By Murray N. Rothbard
Ludwig von Mises Institute
2006


[From The Meaning of Ludwig von Mises: Contributions in Economics
Sociology, Epistemology, and Political Philosophy, edited by Jeffrey
M. Herbener (Mises Institute/Kluwer: 1993), pp. 193-208. Go to The
Complete Mises Bibliography.]

In contemplating the life and career of Ludwig von Mises, one is
struck by the nobility and grandeur, the high courage, of his lonely
and lifelong struggle on behalf of truth and laissez-faire. [1] It
is easy to advocate free markets now that Mises's prophetic analysis
of nearly seven decades ago has been demonstrated to be correct to
virtually everyone. For socialism is collapsing all over the world
and even the socialists themselves have acknowledged the abject
failure of their cherished economic and social system. It is easy
for anyone to follow the tide of events, and to join in the
mainstream of opinion. But what led Mises to fly in the teeth of
both intellectual and popular opinion, and to pursue his lonely and
seemingly doomed struggle until the very end?

In the ultimate sense, of course, no outside person, no historian,
no psychologist, can fully explain the mystery of each individual's
free choice of values and actions. There is no way that we can fully
comprehend why one man trims his sails to the prevailing winds, why
he "goes along to get along" in the infamous phrase, while another
will pursue and champion the truth regardless of cost. We can only
regard the nobility of the life and actions of Ludwig von Mises as
an exemplar, as an inspiration and a guide for us all.

We can, however, discuss certain intellectual problems that arise
when we consider that Mises was a passionate champion of
laissez-faire and militant critic of the rising tide of statism and
collectivism. First, we can ponder what might be called "the Rappard
Problem," raised in a Festschrift for Mises by his close friend and
colleague, William E. Rappard, head of the Graduate Institute of
International Studies of the University of Geneva. [2] Mises was a
utilitarian, who did not believe in the existence of a rational or
objective ethic. Indeed, the bulk of economists in the last two
centuries have been utilitarians. Most utilitarians, however, take a
cautious, ad hoc, cost-benefit view of public policy, and eschew the
broad, sweeping policy commitments that are more typical of those
who do believe in an absolute or objective ethic for public affairs.
I have elsewhere been critical of the adequacy of Mises's solution
to this problem: Mises as utilitarian economist accepts common
social ends-i.e. abundance and prosperity-but points out that
statist measures will cripple that prosperity while freedom and
property rights will advance it. [3] However, I am concerned here
not to belabor that critique but to ponder how Mises as a person
could continue to fight so passionately in the face of a general
social rejection of his arguments and of his entire world outlook.
Mises's well-known "intransigence" shines in particularly stark
contrast to all too many other utilitarian economists who are ready
to bend the knee and to perform as efficiency experts in the service
of whatever goals "society" (translated as the State) demands of them.

A second corollary puzzle has been raised by some modern Austrian
economists. Why didn't Mises stick to his forte, to the pure,
ethereal realms of economic theory: to praxeology, marginal utility,
business cycle theory and the rest? Why did he "lower himself"-and
Austrian economics-by descending from the realm of high scholarship
to the muddy, far less respectable, more provocative and
controversial realm of politics? Why didn't he stick to the ivory
tower of value-free theory and scholarship?

