Wednesday, July 9, 2008

Mises: The Last Knight of Liberalism

I recently finished reading Jorg Guido Hulsmann's new book titled Mises: The Last Knight of Liberalism. It's a detailed biography (1143 pages) of the economist Ludwig von Mises. Hulsmann does a superb job humanizing Mises by overlapping insightful explanations of his overall contributions to economic science, while also focusing on aspects of Mises' eventful personal life. This book is highly recommended for anyone interested in the development of the Austrian School of Economics post-Carl Menger Bohm-Bawerk, as well as serving as an introduction to the historical context of this development.

Few people not already versed in the history of economic thought are familiar with von Mises and his weighty contributions to general human knowledge. It is not altogether unreasonable to suggest that he was the top social philosopher of the 20th century, which makes it ever more unfortunate that more people have not familiarized themselves with his writings. Despite the publication of his first major theoretical treatise, The Theory of Money and Credit in 1912, it took nearly a decade before Mises was recognized as a top monetary theorist. By 1920, with the early release of an excerpted essay from his forthcoming book on Socialism, Mises set off what would later be called the Socialist Calculation Debate. In the essay Mises argued that Socialism was not merely an inferior method of economic organization than capitalism, but that socialism as an economic system was altogether impossible because under an order where all property had a sole owner--the government--there would be no basis for market exchange, the very thing that generates the relative exchange ratios so useful for determining the effective and efficient allocation of resources within an economy. Later in the decade Mises would go on to demonstrate through his theory of intervention that government restrictions (ie. price controls, minimum wage laws, etc) are both counterproductive and bad economic policies, not from his own value judgements but because the restrictive policies were unsuitable to achieve the very ends sought by the government in their justification to implement them. Mises would go on to do significant work on the epistemology of economics, while also developing a systematic, integrated whole of economic theory derived from his initial axiom that "humans act". His magnum opus Human Action: A Treatise on Economics was first published in 1949.

For some the above may be nothing new. I already had a familiarity with many of Mises' works prior to reading Hulsmann's book, but what I did not have much familiarity with was Mises' personal background and his life story, which I find interesting because, after all, no matter how significant his intellectual output, he was still just a man like any other.

Mises was born in an eastern province of the then still intact Austro-Hungarian Empire to a recently ennobled Jewish family. Mises moved, along with his family, to Vienna and attended one of the prestigious gymnasiums (equivalent to middle and high school) and then later the University in Vienna. It was at the University in Vienna that Mises became acquainted with economics after reading Menger's famous 1871 work, the same book mentioned in previous posts. At this time Mises was also fulfilling his military training requirements where he was later commisioned as an officer in an artillery unit of the Austro-Hungarian army. With the outbreak of WWI, Mises fought on the northeastern front against the Russians. After two years of intense fighting, Mises was transfered to an economic bureau in Vienna where he wrote a brief essay outlining what he believed to be the proper method for running the war economy, in which he spelled out that it would be best to maintain as many components of a capitalistic method of production as possible because it was this form that is most flexible and capable of adapting to the dynamic requirements of munitions output and weapons supply. I stop there, though the story is told in splendidly compelling detail in Hulsmann's book.

Mises did many other heroic and impressive things throughout the rest of his life. He stood up to, and spoke out against, some of the most evil and repressive regimes, as well as combating the intellectual ideas that drove them. He barely escaped Europe alive. In all of human history, I doubt there is a single person more impressive and admirable than Ludwig von Mises.

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