Ludwig von Mises

Ludwig Heinrich Edler von Mises (1881-1973) was an Austrian School economist, historian, logician and sociologist. Mises wrote and lectured extensively on the societal contributions of classical liberalism. He is best known for his work on praxeology studies comparing communism and capitalism. He is considered one of the most influential economic and political thinkers of the 20th century.

Mises emigrated from Austria to the United States in 1940. Since the mid-20th century, libertarian movements have been strongly influenced by Mises's writings. Mises's student Friedrich Hayek viewed Mises as one of the major figures in the revival of classical liberalism in the post-war era. Hayek's work "The Transmission of the Ideals of Freedom" (1951) pays high tribute to the influence of Mises in the 20th century libertarian movement¹.

Mises's Private Seminar was a leading group of economists. Many of its alumni, including Friedrich Hayek and Oskar Morgenstern, emigrated from Austria to the United States and Great Britain. Mises has been described as having approximately seventy close students in Austria.

Life

Early yeaars

Ludwig von Mises was born on 29 September 1881 in the city of Lemberg, Galicia, Austria-Hungary (now Lviv, Ukraine). The family of his father, Arthur Edler von Mises, had been elevated to the Austrian nobility in the 19th century (Edler indicates a noble landless family) and they had been involved in financing and constructing railroads. His Jewish mother Adele (née Landau) was a niece of Dr. Joachim Landau, a Liberal Party deputy to the Austrian Parliament. Arthur von Mises was stationed in Lemberg as a construction engineer with the Czernowitz railway company.²

By the age of 12, Mises spoke fluent German, Polish and French, read Latin and could understand Ukrainian³. Mises had a younger brother, Richard von Mises, who became a mathematician and a member of the Vienna Circle, and a probability theorist. When Ludwig and Richard were still children, their family moved back to Vienna.

In 1900, Mises attended the University of Vienna, becoming influenced by the works of Carl Menger. Mises's father died in 1903. Three years later, Mises was awarded his doctorate from the school of law in 1906⁴.

Life in Europe

In the years from 1904 to 1914, Mises attended lectures given by Austrian economist Eugen von Böhm-Bawerk. He graduated in February 1906 (Juris Doctor) and started a career as a civil servant in Austria's financial administration.

After a few months, he left to take a trainee position in a Vienna law firm. During that time, Mises began lecturing on economics and in early 1909 joined the Vienna Chamber of Commerce and Industry. During World War I, Mises served as a front officer in the Austro-Hungarian artillery and as an economic adviser to the War Department.

Mises was chief economist for the Austrian Chamber of Commerce and was an economic adviser of Engelbert Dollfuss, the Austrian Chancellor who tried to prevent the Nazis from taking over Austria⁵. Later, Mises was economic adviser to Otto von Habsburg, the Christian democratic politician and claimant to the throne of Austria (which had been legally abolished in 1918 following the Great War)⁶. In 1934, Mises left Austria for Geneva, Switzerland, where he was a professor at the Graduate Institute of International Studies until 1940.

While in Switzerland, Mises married Margit Herzfeld Serény, a former actress and widow of Ferdinand Serény. She was the mother of journalist Gitta Sereny.

Work in the United States

In 1940, Mises and his wife fled the German advance in Europe and emigrated to New York City⁷. He had come to the United States under a grant by the Rockefeller Foundation. Like many other classical liberal scholars who fled to the United States, he received support from the William Volker Fund to obtain a position in American universities⁸. Mises became a visiting professor at New York University and held this position from 1945 until his retirement in 1969, though he was not salaried by the university⁹. Businessman and libertarian commentator Lawrence Fertig, a member of the New York University Board of Trustees, as well as journalist Henry Hazlitt and Leonard Read, founder of the Foundation for Economics Education, funded Mises and his work¹⁰.

For part of this period, Mises studied currency issues for the Pan-Europa movement, which was led by Richard von Coudenhove-Kalergi, a fellow New York University faculty member and Austrian exile¹¹. In 1947, Mises became one of the founding members of the Mont Pelerin Society.

In 1962, Mises received the Austrian Ehrenzeichen (medal or badge of honor) for Science and Art for political economy at the Austrian Embassy in Washington, D.C.¹²

Mises retired from teaching at the age of 87 and died on 10 October 1973 in New York. He is buried at Ferncliff Cemetery in Hartsdale, New York. Grove City College houses the 20,000-page archive of Mises papers and unpublished works¹³. The personal library of Mises was given to Hillsdale College as bequeathed in his will¹⁴.