In the first place, the latter question, although common, totally
distorts the role of the economist in public policy. The founders of
economics were (a) all deep in advocacy of political programs, and
(b) often participated directly in government policy. Turgot was an
ardent advocate of laissez-faire as well as a great pioneer
theorist; and his two-year term as economic minister and reformer
proved to be the last chance for the ancien regime to reform itself
before the French Revolution. Adam Smith's work was largely prompted
by a critique of mercantilism and adherence to a moderate
free-market policy; and he ended his years happily as one of the
leading customs commissioners in Scotland. J. B. Say, as a young
man, was one of the leading members of the ruling French Tribunat
during the Directory period, and he virtually founded the dominant
nineteenth-century school of French laissez-faire economics. James
Mill, in addition to his leading role in classical British theory,
was a high official of the East India Company in governing India,
and he was the undisputed leader (if from outside Parliament) of a
bloc of twenty to thirty Philosophical Radicals in Parliament during
the 1830s. David Ricardo, tutored by Mill, not only followed his
mentor on deep interest in public policy; he was also an ardent
monetary reformer as well as monetary theorist. After he wrote his
Principles, he was persuaded by Mill to enter Parliament to promote
the Radical cause. Mill's son, John Stuart, succeeded his father as
leader of the Parliamentary Radicals, as well as to his office in
the ruling East India Company. In France, the Anglo-French treaty of
1860, the high-water mark of free-trade in Europe, was negotiated by
the laissez-faire economist Michel Chevalier.

But how about after the mid-nineteenth century? Couldn't we say that
then, when economics became more specialized and academic, and
theory became more arcane, that theorists retired from policy and
repaired to their ivory tower? Not really. First, among the statist
dissenters from orthodoxy, there was an overriding preoccupation
with policy. The German Historical School were conscious
"monarchical socialists," and their leader, Gustav Schmoller,
referred, quite correctly, to himself and his colleagues at the
University of Berlin as the "intellectual bodyguard of the House of
Hohenzollern [of Prussia]." Marx and Marxism have been, of course,
political economy in every sense. The American Institutionalist
professoriat—men such as Richard T. Ely and John R. Commons—were
constantly in and out of government posts, beginning with the
setting up of welfare and regulatory state interventions in
Wisconsin at the turn of the twentieth century.

Among more mainstream theorists, the Austrian professors were
largely devoted to the free market and hard money, and often assumed
governmental posts. Bohm-Bawerk was several times Minister of
Finance in the Austro-Hungarian Empire, and Menger was the tutor and
mentor of Crown Prince Rudolf, whom Menger had primed to pursue
free-market policies if he had become Emperor. Even an aggressively
pure theorist such as Schumpeter served a stint (disastrously) as
Finance Minister of post-World War I Austria.

Even among mathematical neoclassical economists, whose pure
formalism might incline them away from substantive political views,
Vilfredo Pareto was a militant laissez-faire liberal and battler for
free trade, heavily influenced by the French anarcho-capitalist
Gustave de Molinari. Despairing of freedom and the free market after
the turn of the twentieth century, Pareto retreated into cynical
critiques of political action, but he was never not interested in
political economy. [4] Irving Fisher of Yale, the grandfather of the
Chicago monetarist school, was always tinkering—always advocating
schemes of government intervention and planning—from commodity
baskets and other proposals for stabilizing the "price level" and
thereby allegedly providing a fixed yardstick to "measure" values,
to plans for inflation to prohibition and to purging the world of
"such iniquities of civilization as alcohol, tea, coffee, refined
sugar and bleached white flour..." [5]

Later in the century, of course, Keynes and his Keynesian followers
have been nothing if not political; Keynes served in key government
posts, and his followers have been happy to fill the planning
positions that have been opened up by propagation of theoretical
Keynesian doctrine.

So where is this alleged tradition of requiring economic theorists
to take up the monkish cowl and abstain from all thoughts or
implications of their work, let alone take direct posts in
government? Moreover, the call for political abstinence is almost
always directed to economists outside the mainstream politics of the
day. If economists advocate generally accepted policies, this is
somehow subsumed under the rubric of "value-neutrality"; only
adhering to policies opposed to the conventions of the day is
decried as an intrusion of unclean political considerations into the
virtuous realm of economic science.

Ludwig von Mises had the bad luck to be one of the foremost
champions of laissez-faire in the history of economic thought, but
during a century of aggravated statism. All his life he swam
vigorously against the dominant ideological and political statist
tides of his age. The twentieth century has been the century of
socialism, collectivism and government-propelled inflation, and
Mises battled valiantly against them all, in the realm of academic
theory and in the world of practical politics.

