Ed. note: MasterResource is closely associated with the worldview and example of Julian Simon (1932–1998). But a second influence would certainly be that of economist Ludwig von Mises (1881–1973), born on this day 140 years ago.
Below, Robert Bidinotto’s “Von Mises: A Final Salute.” Unbound! Boston: Individuals for a Rational Society 2, no. 1 (September-October 1973): 1–2 is reprinted with permission of the author.
A surprisingly fair obituary in the New York Times (October 11, 1973) follows that of Bidinotto below. I then conclude with a final observation.
“The scope and content of von Mises’ work boggle the imagination. He was easily the greatest economist of this century, and the list of his original achievements in that science rivals that of anyone since Adam Smith.”
Our age may well be labeled by future historians as “the Age of Mediocrity.” Nothing is so characteristic of this century as the ever-shrinking stature of its men. Yet if these times are to be vindicated, it will be solely by the grace of a few lonely giants who stood tall and strode far, guided down unexplored paths by unflinching courage and unwavering vision.
On October 10, 1973, one of those giants fell. His life had passed by men, virtually unnoticed; his words remain with men, virtually unheeded. Yet if mankind is to have a future, it will owe him an incalculable debt, for his work will have helped to create a better world.
Dr. Ludwig von Mises is dead at the age of 92. And it is difficult to conceive of any person in our time who has given the world so much, yet been rewarded so little in return.
The scope and content of von Mises’ work boggle the imagination. He was easily the greatest economist of this century, and the list of his original achievements in that science rivals that of anyone since Adam Smith.
His Theory of Money and Credit, published in 1912, was the first integration of monetary theory into the rest of economic science. The peripheral achievements of that work included a devastating analysis and critique of governmental monetary inflation, and the first satisfactory explanation of the “business cycle.”
In Socialism, first released in 1922, von Mises presented a grand-scale assault on all varieties of collectivism, and offered a never-refuted logical proof that economic calculation is impossible under socialism.
With Human Action, his greatest work, he offered a complete and massive systematization of all aspects of what has come to be called “the Austrian School of Economics.”
First editions of his works alone number 19 volumes, and also include: Omnipotent Government, which traces the history of nationalism and Nazism in Germany; Bureaucracy, a study of the differences between bureaucratic and market planning; Epistemological Problems of Economics; Theory and History; and The Anti-Capitalist Mentality.
Reading von Mises is an exhilarating experience, After a while, one almost begins to take for granted his inexhaustible intellect. His style is confidently assertive–an earned confidence, for his arguments are usually invulnerable.
He moves systemically, relentlessly from basic premises to distant and unexpected conclusion, leaving behind staggering chains of reasoning along the way. His mere asides are filled with some of the most original and inclusive observations ever penned in psychology, economics, philosophy, and history.
Skimming through the thousands of pages he wrote, one finds that the range of knowledge was absolutely breathtaking. Even when von Mises was wrong, he was brilliantly wrong–but he was rarely wrong.
Yet this same man was scorned and ignored by the economic establishment when he arrived in Keynesian-New Deal America in 1940. Despite his impressive European teaching credentials and the authorship of six masterpieces of theoretical economics, he could not find an academic post until 1945–as a Visiting Professor at New York University.
Vilified throughout his career as a “reactionary” by spend-yourself-rich economic mystics, von Mises bore it all (I am informed by good sources) without a single complaint, never wavering, never giving up his one-man crusade for human liberty.
My only encounter with Dr. von Mises came a scant three years ago, and I shall never forget the privilege of being able to question him about the current economic situation. Even then, with old age taxing him mentally and physically, he still retained both his passion for his uncompromising convictions, and an awesome aura of personal dignity.
I shall never forget that quiet little giant who, 89 years of age and in failing health, had traveled to warn a gathering of young people about the dangers of monetary inflation.
To the end, for as long as he was able, Professor von Mises defended his standards of reason, individualism, and capitalism against the nihilistic axis of mysticism, collectivism, and tyranny.
Yes, a giant fell of October 10th. And if our civilization and our futures are not to crumble into chaos, Ludwig von Mises’ work will be among the few mighty pillars supporting all of it.
Let us dedicate our futures, then–the futures his work may save–to his cause; and to his memory let us say:
“We who are not about to die, salute you.”
Leonard Silk, “Ludwig von Mises, Economist, Author and Teacher, Dies at 92.” New York Times, October 11, 1973.
Ludwig von Mises, one of the Foremost economists of this century, died yesterday in St. Vincent’s Hospital at the age of 92. He lived at 777 West End Avenue.
Professor von Mises was best known in this country as a champion of libertarian economics — the doctrine that regards with intense suspicion any intervention in the economy by government. He was recognized as a brilliant contributor to economic thought not only by his disciples but also by many who disagreed radically with his political and social philosophy, such as the outstanding socialist economist, Oskar Lange.