At one time, Mises praised the work of writer Ayn Rand and she generally looked on his work with favor, but the two had a volatile relationship, with strong disagreements for example over the moral basis of capitalism.

Thought

Mises wrote and lectured extensively on behalf of classical liberalism. In his magnum opus Human Action, Mises adopted praxeology as a general conceptual foundation of the social sciences and set forth his methodological approach to economics.

Mises was against economic interventionism¹⁵ and was an anti-imperialist. He referred to World War I as such a watershed event in human history and wrote that "War has become more fearful and destructive than ever before because it is now waged with all the means of the highly developed technique that the free economy has created. Bourgeois civilization has built railroads and electric power plants, has invented explosives and airplanes, in order to create wealth. Imperialism has placed the tools of peace in the service of destruction. With modern means it would be easy to wipe out humanity at one blow"¹⁶.

In 1920, Mises introduced the economic calculation problem as a critique of socialist nations based on planned economies and rejection of the price mechanism. In his first article, "Economic Calculation in the Socialist Commonwealth"¹⁷, Mises described the nature of the price system under capitalism and how individual subjective values are translated into the objective information necessary for rational allocation of resources in society. Mises argued that the pricing systems in socialist economies were necessarily deficient because if a public entity owned all the means of production, no rational prices could be obtained for capital goods as they were merely internal transfers of goods and not "objects of exchange", unlike final goods. Therefore, they were unpriced and hence the system would be necessarily irrational, as the central planners would not know how to allocate the available resources efficiently. He wrote that "rational economic activity is impossible in a socialist commonwealth"¹⁸. Mises developed his critique of socialism more completely in his 1922 book Socialism: An Economic and Sociological Analysis, arguing that the market price system is an expression of praxeology and can not be replicated by any form of bureaucracy.

Reception

Debates about Mises's arguments

Economic historian Bruce Caldwell wrote that in the mid-20th century, with the ascendance of positivism and Keynesianism, Mises came to be regarded by many as the "archetypal 'unscientific' economist"¹⁹. In a 1957 review of his book The Anti-Capitalistic Mentality, The Economist said of Mises: "Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null and as a debater he is of Hyde Park standard"²⁰. Conservative commentator Whittaker Chambers wrote, in a letter to William F. Buckley Jr, that Mises's point that "the anticapitalist mentality is the product of envy" was "what know-nothing conservatism can breed at its know-nothingest"²¹.

Scholar Scott Scheall called economist Terence Hutchison "the most persistent critic of Mises's apriorism"²², starting in Hutchison's 1938 book The Significance and Basic Postulates of Economic Theory and in later publications such as his 1981 book The Politics and Philosophy of Economics: Marxians, Keynesians, and Austrians²³. Scheall noted that Friedrich Hayek, later in his life (after Mises died), also expressed reservations about Mises's apriorism, such as in a 1978 interview where Hayek said that he "never could accept the ... almost eighteenth-century rationalism in his [Mises's] argument"²⁴.

In a 1978 interview, Hayek said about Mises's book Socialism:

At first we all felt he was frightfully exaggerating and even offensive in tone. You see, he hurt all our deepest feelings, but gradually he won us around, although for a long time I had to–I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument.²⁵

Economist Milton Friedman considered Mises inflexible in his thinking, but added that Mises's difficult life and lack of acceptance by academia are the likely culprits:

The story I remember best happened at the initial Mont Pelerin meeting when he got up and said, "You're all a bunch of socialists." We were discussing the distribution of income, and whether you should have progressive income taxes. Some of the people there were expressing the view that there could be a justification for it.

Another occasion which is equally telling: Fritz Machlup was a student of Mises's, one of his most faithful disciples. At one of the Mont Pelerin meetings, Machlup gave a talk in which I think he questioned the idea of a gold standard; he came out in favor of floating exchange rates. Mises was so mad he wouldn't speak to him for three years. Some people had to come around and bring them together again. It's hard to understand; you can get some understanding of it by taking into account how people like Mises were persecuted in their lives.²⁶

Economist Murray Rothbard, who studied under Mises, agreed he was uncompromising, but disputed reports of his abrasiveness. In his words, Mises was "unbelievably sweet and he was constantly urging people, finding research projects for people to do, ... and always being unfailingly courteous, ... and non-bitter" about the discrimination he received at the hands of the economic establishment of his time²⁷.