Those of us who met Mises in his American years, after World War II,
were familiar with his justly legendary privatseminar in Vienna that
had provided the setting and stimulus for the most important work
going on in Europe during the 1920s in economics and in the social
sciences. But we had little idea how active and influential he had
been in those years in government and in public policy.

Part of the reason for Mises's focus on government work was
practical; for it is to the abiding disgrace of academia, both in
Austria and the United States, that this brilliant, creative, and
remarkably productive scholar and inspiring teacher was never able
to obtain a paid professorial post. [6] Mises received the Ph.D. in
1906, and his full-time position, from 1909 until he left Vienna in
1934, was as economist for the Vienna Chamber of Commerce. [7]

Unlike similarly named groups in the United States today, the
Chambers were a form of economic parliament created by the Austrian
government, with delegates elected by businessmen and financed by
taxation. The task of the Chambers was to give economic advice to
the government. The various local and regional Chambers in Austria
elected delegates to a General Assembly. By the turn of the
twentieth century, economists working in the secretary's office of
the Vienna Chamber of Commerce—the most important of the various
Chambers—had become important economic advisers to the government.
By the end of World War I, Ludwig von Mises had become the principal
economic adviser to the Austrian government.

After the publication in 1912 of his path-breaking work on monetary
theory, The Theory of Money and Credit, Mises was appointed to a
teaching position at the University of Vienna, where he lectured and
taught a seminar in economic theory for two decades. But his
position was that of a privatdozent, i.e., unpaid, and he was passed
over four times for a paid university chair. His highly influential
and prestigious privatseminar was a purely private creation of his
own, and he held it one evening a week at his offices in the Chamber
of Commerce. In his academic post, Mises and his students were
systematically belittled and discriminated against by his chaired
colleagues. [8]

In his memoirs, Mises wrote that "The Chamber offered me the only
field in which I could work in Austria." He states that he did not
aspire to a career in government service, but that a "university
professorship was closed to me inasmuch as the universities were
searching for interventionists and socialists." [9] Yet despite the
unpopularity and vast resistance to his views, and his independent
status unaided by political parties, Ludwig von Mises, by dint of
his brilliance and energy, commanded the attention and respect, if
not the agreement, of the Austrian state. In addition to Mises's
numerous tasks at the Chamber dealing with Austro-Hungarian finance
and trade relations before the War, and debt problems afterwards,
Mises's major thrust as the chief adviser of the Austrian government
was to wage a titanic battle against statism and inflation. Mises
writes that:

In the Austria of the postwar world I was the economic conscience.
Only a few helped me and all political parties distrusted me. And
yet, all secretaries and party leaders sought my advice and
opinion. I never tried to press my opinion on them. I never sought
out a statesman or politician. Unless I was formally invited I
never appeared in the lobbies of Parliament and government
departments. Secretaries and party leaders visited my Chamber
office more often than I visited theirs. [10]

Mises's most important activity as economic adviser to the Austrian
government was a gallant and determined effort to stop the rampant
inflation, and hence to reverse the hyperinflationary thrust of
post-war Austrian monetary policy. Here Mises had one staunch ally:
the noted business economist and jurist Wilhelm Rosenberg, a former
student of Carl Menger. Valiantly the two fought against the
Austrian policy of huge deficits and the creation of paper money. If
Mises and Rosenberg had not fought with such determination, the
Austrian krone would have gone the way of the hyperinflation of the
German mark in 1923. By 1922, after three years of struggle, Mises
and Rosenberg succeeded in getting the Austrian currency stabilized
at the rate of 14,400 paper krone to one pre-war gold krone, the
krone of the gold standard. If not for their battle, the krone "in
early 1922 would have fallen to one-millionth or one-billionth of
its gold parity in 1892," as would happen in Germany a year later.

