When Ludwig von Mises died in October, 1973, the world lost one of the truly great productive minds ever to have lived. His precise and cutting insights into the workings of the mind of man, and hence man made economies, may never be equalled. He was the true scholar, leaving behind a wealth of knowledge in his many books that will influence generations for ages to come. And outstanding above all his consistent and courageous defence of liberty and the free market.
Born on September 29, 1881, in the Austro-Hungarian town of Lemberg (now part of Russian Ukraine). Mises entered the University of Vienna in 1900, studied under Eugen Bohm-Bawerk, and attained his doctorate in law and economics in 1906. His doctoral dissertation was the final touch to the “subjective revolution” that had begun in the 1870’s under the founder of the Austrian School of Economics, Carl Menger, and Bom-Bawerk. This dissertation, published in 1912 as The Theory of Money and Credit, still remains as the best and most sophisticated presentation of the Quality Theory of money.
In 1909 he became advisor to the Austrian Chamber of Commerce (a post he held till 1934) and in 1913, he was appointed professor of economics at the University of Vienna; unpaid, but nevertheless, a prestigious position he held for twenty years. During this period, he also conducted his own private seminar in which were attracted such worthies as Friedrich Hayek and Gottfried Haberler, founded and administered an institute for business cycle research and took an active part in international economic conferences as a courageous advocate of the free market and sound money.
During the 1920’s, three works were published which examined the human condition under state intervention. They were the classic Socialism, Liberalismus (translated as The Free and Prosperous Communwealth, but now out of print) and Interventionismus, an essay as yet not published in English. These great works showed conclusively that: (1) total socialism, lacking any means of rational economic calculation, i.e., prices, can only function at the very lowest level of economic efficiency; (2) only a market system, or an exchange system based on the private ownership of the means of production, can provide the means of achieving rational allocation of capital goods to their most productive uses and thereby to a higher measure of economic welfare; and finally (3) any intervention into the market exchange process will lead to a cumulative deterioration of economic welfare and ultimately to increasing centralism and collectivisation of the economic system.
His precision in excising interventionist fallacies may never be equalled. With these three major works completed, Mises left for Switzerland under the shadow of Hitler’s sword and taught there are the Graduate Institute for International Studies in Geneva until 1940 when he emigrated to America. At the age of sixty he began working anew in a strange land and a second language. None of this dulled his capacity for work, yet he found it difficult to find a position in an American university. None would employ him. His anti-statism and uncompromising stand for freedom was too much even for the “liberal” Americans. Still, inside this man rested the heart of a truly intellectual giant, who not only took his ideas seriously, but would not relent when attacked. He knew he was right.
Possibly his greatest work, Human Action, which appeared in English in 1949, enlarged from an earlier German edition which first appeared in 1940. This marvellous book is not only a treatise on economics, but a full exposition of the working of society under conditions of freedom. Mises describes the science of economics as an integral part of the entire field of knowledge, and further more, he demonstrated that the science of economics deals with the conscious purposeful action of human beings. The impact of Human Action on contemporary economics is yet to be realised, but it is clear that if the international market system, as it has developed over the last 200 years is to survive, the ideas of Mises must be understood.
Other great books of Mises are numerous. Of note are: Omnipotent Government, where we read of the struggle of free nations against Hitler’s National Socialism; Bureaucracy, where the analysis of bureaucratic versus profit management has never been clearer; Theory and History, possibly his favourite book, which examines the differences between economic theory on the one hand, and that of history on the other. The Anticapitalist Mentality and Planning for Freedom, being two others.
Inherent in all of Mises’s works is the thesis that it is ideas that make history and not history that makes ideas. Policies that arise from bad ideas, faulty logic, and fake interpretation, can only lead to undesirable and serious consequences — certainly far from their original aim. He was a constant critic of government intervention and his vast knowledge enabled him to predict the consequences of some particular government encroachment in the economy, notably so in the area of government manipulated money and credit.
Though he was unable to attain a professorial chair at any American university, he became Visiting Professor at the Graduate School of Business Administration of New York University in 1945, a post he held until 1969. He was also an honorary staff member of the Foundation for Economic Education.
As a teacher, he generated warm enthusiasm among his students. His lectures and seminars could last for hours, his students listening enthralled as his breadth and wide-reading came forth, tackling so thoroughly the many problems of the world. In New York, his seminars, his Coffee Klatches (after the seminars) and the Mises Dinner Circle were always well-attended. His evening often sparkled with humour. When one student could not believe that he heard Mises correctly when he said that government should always refrain from interfering with the market processes, he asked Mises if he meant that the government should do nothing when there was a depression. Mises replied: “I mean that the government should start to do nothing much earlier.” So precise.
Even after he retired from teaching in his 88th year, he continued to accept a limited number of speaking engagements into his 90th year. His last great speech, which fortunately has been preserved on tape, was given on May 2, 1970. He spoke on “Socialism and the Free Market.”
We have learned far more from Mises than economics. He was a model of scholarship, a giant of erudition and steadfastness. Truly one of the great teachers of all time.
We would be well-employed to assist in making known the work of this great libertarian.
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