[A-List] Academic life of Mises
Annewilliamson at msn.com
Sun Dec 15 18:22:51 MST 2002
The Tenacity of Ludwig von Mises
by Gary North
Ludwig von Mises (1881-1973) is not widely regarded as a major
figure of twentieth-century economic theory. The main reason for
this assessment is the fact that those within the economics
profession who make such career-enhancing imputations regarding
other economists have adopted economic theories that he had
before most of them were born, or in some cases, before their
fathers were born. His contemporaries adopted a time-honored
technique of dealing with him: the memory hole. "Mises? Who's
Mises?" Their successors remained in the dark.
He fully understood the game. When his wife once told him that
ideas would be more widely received some day, he replied that an
academic man's influence can be estimated by references to him
footnotes of his contemporaries. His name and work were missing.
The vast majority of professionals in any field, including
disciplines, never make a major intellectual contribution. Few
them make even a minor contribution. Few of them are remembered
after they retire, if they were known before they retired. They
practitioners of what Thomas Kuhn has called "normal science,"
most of them are normal practitioners. Mises was in this sense
Three Major Contributions
Mises made three major contributions to economic theory. The
was his monetary theory of the trade cycle, which he presented
1912 in his book, The Theory of Money and Credit. In that book,
kind of aside, he presented his regression theory of the value
money: whatever constitutes money in a market must originally
derived its value from a non-monetary use. Few economists ever
a breakthrough even this momentous.
Mises's theory of the trade cycle was the foundation of F. A.
Hayek's work on monetary theory in the 1930's, for which he won
Nobel Prize in 1974, the year after Mises's death. Yet, even
the typical Ph.D. graduate in economics would reply, "Mises?
Mises?" The less sharp ones would pronounce it "MYEseez." The
brighter ones might reply, "Mises. Oh, yes. He was the economist
refuted by Oskar Lange, or so everyone thought before 1991."
This brings me to his second major contribution: his theory of
impossibility of rational economic calculation in a socialist
economy. He first presented this theory in a 1920 essay,
Calculation in a Socialist Commonwealth." He fleshed out his
and added much more, in his 1922 book, Socialism. Without free
pricing, private ownership, and capital markets, he argued,
socialist central planners cannot allocate scarce resources
rationally. They cannot know what anything costs. They cannot
supply with demand.
This insight was generally ignored by economists for seventy
In fact, an attempted refutation in 1936 by a Communist
Oskar Lange, received far wider attention in textbooks on the
history of economic thought. A decade later, Lange left the
States to become the chief economist for Communist Poland, where
ignored his own theory of how a socialist economic planning
can overcome Mises's assertions. Of course, the textbooks never
refer to Lange's Communist affiliation and his subsequent
practice of his supposed practical solution to Mises's
trial-and-error pricing by the planning board. We can hardly
him. In Communist countries, errors too often led to trials.
Mises's third contribution was his a priori epistemology. He
his entire economic theory on a small set of axioms, postulates,
corollaries. In a century in which a posteriori positivism was
dominant in most academic fields, especially the economics
profession, his insights on epistemology received little
and no praise from mainstream economists. The only Mises to
any recognition for work in epistemology was Richard, his
mathematician-positivist brother. (This fact did not sit well
In all three areas, Mises never gave an inch, nor did he give
quarter. He was intransigent. He was also tenacious. He would
change his mind, and he would not go away quietly. There are not
many men in any generation who possess both qualities. Those who
rarely possess great intelligence, nor do they live to age 92.
A Long Career
Mises' finished his Ph.D. dissertation in 1906, at the age of
The Theory of Money and Credit appeared six years later. Mises
off to a flying start. Unfortunately, as an opinionated Jew in
Austria, he was allowed to fly only in circles. He was employed
the Austrian Chamber of Commerce. He never attained a salaried
position in any state-funded Austrian institution of higher
He left Austria in the mid-1930's because he feared that the
(members of the National Socialist Democratic Workers Party,
forget, as textbook writers would prefer we forget) would take
in Austria. He warned several Jewish economists to leave, and
of them did, probably saving their lives. Fritz Machlup was one
them-a far more famous economist than Mises after 1940. Mises
to the Graduate Institute of Geneva, where his former student,
Wilhelm Roepke, had secured a position for him. This was the
university-funded academic position that he ever held.
In 1941, he and his wife fled Switzerland by risking a bus ride
across Nazi-occupied France. He arrived in the United States
any academic position or prospects. He was then hired by New
University as a visiting professor. NYU condescended to allow
to put up his salary. Lawrence Fertig did so for decades.
The sharper members of the NYU economics faculty had no use for
Mises or his theories; the rest of them despised his ideas. His
famous weekly graduate seminar eventually attained a following,
the attendees were increasingly people from off campus. Murray
Rothbard was the premier example. Bettina Bien and Percy Greaves
(who decades later got married) attended weekly for almost two
Mises was at NYU. He was not of NYU. He got even with his
in the department by remaining on the job from 1941 to 1966. He
Think about his career. He fled Switzerland at the age of 60. He
no job prospects when he landed in the United States. He had
employed in academia for only a few years as an expatriate. The
Keynesian era had just begun, and it was to dominate academic
economics for the next five decades. He died knowing that the
visible academic challengers to the Keynesians were the
positivists of the Chicago School.
He never gave up. Yale University press published his little
masterpiece, Bureacracy, in 1944. Human Action was published by
in 1949. Slowly, Mises gained a new audience through the efforts
Henry Hazlitt, a widely read economics columnist, and from the
Foundation for Economic Education and its publication, The
Hayek's unexpected prominence in 1974 and subsequently helped
a posthumous awareness of Mises. The Mises Institute is an
institutional witness to his significance.
Mises never stopped saying in print that the dominant economic
of his era were all tainted to one degree or other with the
irrationalism of socialism. He never stopped saying that all
governments are at bottom inflationary because politicians seek
extract wealth from those under their jurisdiction, and at some
point, the victims resist. Governments turn to fiat money in
to extract wealth by stealth.
One by one, the socialist paradises have collapsed. One by one,
central banks have inflated. By 1945, the twin processes of
socialist economic inefficiency and central bank price inflation
been manifested during two world wars. In between the wars, the
boom-bust cycle that Mises's monetary theory of the trade cycle
predicted had decimated the world's economy. But the dominant
thinkers of Mises's era did not acknowledge any of this. They
for more government intervention and more central bank
of the economy. The collapse of the Soviet economy in 1989,
years after his death, came as a surprise to the economics
writers, Paul Samuelson included. Even today, the Federal
Reserve-created banking cartel remains a sacred cow in every
college-level economics textbook.
There is much that remains to be done.
Mises never gave up. He never shut up. He never pulled a punch.
he never hit below the belt, unlike his academic detractors,
whom spent their careers ignoring his writings, preferring at
to mention him in the context of Lange, insisting that Lange had
refuted him. Most of them had not read Lange, either.
Today's generation of academic economists can probably now get
with saying, "Lange? Who's Lange?" I suppose that this is an
improvement. For academic economists, little improvements count
a great deal. Most of them never achieve even one.
Mises achieved more than one. He should be a model to us all, in
every field. Not many of us will ever contribute three major
revolutionary insights, or even one, but we can keep the faith.
can refuse either to sit down or shut up.
August 20, 2001
More information about the A-List