[11] The problem was that the stabilization was a half-way house,
and despite Mises's best efforts, the Austrian government continued
a policy of inflation, bank credit expansion, deficits and
welfare-state measures that steadily and gravely consummed the
capital of Austria, and also pushed the commercial bank into an
ever-more inflated and shakier financial position. As the Austrian
banks became more inflated during the late 1920s, Mises was
prevented, because of his official position, from speaking out
publicly and thereby endangering their already highly wobbly status.

Mises was caught in an impossible Catch-22 trap:

In public these things could not be freely discussed, as the
credit reputation of the Austrian economy had to be protected with
care. It would have been very easy, indeed, to present the facts
in such a way that everyone would have seen the necessity for
halting the policy of capital consumption, but such action would
have undermined the banks' foreign credits making instant
bankruptcy unavoidable. Therefore, I was forced to use
extraordinary restraint in my efforts to change economic policies
lest I frighten the public and jeopardize the credit of banks and industry.

This restraint guided my conduct during the...period from the
crown [krone] stabilization in 1922 to the collapse of the
Kreditanstalt [bank] in the spring of 1931. The worse the
situation grew through the continuation of the disastrous policy,
the greater became the danger of a credit crisis and the more
important it became not to disquiet the foreign markets. [12]

It would of course have been better if the banking system and the
krone had gone hang long before, and Mises, in retrospect and in
despair, acknowledged that fact.

[Because of his and Rosenberg's efforts] the Austrian currency did
not collapse like the German currency in 1923. The crackup boom
did not occur. Nevertheless, the country for many years had to
suffer from the destructive consequences of continuous
inflation....The consumption of capital could not be halted. We
met too much resistance; our victory [in 1922] came too late. It
delayed the ultimate collapse by several years, but could no
longer save Austria.

And again;

I was the economist of the country. This does not mean that my
recommendations were followed or that my warnings were heeded.
Supported by only a few friends, I waged a hopeless fight. All I
achieved was to delay the catastrophe. [13]

In a moving passage, Mises recalls that he was often reproached by
his friends for being too unyielding, "because I made my point too
bluntly and intransigently, and I was told that I could have
achieved more if I had shown more willingness to compromise." But
Mises responds that "I could be effective only if I presented the
situation truthfully as I saw it," and concludes magnificently that,
to the contrary, "as I look back today at my activity with the
Chamber I regret only my willingness to compromise, not my
intransigence." [14]

In contrast to so many of his acquaintances and colleagues, Mises
was the reverse of a person out to seize the main chance. Indeed, he
notes that, even though the universities were closed to him, his
reputation as a monetary economist after the publication of The
Theory of Money and Credit led to several lucrative offers of
employment by large banks in Vienna. "But until 1921 I always
declined for the reason that they refused to give assurance that my
advice would be followed; after 1921 I declined because I considered
all banks insolvent and irretrievably lost. Events bore me out." [15]

Why did Mises do it? Why did he continue to battle for the truths of
laissez-faire against all odds, against the tides of history,
against the Zeitgeist itself, in what seemed a hopeless cause? As
I've written above, in the last analysis we cannot fully explain or
rationalize the choices of an individual; we can only admire or
revile them. But more can be said about Mises's passionate devotion
to laissez-faire and his assaults upon its host of enemies. For
Mises was not really a utilitarian in the standard cost-benefit,
calculating sense. He was much more. He was not even a "rule
utilitarian" who believed that a certain set of rules was more
conducive for human happiness than another set. For Mises was
committed to the view that the struggle for laissez-faire was
literally a life-and-death struggle for mankind, for human
civilization, for the existence of the human race itself.

