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Ludwig von Mises

 
Britannica Concise Encyclopedia: Ludwig Edler von Mises
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(born Sept. 29, 1881, Lemberg, Austria-Hungary — died Oct. 10, 1973, New York, N.Y., U.S.) Austrian-U.S. economist whose theories followed those of the Austrian school of economics. He taught at the University of Vienna (1913 – 38) before immigrating to the U.S. and joining the New York University faculty (1945 – 69). In The Anti-Capitalistic Mentality (1956), an examination of U.S. socialism, he dealt with the opposition to the free market by intellectuals, who, in his view, bear an unwarranted resentment toward mass demand, which is the basis of prosperity in big business.

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Biography: Ludwig von Mises
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Ludwig von Mises (1881-1973) an Austrian economist and social philosopher, was the leading exponent, in the 20th century, of the Austrian school and an extreme conservative in matters of economic and social policy.

Ludwig von Mises was born September 29, 1881, in the city of Lemberg which was located in the former Austria-Hungary. He was born the son of a highly successful and respected engineer. By the time von Mises was 19 he had already entered the prestigious University of Vienna, studying under Eugen von Böhm-Bahwerk and Eugene von Philippovich. Ludwig von Mises earned his doctorate degree in Both (Canon and Roman) Laws by the time he was 27 years of age.

After receiving his advanced degree, von Mises wrote the first of what would be a long list of phenomenal works, The Theory of Money and Credit (1912). Von Mises was revolutionary in his thinking. He would successfully argue that money had a price, not unlike any other commodity. The theory was based on the economic notion that all things were priced according to supply and demand. Von Mises theorized that money would have the same effect, therefore, its "price" would rise and fall as well.

Von Mises was privatdozent of economics at Vienna (1913-1934) and professor of international relations at the Graduate Institute of International Studies in Geneva, Switzerland (1934-1940). In 1945 he became visiting professor of economics at the Graduate School of Business Administration of New York University; he retired in 1969. Between the years of 1909 and 1934 he held various economic advisor positions with the Austrian Chamber of Commerce.

Von Mises was known throughout his career as an uncompromising champion of laissez-faire, arguing in Socialism: An Economic and Sociological Analysis (1922) and Human Action: A Treatise on Economics (1949) that a socialist system cannot function because it lacks a true price system. It has been written that Socialism was a prediction of the fall of communism. Von Mises argued that socialism could not sustain an economy, due to the fact that under socialism there is no market for goods or services. Von Mises projected that without an industrial economy, there would be no price system. It is the price system which determines profit and loss. In the same book, von Mises also theorized that mixed economies would fare no better, because of the distortion involved. He also held that lesser types of intervention, such as minimum-wage laws, are equally futile. In his writings on the epistemology of economics, he maintained that the only approach to economics is a deductive system based on self-evident axioms stressing the individual's purposive choice of means to arrive at preferred ends.

A theory of the business cycle grew out of Von Mises's theory of money and was developed by him in detail by 1928. This theory emphasized the role of the banking system in the expansion of the money supply, the consequent artificial lowering of the interest rate, and the resulting overinvestment. When the money supply reaches the limits of its ability to expand, a depression inevitably follows. The theory aroused considerable interest among economists in the early 1930s but was lost sight of with the advent of the "Keynesian revolution," which began in 1936. Later in the century, economists reconsidered the role of overinvestment as a factor in business fluctuations.

Von Mises's publications include almost 20 books as well as numerous articles and other, shorter pieces ranging from economic theory and the history of economic thought to methodology and social and political philosophy. In 1969 he was named distinguished fellow of the American Economic Association in recognition of his valuable contributions to economics.

Due to von Mises's critical views on socialism he remained in exile from the National Socialists in Geneva until his death in 1973. Von Mises's most highly regarded work was his 900-page Human Action which was not published until 1949. The book had been written in early 1940; however, amidst the effects of the war, it was placed on hold.

