises is capable of nothing less.

He explains what it is that entrepreneurs confront in a market economy, and how no bureaucratic institution can replicate the trial-and-error process that is at the heart of the market system. He weaves into his analysis the role of the consumer as the final arbiter of what is produced and distributed.

The great merit of this essay is its brevity and passion. It is accessible to laymen, addressing what is often taken for granted about the market, while also remaining the best summary of the technical side of the market for graduate students of economics. Originally presented to a group of scholars whom Mises believed to have lost touch with the core truths of the market economy, this book is a vigorous shot in the arm.