And here lies the importance of Professor Salerno's paper. [16]

Salerno points out two fundamental building-blocks of Mises's view
of human society, which he saw consisted of market exchange based on
the division of labor. First, that the survival, growth and
flourishing of the human race depends on the progressive extension
and expansion of the free market and the increasingly productive
division of labor, what Mises called the developing world "oecumene"
or "social organism." A crippling or contraction of that oecumene, a
suppressing or thwarting of that free market, spells impoverishment,
death, and destruction of the human race. Second, in stark contrast
to Hayek's increasing emphasis on this social organism as a
"spontaneous order" that can only be preserved by blindly accepting
existing "evolved" rules, Mises realized that this "social
evolution" of the market and of the division of labor rests on the
conscious social cooperation brought about by human reason and human
will. In short, Hayek applies the metaphor of biological evolution
of allegedly "higher," or at least fitter, species. Mises, on the
other hand, realizes that human action is radically different from
the motions and interactions of stones, atoms, or genes. Human
action is individual and rational, in the sense of conscious and
purposive, designed to improve a person's lot. As Salerno quotes
from Mises's Human Action : "Human society is an intellectual and
spiritual phenomenon. It is the outcome of a purposeful utilization
of a universal law determining cosmic becoming, viz., the higher
productivity of the division of labor."

F.A. Hayek's emphasis on spontaneous order, on the unintended rather
than intended consequences of human action, on irrationalism rather
than reason, is grounded on the implicit premise that human beings
are not consciously acting men but rather are tropistic organisms,
reacting unconsciously, in accordance with evolved rules. Hence, for
Hayek, at least for the "Hayek II" of the 1940s and afterwards,
influenced by the neo-positivist empiricism of Karl Popper, the
sharp dualistic Misesian distinction between human action and the
motion of stones, atoms, etc. falls away, and human action and the
physical sciences are treated with the same epistemology. [17]

But if we reject Hayek's bizarre underlying concept of unconscious
action, and we acknowledge that men's actions are conscious and
purposive, then, as David Gordon perceptively puts it, people
may consciously desire to have a market system, and their
coordinated action in maintaining it is then not an "unintended
consequence of human action." They may avoid harmful intervention,
not because they blindly follow traditional rules, but because
they understand the way the market works. [18]

It should be noted that Hayek's notion of unconscious, spontaneous
order was grounded in the eighteenth-century Scottish Enlightenment,
in particular Adam Ferguson's stress on "the results of human
action, but not of human design." It is little known that Ferguson's
concept did not originate in attempts to explain the market,
language, or other similar human institutions. Instead, Ferguson, a
close friend of Adam Smith, and his fellow youthful ministers of the
Presbyterian Church of Scotland, were trying to explain what for
them was a deeply traumatic experience: the Jacobite Rebellion of
1745, in which Jacobites captured Scotland and their beloved city of
Edinburgh, and almost triumphed for the cause of the Stuarts—losing
only at the bloody Battle of Culloden. In sermons after the battle,
Ferguson and the Rev. Hugh Blair, another lifelong friend of Smith,
felt forced to explain how it is that God permitted consciously evil
people such as the Catholic Jacobites to almost triumph over the
true Presbyterian Church. Their answer: that the Catholic Jacobites,
though consciously evil, were unwittingly carrying out God's deeper
purpose, i.e., to shake the Presbyterian Church out of its apathy
and loss of zeal. In this way, wicked men may pursue consciously
evil goals, but are unconsciously carrying out providential ends—the
unintended social consequences of human action, decidedly not of human design.

Thus, in his sermon preached before the general assembly of the
Church of Scotland on May 18, 1746, scarcely a month after Culloden,
Hugh Blair explained that God had beheld a Scotland blessed with a
"happy Constitution" and a "pure Religion," but yet sunk into
religious apathy, "Luxury," and the "Corruption of Manners." As a
result, God sent forth the "wrath of man," i.e., the passions of
wicked men, in the form of the Jacobites, in order to "work a Cure
for all these Evils." Prodded out of their apathy, the Presbytery
revived; hence, God "Makes the unruly Passions of bad Men work in a
secret Way, towards Ends, by them altogether unseen." [19] Out of
apparent evil, actual good. Unintended consequences indeed! It is
not surprising that Hegel, avidly reading Ferguson's sociology—a
development of this theme for human institutions—should be inspired
to develop his crucial notion of the "cunning of Reason," in which
inevitable and providential historical forces ever guide apparent or
conscious evil into achieving the actual good.