Further Reading

Mary H. Sennholz, ed., On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (1956), contains considerable information on von Mises and his work. A chapter on him is in the excellent study by Ben B. Seligman, Main Currents in Modern Economics: Economic Thought since 1870 (1962). Additional material on Von Mises is in Howard S. Ellis, German Monetary Theory, 1905-1933 (1934), and lsrael M. Kirzner, The Economic Point of View: An Essay in the History of Economic Thought (1960). Information regarding Ludwig von Mises is also accessible at http://www.mises.org.

Quotes By: Ludwig Von Mises
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"The history of mankind is the history of ideas."

"Government is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink."

Wikipedia: Ludwig von Mises
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Ludwig von Mises
Western Economists
20th-Century Economists
(Austrian economics)
Full name Ludwig Heinrich Edler von Mises
Born September 29, 1881(1881-09-29)
Lemberg, Austria-Hungary (now Lviv, Ukraine)
Died October 10, 1973 (aged 92)
New York City, New York, USA
School/tradition Austrian School
Main interests economics, political economy, philosophy of history, epistemology, rationalism, classical liberalism, libertarianism
Notable ideas praxeology, economic calculation problem, methodological dualism

Ludwig Heinrich Edler von Mises (pronounced /ˈluːtvɪç fɔn ˈmiːzəs/) (September 29, 1881 – October 10, 1973) was an Austrian economist, philosopher, author and classical liberal who had a major influence on the modern libertarian movement and the Austrian School.

Contents

Biography

Early life

Coat of arms of Ludwig von Mises' great-grandfather, Mayer Rachmiel Mises, awarded upon his 1881 ennoblement by Franz Joseph I of Austria

Ludwig von Mises was born in the city of Lemberg, in Galicia, Austria-Hungary (now in Ukraine), to parents Arthur Edler von Mises from a recently ennobled Jewish family involved in building and financing railroads, and Adele von Mises (née Landau), the niece of Dr. Joachim Landau, a Liberal Party deputy to the Austrian Parliament.[1]. Arthur was stationed there as a construction engineer with Czernowitz railroad company. At the age of twelve Ludwig spoke fluent German, Polish, and French, read Latin, and could understand Ukrainian.[2] 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.

Professional life

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.[3] 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 [1], and, later, Otto von Habsburg.[4] 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.[5]

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..."[6] It was Hayek's development of Mises' innovative theoretical work on the business cycle which later earned him the Nobel Prize in economics.[7]

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 Mises with other Jewish refugees left Europe and emigrated to New York City[8]. There he became a visiting professor at New York University, from 1945 until his retirement in 1969, though he was not salaried by the university. Instead, he earned his living from funding by businessmen such as Lawrence Fertig. 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.[9] 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 also writers such as former radical Max Eastman, who threw a party for Mises in order to celebrate the publication of his treatise Human Action. In addition, novelist Ayn Rand was among those who attended his New York City seminar. His American students included Israel Kirzner, Hans Sennholz, Ralph Raico, Leonard Liggio, George Reisman and Murray Rothbard.[10] 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.[11] He retired from teaching at the age of 87, then, the oldest active professor in America.[12] Mises died at the age of 92 at St. Vincent's hospital in New York.

Contributions to the field of economics

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Mises wrote and lectured extensively on behalf of classical liberalism and is seen as one of the leaders of the Austrian School of economics.[13] 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:

  1. monetary economics and inflation;
  2. the differences between government controlled economies and free trade.
Mises in his library

Mises argued that money is demanded for its usefulness in purchasing other goods, rather than for its own sake and that any unsound credit expansion causes business cycles. His other notable contribution was his argument that socialism must fail economically because of the economic calculation problem – the impossibility of a socialist government being able to make the economic calculations required to organize a complex economy. Mises projected that without a market economy there would be no functional price system, which he held essential for achieving rational and efficient allocation of capital goods to their most productive uses. Socialism would fail as demand cannot be known without prices, according to Mises. Mises' criticism of socialist paths of economic development is well-known, such as in his 1922 work Socialism: An Economic and Sociological Analysis:

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.[14]

These arguments were elaborated on by subsequent Austrian economists such as Nobel laureate Friedrich Hayek[15] and students such as Hans Sennholz.

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?

