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Ludwig Heinrich Edler von Mises (September 29, 1881 – October 10, 1973) was an Austrian economist, historian, philosopher, author, and classical liberal who had a significant influence on the modern free market libertarian movement and the Austrian School. Ludwig von Mises was born in the city of Lemberg, in Galicia, Austria - Hungary (now Lviv in Ukraine). His father was Arthur Edler von Mises. The family were Jewish and had recently been ennobled. They were involved in building and financing railroads. Similarly, Adele von Mises (née Landau), the niece of Dr. Joachim Landau, was a Liberal Party deputy to the Austrian Parliament. Arthur was stationed there as a construction engineer with Czernowitz railway company. At the age of twelve Ludwig spoke fluent Yiddish, German, Polish, and French, read Latin, and could understand Ukrainian. Mises had two younger brothers: applied physicist Richard von Mises, a member of the famous Vienna Circle, and later Karl von Mises, who died in infancy from scarlet fever. When Ludwig and Richard were children, his family moved back to their ancestral home of Vienna. In 1900, he attended the University of Vienna, becoming influenced by the works of Carl Menger. Mises' father died in 1903, and in 1906 Mises was awarded his doctorate from the school of law. In the years from 1904 to 1914, Mises attended lectures given by the prominent Austrian economist Eugen von Böhm - Bawerk. There, he developed friendships not only with Menger and Böhm - Bawerk, but also prominent sociologist Max Weber. Mises taught as a Privatdozent at
the Vienna University in the years from 1913 to 1934 while formally
serving as secretary at the Vienna Chamber of Commerce from 1909 to
1934. In these roles, he became one of the closest economic advisers of Engelbert Dollfuss, and, later, Otto von Habsburg. Friends and students of Mises in Europe included Wilhelm Röpke and Alfred Müller - Armack (influential advisors to German chancellor Ludwig Erhard), Jacques Rueff (monetary advisor to Charles de Gaulle), Lord Lionel Robbins (of the London School of Economics), and President of Italy, Luigi Einaudi. Economist and political theorist F.A. Hayek first came to know Mises while working as Mises' subordinate at a government office dealing with Austria's post - World War I debt. Hayek wrote, "there I came to know him mainly as a tremendously efficient executive, the kind of man who, as was said of John Stuart Mill,
because he does a normal day's work in two hours, always has a clear
desk and time to talk about anything. I came to know him as one of the
best educated and informed men I have ever known..." It was Hayek's development of Mises' innovative theoretical work on the business cycle which later earned him the Nobel Prize in economics. In 1934, Mises left Austria for Geneva, Switzerland, where he was a professor at the Graduate Institute of International Studies until
1940. Fearing the prospect of Germany taking control over Switzerland,
in 1940 along with other Jewish refugees Mises left Europe and emigrated to New York City. There he became a visiting professor at New York University.
He held this position from 1945 until his retirement in 1969, though he
was not salaried by the university. Instead, businessmen such as Lawrence Fertig funded him and his work. For part of this period, Mises worked on currency issues for the Pan - Europa movement led by a fellow NYU faculty member and Austrian exile, Richard Coudenhove - Kalergi. In 1947, Mises became one of the founding members of the Mont Pelerin Society. In America, Mises' work first influenced that of economists such as Benjamin Anderson, Leonard Read and Henry Hazlitt, but writers such as former radical Max Eastman, legal scholar Sylvester J. Petro, and novelist Ayn Rand were also among his friends and admirers. His American students included Israel Kirzner, Hans Sennholz, Ralph Raico, Leonard Liggio, George Reisman and Murray Rothbard. Mises later received an honorary doctorate from Grove City College. Despite his growing fame, Mises listed himself plainly in the New York phone directory and welcomed students into his home. He retired from teaching at the age of 87, then the oldest active professor in America. Mises died at the age of 92 at St. Vincent's hospital in New York. Mises wrote and lectured extensively on behalf of classical liberalism and is seen as one of the leaders of the Austrian School of economics. In his treatise on economics, Human Action, Mises introduced praxeology as
a more general conceptual foundation of the social sciences and
established that economic laws were only arrived at through the means of methodological individualism firmly rejecting positivism and materialism as a foundation for the social sciences. Many of his works, including Human Action, were on two related economic themes: The
only certain fact about Russian affairs under the Soviet regime with
regard to which all people agree is: that the standard of living of the
Russian masses is much lower than that of the masses in the country
which is universally considered as the paragon of capitalism, the
United States of America. If we were to regard the Soviet regime as an
experiment, we would have to say that the experiment has clearly
demonstrated the superiority of capitalism and the inferiority of
socialism. In Interventionism, An Economic Analysis (1940), Ludwig von Mises wrote: The usual terminology of political language is stupid. What is 'left' and what is 'right'? Why should Hitler be 'right' and Stalin, his temporary friend, be 'left'? Who is 'reactionary' and who is 'progressive'?
Reaction against an unwise policy is not to be condemned. And progress
towards chaos is not to be commended. Nothing should find acceptance
just because it is new, radical, and fashionable. 'Orthodoxy' is not an evil if the doctrine on which the 'orthodox' stand is sound. Who is anti-labor, those who want to lower labor to the Russian level, or those who want for labor the capitalistic standard of the United States? Who is 'nationalist,' those who want to bring their nation under the heel of the Nazis, or those who want to preserve its independence? After the fall of the Soviet Union Robert Heilbroner,
a lifelong advocate of socialism, said that "It turns out, of course,
that Mises was right" about the impossibility of socialism. "Capitalism
has been as unmistakable a success as socialism has been a failure.
Here is the part that's hard to swallow. It has been the Friedmans,
Hayeks, and von Miseses who have maintained that capitalism would
flourish and that socialism would develop incurable ailments." Mises
developed the theory of the 'sovereignty of the consumer' in a
free market economy; in his view, the consumer ultimately dictates everything that happens. This argument was set out in Human Action: 'The
captain is the consumer… the consumers determine precisely what should
be produced, in what quality, and in what quantities… They are
merciless
egoistic bosses, full of whims and fancies, changeable and
unpredictable. For them nothing counts other than their own
satisfaction… In their capacity as buyers and consumers they are
hard hearted and callous, without consideration for other
people… Capitalists… can only preserve and increase their wealth by
filling best the orders of the consumers… In the conduct of their
business affairs they must be unfeeling and stony hearted because the
consumers, their bosses, are themselves unfeeling and stony hearted.’ The
context does not suggest that Mises is trying here to denigrate the
consumer society. On the contrary, he is describing the free market economy as he believes that it naturally is and should be. Milton Friedman considered Mises intolerant in his personal behavior: 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, Fritz 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. In a 1957 review of his book, The Anti-Capitalistic Mentality, The Economist said of von 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." In a 1978 interview Friedrich Hayek said about his 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." |