To return to Mises, if the market economy and society is the work of
men's reason, this means that to sustain and develop that market,
the general public must continuously renew their agreement, must
understand and continue to understand the importance of
laissez-faire, and of sustaining the all-important world oecumene.
As Salerno summarizes Mises's point: "At any point in history, the
evolving oecumene is the rational and intended outcome of an
intersubjective process, whose purpose is the amelioration of
scarcity. It exists not as a thing unto itself but as a complex of
social relations which emerges from a common orientation of
individual human actions....Because such relations thus emanate from
the will, they must be daily affirmed and recreated in human thought
and conduct." [20]

Their different epistemologies led Hayek and Mises to very different
strategies on how best to sustain and defend a free market economy.
To the tropistic analyst and irrationalist Hayek, the role of the
philosopher is to understand that reason is feeble and plays very
little role in human affairs, and then to instruct general
intellectuals and finally the public in the wisdom of doing nothing
and relying on the instinctive wisdom (because "evolved") of
traditionally received social roles. Mises, on the contrary, as
someone who understands the pervasive role of reason and purpose in
human affairs, believes it to be the role of philosopher and
intellectual to instruct the public in the wisdom and the necessity
of sustaining and expanding the free-market oecumene, and of the
importance of consulting one's "rightly-understood" interests in
cultivating that oecumene.

Whereas Hayek conceives of spontaneous order and being unconscious
of consequences as both natural and a blessing, Mises realizes that
people being heedless of the beneficial consequences of the
free-market economy is a great danger to that market, and therefore,
ultimately, to themselves. The short-run, narrow self interest that
drives people to loot and cripple the free market is due to their
lack of consciousness of the importance of the free market economy.
As Salerno quotes Mises: "antisocial conduct which shakes the very
foundations of social cooperation....is the outcome of a
narrow-mindedness which fails to conceive the operation of the
market economy and to anticipate the ultimate effects of one's own
actions." [21] In contrast to Hayek, then, Mises sees it as vital
for the social philosopher and the economist, not only to expand
scholarship and advance high theory, but also to educate businessmen
and members of the general public in economics and in the vital
importance of keeping the market economy free and unhampered. As
Salerno sums up Mises's insight therefore, "to the extent that
social norms, policies, and institutions are 'undesigned', are not
completely and correctly thought in advance and accounted for in a
logically consistent ideology, to that extent does the continued
existence of society become problematic." [22]

For Mises, then, in contrast to Hayek, the fact that many if not
most of the consequences of the market economy and society are
unintended is a cause for alarm and not celebration. To save that
economy, and therefore human existence and civilization, it becomes
necessary for economists, social philosophers, and intellectuals to
spread the knowledge of those consequences so that they become fully
rational and intended by most of the public.