Robert Heilbroner opined after the fall of the Soviet Union, 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." [16]

Criticism

Milton Friedman considered Mises intolerant in his method and in 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.[17]

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."[18]

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." [19]

Bibliography

v • d • e
Selected books by Ludwig von Mises (1881-1973)

See also

Further reading

Notes

  • Note regarding personal names: Edler is a title, (<G, meaning 'noble'), in rank similar to that of a baronet, not a first or middle name. The female form is Edle. Similarly, below, Ritter is German for 'knight'; Graf is German for 'count'.
  1. ^ Hulsmann, Jorg Guido (2007). Mises: The Last Knight of Liberalism. Ludwig von Mises Institute. 
  2. ^ Erik Ritter von Kuehnelt-Leddihn "The Cultural Background of Ludwig von Mises", The Ludwig von Mises Institute, page 1
  3. ^ Mises, Ludwig von, The Historical Setting of the Austrian School of Economics, Arlington Houise, 1969, reprinted by the Ludwig von Mises Institute, 1984, p. 10, Rothbard, Murray, The Essential Ludwig von Mises, 2nd printing, Ludwig von Mises Institute, 1983, p. 30.
  4. ^ Mises, Margit von, My Years with Ludwig von Mises, Arlington House, 1976, 2nd enlarged edit., Center for Future Education, 1984.
  5. ^ Rothbard, Murray, Ludwig von Mises: Scholar, Creator, Hero, the Ludwig von Mises Institute, 1988, p. 67.
  6. ^ Mises, Margit von, My Years with Ludwig von Mises, Arlington House, 1976, 2nd enlarged edit., Center for Future Education, 1984, pp. 219-220.
  7. ^ Rothbard, Murray, Ludwig von Mises: Scholar, Creator, Hero, the Ludwig von Mises Institute, 1988, p. 68.
  8. ^ Hulsmann, Jorg Guido (2007). Mises: The Last Knight of Liberalism. Ludwig von Mises Institute. p. xi. 
  9. ^ Coudenhove-Kalergi, Richard Nikolaus, Graf von (1953). An idea conquers the world. London: Hutchinson. p. 247. 
  10. ^ On Mises' influence, see Rothbard, Murray, The Essential Ludwig von Mises, 2nd printing, the Ludwig von Mises Institute, 1983; on Eastman's conversion "from Marx to Mises," see Diggins, John P., Up From Communism Harper & Row, 1975, pp. 201-233; on Mises's students and seminar attendees, see Mises, Margit von, My Years with Ludwig von Mises, Arlington House, 1976, 2nd enlarged edit., Center for Future Education, 1984.
  11. ^ Reisman, George, Capitalism: a Treatise on Economics, "Introduction," Jameson Books, 1996; and Mises, Margit von, My Years with Ludwig von Mises, 2nd enlarged edit., Center for Future Education, 1984, pp. 136-137.
  12. ^ Rothbard, Murray, Ludwig von Mises: Scholar, Creator, Hero, the Ludwig von Mises Institute, 1988, p.61.
  13. ^ For example, Murray Rothbard, a leading Austrian school economist, has written that, by the 1920s, "Mises was clearly the outstanding bearer of the great Austrian tradition." Ludwig von Mises: Scholar, Creator, Hero, the Ludwig von Mises Institute, 1988, p. 25.
  14. ^ Socialism: An Economic and Sociological Analysis by Ludwig von Mises.
  15. ^ F. A. Hayek, (1935), "The Nature and History of the Problem" and "The Present State of the Debate," in F. A. Hayek, ed. Collectivist Economic Planning, pp. 1-40, 201-43.
  16. ^ "The Man Who Told the Truth", Reason, 1990. Retrieved on April 4 2009.
  17. ^ "Best of Both Worlds (Interview with Milton Friedman)". Reason. June 1995. http://www.reason.com/news/show/29691.html. 
  18. ^ "Liberalism in Caricature", The Economist
  19. ^ UCLA Oral History "interview with Friedrich Hayek", American Libraries/Internet Archive, 1978. Retrieved on April 4 2009 (source with quotes).

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