He acquired his first recognition for his “Theory of Money and Credit,” published in German in 1912. In that work he was the first to develop the theory of subjective value to explain the demand for cash balances as a basis for expansions and contractions in economic activity.
Stressing the causal role of individual human decisions, Professor von Mises observed that changes in the amount of cash individuals want to hold would cause expansions and contractions in the volume of money and credit.
Developed, Cyclical View
He went on to develop a complete theory of the business cycle resulting from the expansion and contraction of the money supply. Booms, he said, resulted from the expansion of fiduciary bank credit, which inflated the money supply and artificially lowered interest rates. This in turn led to overinvestment, which set the economy up for a slump. Depression would follow as the expansion of the money supply was brought to a halt—either because the banking system encountered a limit of reserves or because the monetary authorities clamped down on further credit expansion.
In 1922, Professor von Mises set forth his critique of collectivist economics in “Socialism: An Economic and Sociological Analysis.” The work was to have a major impact on socialist thinking.
He presented the challenging argument that rational economic organization was logically impossible in the absence of free markets. Hence, he contended, socialism was bound to wallow in inefficiency, because it lacked correct market prices on which to base decisions about what to produce and how to produce it.
Although they regarded his views as too extreme, such socialist economists as Oskar Lange in Poland and Abba P. Lerner in England took Professor von Mises’s strictures seriously, and set out to construct a theory of socialism based on simulated markets—“playing the game of competition.” Professor Lange, who spent some years at the University of Chicago and returned to Communist Poland after World War II, once declared that “in front of every Socialist ministry of planning there should be a statue of Ludwig von Mises.”
It was not until the nineteen sixties that the Soviet Union and other Communist countries began to take seriously the need for developing the market as a tool for rational planning and allocation of goods and resources.
Professor von Mises, however, regarded such socialist efforts at imitating the market—“planning not to plan”—as doomed to failure. “Unfortunately,” he wrote, “it is not possible to divorce the market … from the working of a society which is based on private property in the means of production.” Without the striving of entrepreneurs for profit, of landlords for rent, of capitalists for interest and of workers for wages, the system could not succeed, he contended.
A Brilliant Teacher
The economist was regarded as a brilliant teacher. His students, at the University of Vienna and in his informal Wiener Kreis (Vienna circle), numbered many who were to go on to fame of their own as economists and philosophers. His students included Fritz Machlup, Gottfried von Haberler, Friedrich Hayek, Gerhard Tintner, Oskar Mogenstern, Ilse Mintz, Rudolf Carnap and Karl Popper.
Professor von Mises was credited with helping to revive respect for free‐market economics in Europe (he was considered by some the intellectual godfather of the German postwar “economic miracle”). His views are held in high regard at the American capital of libertarian economics, the University of Chicago, whose most famous resident scholar is Prof. Milton Friedman.
The economist was born in Lemberg, Austria, on Sept. 29, 1881. He left his professorship at the University of Vienna as the Nazi tide approached Austria, and became Professor of International Economic Relations at the Graduate Institute of International Studies in Geneva. He came to the United States in 1940 and became a citizen in 1946. He was a founder of the Mont Pelerin Society, a group of like‐minded economists; a member of the faculty of New York University from 1945 to 1969, and the author of 19 books.
Surviving is his widow, Margit.
The service will be held at noon Tuesday in the Universal Funeral Chapel, Lexington Avenue and 52d Street.
I was a senior at Kinkaid High School in Houston, Texas when a classmate told me that Ludwig von Mises was speaking at the University of Houston. I believe it was in the Spring of 1972.
I was very interested in Ayn Rand and libertarianism at the time but did not know of von Mises–and little about the Austrian School economics. I do not remember the reason, but I did not attend.
It was two years later at Rollins College when I read the above tribute by Robert Bidinotto and thought, WOW. I started reading about Austrian School economics and soon changed my major from business to economics.
I would read Mises and Murray Rothbard by night for my day classes in economics. Armed, I would raise my hand to challenge what I read in my Paul Samuelson Economics textbook (9th edition: 1973).
I found out that the Austrian criticisms held up very well against the Keynesian orthodoxy, the consensus, with my professors.
Note that this was during the stagflation that refuted a major tenet of Keynesian economics. Samuelson himself would confess in 1975:
It is a terrible blemish on the mixed economy and a sad reflection on my generation of economists that we’re not the Merlins that can solve the problem. Inflation is deep in the nature of the welfare state. Even when there is slack in the system, unemployment doesn’t exert downward pressure on prices the way it did under ‘cruel’ capitalism.
I would graduate from Rollins College in 1977 (see here) with an award as the top student in economics. I came in second for Rollins’s student-athlete award my senior year. And my passion, following Ayn Rand, continued with Robert Bidinotto’s “von Mises: A Final Salute.”
[Rothbard’s “The Essential von Mises” would also profoundly influence me–I recommend it as a follow-up to this post for those curious.]