The only way to educate the public fully and successfully, Mises
realized, was for those who understand the vital importance of the
market economy to spread far and wide the ideology of classical
liberalism, of what would now be called libertarianism. Mises
posited the liberal principle—of peaceful trade and exchange—as the
great ideology combating the "militarist-imperialist principle," the
"hegemonic principle" of coercion and organized theft. As Salerno
pointedly quotes from Mises's Socialism: "In Liberalism humanity
becomes conscious of the powers which guide its development. The
darkness which layover history recedes. Man begins to understand
social life and allows it to develop consciously..." [23] It is only
a fervently held ideology that allows mankind to overcome desires
for coerced special privileges, and to alert them to the vital
importance of rebuffing any attempts at wresting special privileges
by others. In particular, classical liberal ideology provides the
way out of the Public Choice trap; the idea that since individuals
and consumers are "rationally ignorant" of each small area of their
pocketbook, that special groups, each passionately interested in
their own aggrandizement over the consumer, are bound to win out,
and that therefore the democratic process is inherently hopeless.
But Mises saw the democratic process as a method by which classical
liberal ideology could be spread to the general public via, for
example, the political party system. It should not be forgotten
that, before the twentieth century, political parties, in the United
States and Western Europe, were vehicles for propagation of a
strongly held ideology. In the seventeenth, eighteenth and
nineteenth centuries, classical liberal ideologies were often
reflected in political parties and in mass movements. If the Public
Choice trap could be overcome in the past, there is no reason why it
cannot be surmounted in the future. The Public Choicers fall into
their trap by dismissing ideology as ever and always trivial and
unimportant. Mises, knowledgeable in history as the Public Choicers
are not, would never make that mistake.

On the other hand, Mises also realized that the original classical
liberals were absurdly optimistic in believing that continuing
social progress and expanding liberty were inevitable. Living in the
twentieth century and battling all his life against the Zeitgeist,
Mises could scarcely fall into this particular error of
deterministic complacency about the future. On the contrary, Mises
realized that man is free to choose foolishly and self-destruct by
opting for restrictionism, statism or collectivism. Hence, Mises
could not fall back on the Hayekian "pyramid" of focusing only on
theorists, and waiting calmly for decades or centuries until the
alleged wisdom of doing nothing to alter traditional rules seeps
downward toward the masses. Mises was acutely aware that there was
not time for that—that the general public, especially in a
democratic world, must always be made aware of the vital importance
of sustaining the market and of the disastrous consequences of
statism, and must be enlisted into a classical liberal ideology. [24]

It should now be clear how Mises's epistemology and social
philosophy reinforced his inner tendency to battle unwaveringly for
the truth. Civilization and human existence are at stake—and to
preserve and expand it, high theory and scholarship, though
important, is not enough. Especially in an age of galloping statism,
the classical liberal, the advocate of the free market, has an
obligation to carry the struggle to all levels of society—to
government, to the general public, to political parties. Not for
Mises the view that general education or even political action was
somehow beneath his dignity as a theorist and scholar. Not for Mises
the artificial separation between theory and practice; with
civilization at stake, and with freedom vitally important, there was
no time for such pussyfooting. And even though Mises strongly
believed that economic science was value-free, and that values are
not objective, he also passionately committed himself to the
ideology—yes the values—of classical liberalism—of freedom, peace,
and free markets. For unlike standard utilitarianism, his insight
into social affairs taught him that human life and happiness were at
stake, and he was willing to take the "non-objective" step of coming
out squarely in favor of human life and high living standards. Never
for Mises, in short, the gathering of academic robes around him or
refusing to engage in political controversy in the name of "value
freedom." Economic science may be value-free, but men can never be,
and Ludwig von Mises never shirked the responsibilities of being human.