After Mises died, his widow Margit quoted a passage that Mises had written about Benjamin Anderson. She said it best described Mises's own personality:

His most eminent qualities were his inflexible honesty, his unhesitating sincerity and his unflinching patriotism. He never yielded. He always freely enunciated what he considered to be true. If he had been prepared to suppress or only to soften his criticisms of popular, but obnoxious, policies, the most influential positions and offices would have been offered him. But he never compromised.²⁸

Debates about fascism

Marxists Herbert Marcuse and Perry Anderson as well as German writer Claus-Dieter Krohn criticized Mises for writing approvingly of Italian fascism, especially for its suppression of leftist elements, in his 1927 book Liberalism²⁹. In 2009, economist J. Bradford DeLong and sociologist Richard Seymour repeated the criticism³⁰.

Mises, in his 1927 book Liberalism, wrote:

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history. But though its policy has brought salvation for the moment, it is not of the kind which could promise continued success. Fascism was an emergency makeshift. To view it as something more would be a fatal error.³¹

Mises biographer Jörg Guido Hülsmann says that critics who suggest that Mises supported fascism are "absurd" as he notes that the full quote describes fascism as dangerous. He notes that Mises said it was a "fatal error" to think that it was more than an "emergency makeshift" against up and coming communism and socialism as exemplified by the Bolsheviks in Russia and the surging communists of Germany³². Nevertheless, Hülsmann does mention briefly in Mises: The Last Knight of Liberalism that Mises became a member of the Patriotic Front (Vaterländische Front) fascist party but, as Hülsmann uses the word "probably", it is not exactly clear whether membership was mandatory for public officials and civil servants³³.

In regards to Nazism, the fascist force in Germany, Mises called on the Allies in his 1944 book Omnipotent Government to "smash Nazism" and to "fight desperately until the Nazi power is completely broken"³⁴.

Influence

Friends and students of Mises in Europe included Wilhelm Röpke and Alfred Müller-Armack (advisors to German chancellor Ludwig Erhard), Jacques Rueff (monetary advisor to Charles de Gaulle), Gottfried Haberler (later a professor at Harvard), Lionel Robbins (of the London School of Economics), Italian President Luigi Einaudi³⁵ and Leonid Hurwicz, recipient of the 2007 Nobel Memorial Prize in Economic Sciences³⁶. Economist and political theorist Friedrich Hayek first came to know Mises while working as his subordinate at a government office dealing with Austria's post-World War I debt. While toasting Mises at a party in 1956, Hayek said: "I came to know him as one of the best educated and informed men I have ever known"³⁷.  Mises's seminars in Vienna fostered lively discussion among established economists there. The meetings were also visited by other important economists who happened to be traveling through Vienna.

At his New York University seminar and at informal meetings at his apartment, Mises attracted college and high school students who had heard of his European reputation. They listened while he gave carefully prepared lectures from notes. Among those who attended his informal seminar over the course of two decades in New York were Israel Kirzner, Hans Sennholz, Ralph Raico, Leonard Liggio, George Reisman and Murray Rothbard³⁸. Mises's work also influenced other Americans, including Benjamin Anderson, Leonard Read, Henry Hazlitt, Max Eastman³⁹, legal scholar Sylvester J. Petro and novelist Ayn Rand.

Creation of the Mises Institute

As a result of the economic works of Ludwig Von Mises, the Mises Institute was founded in 1982 by Lew Rockwell, Burton Blumert and Murray Rothbard, following a split between the Cato Institute and Rothbard, who had been one of the founders of Cato. It was funded by Ron Paul.

The mission of the Mises Institute is to "promote teaching and research in the Austrian school of economics, and individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard"⁴⁰. Notably, the Mises Institute offers thousands of free books written by Ludwig Von Mises, Murray Rothbard, Hans-Hermann Hoppe and other prominent economists in e-book and audiobook format. The Mises Institute also offers a graduate school program with the mission to "provide quality online education, prepare faculty, and promote research in the Austrian school of economics"⁴¹.

This article is derived from the English Wikipedia article "Ludwig von Mises" as of 23 Jun 2022, which is released under the Creative Commons Attribution-Share-Alike License 3.0.