“Theory and History” deals with the theory of economics, i.e.; the study of purposive human action, and with history, the record of the past actions of individuals. All actions are determined by ideas. Thoughts and ideas are “real things” Mises writes. “Although intangible and immaterial, they are factors in bringing about changes in the realm of tangible and material things.” Rather than rejecting the study of historical change as a “useless pastime,” Mises considers it of utmost practical importance. “History looks backward into the past, but the lesson it teaches concerns things to come.” History opens the mind to an understanding of human nature, increases wisdom, and distinguishes civilized man from the barbarian. Moreover, historical knowledge is of the utmost importance in helping to anticipate and plan for the future.
A major part of the book is a critique of Karl Marx and of his view of theory and history. Marx attributes the creation of tools and machines, as well as the economic structure of society, to undefined “material productive forces.” Mises rejects this materialistic view and points out that tools and machines are actually created by individuals acting on the basis of nonmaterialistic ideas. Marx predicts that society is moving toward socialism “with the inexorability of a law of nature.” Mises responds, “The outstanding fact about history is that it is a succession of events that nobody anticipated before they occurred.”