FOOTNOTES

[1] See Murray N. Rothbard, Ludwig uon Mises: Scholar; Creator; Hero
(Auburn, Ala.: The Ludwig von Mises Institute, 1988).
[2] William E. Rappard, "On Reading von Mises." in M. Sennholz, ed.,
On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises
(Princeton: D. Van Nostrand, 1956), pp. 17-33.
[3] See Murray N. Rothbard, The Ethics of Liberty, 2nd ed. (Atlantic
Highlands, N.J.: Humanities Press, 1983). pp. 205-13.
[4] On this neglected aspect of Pareto, see P. Bucolo, ed. The Other
Pareto (London: Scolar Press, 1980); and S. E. Finer, "Pareto and
Pluto-Democracy: the Retreat to Galapagos," American Political
Science Review 62 (June 1968): 441}-50.
[5] Irving Norton Fisher, My Father Irving Fisher (New York: Comet
Press, 1956),pp.146-47. Also see Murray N. Rothbard, "World War I as
Fulfillment: Power and the Intellectuals," Journal of Libertarian
Studies 9 (Winter 1989), pp. 107-08, 115.
[6] Mise's only paid academic post was at the University of Geneva,
where he held a chair of International Economic Relations at the
Graduate Institute for International Studies from 1934 until he fled
Nazi-occupied Europe to the United States in 1940. The chair was
only for a one-year term, though it was renewed each year until
Mises left Geneva.
[7] From 1909 to 1914, Mises was also an economist for the Central
Association for Housing Reform. Mises soon became the Association's
expert on real estate taxation, concluding that the abysmal housing
conditions in Austria were brought about by high tax rates on
incomes and capital gains in real estate. Mises pointed out that
lowering the high taxes on real estate would raise its market value
and thereby lead to greater investment in housing. He succeeded in
pushing through a substantial reduction in housing taxes. Mises
notes that his work with the Central Association "offered me great
satisfaction." Ludwig von Mises, Notes and Recollections, Hans F.
Sennho1z, trans. (Spring Mills, Penn.: Libertarian Press, 1978), p.
21.
[8] See Rothbard, Ludwig von Mises: Scholar; Creator; Hero, pp.
25-27.
[9] Mises, Notes and Recollections, p. 73.
[10] Ibid., p. 75.
[11] Ibid., p. 78.
[12] Mises notes that the main banking adviser of the
Christian-Social government of Austria, Gottfried Kunwald, saw the
basic problem but refused to act to diminish the venal role of
himself and his powerful friends. "He [Kunwald] saw the true
situation the banks and big enterprises and occasionally made
remarks that were no less pessimistic than mine. But he was
convinced that to present the plain truth about the state of affairs
would diminish his influence with the secretaries, through whom he
secured licenses and other favors for his clients, and thus
jeopardize his income as an attorney and financial agent" (ibid., p.
82).
[13] Ibid., pp. 78, 74. Mises's other political accomplishment, in
addition to stabilizing the krone in 1922, was to singlehandedly
persuade his old friend Otto Bauer, the radical Marxist who was the
head of the Social Democratic Party, to suppress an Austrian
Bolshevik takeover that he had previously welcomed during 1918-19.
Mises convinced Bauer that the Allies would shut of the Viennese
food supply, and doubtless Mises was aided in this crucial effort by
the fact that Bauer had been a long-time student at Bohm-Bawerk's
seminar, and had conceded that Bohm was right in his refutation of
the labor theory of value (ibid), pp. 16-19, 39-40, 77.
[14] Ibid., p. 74.
[15] Ibid., p. 73.
[16] Joseph T. Salerno, "Ludwig yon Mises as Social Rationalist," p.
215.
[17] In contrast, Hayek's Counter-Revolution of Science (1952;
Indianapolis: Liberty Press, 1979), originally published as journal
articles before World War II though collected in book form after the
war, was decidedly Misesian, or Hayek I. Hayek, though, never
accepted Mises's praxeology, which is based on Mises's fundamental
view of the nature of purposive, rational human action.
[18] David Gordon, "The Origins of Language: A Review," Review of
Austrian Economics 3 (1989), p. 246. Gordon adds that, despite
Hayek, the market may well have originated through conscious
adoption.
Hayek has been using the origin of language as his model how and why
social institutions allegedly originated tropistically, outside
conscious human design. In his important review, however, Gordon
cites recent studies of the origin of language by G. A. Wells and J.
N. Hattiangadi that vindicate the eighteenth-century view of
language as conscious human invention. Ibid., pp. 245-51.
[19] Richard B. Sher, Church and University in the Scottish
Enlightenment: The Moderate Literati of Edinburgh {Princeton:
Princeton University Press, 1985), p. 42. The Scottish
Enlightenment, on the other hand, was not a monolith. The
distinguished Common Sense philosopher Thomas Reid and Lord
Monboddo, eminent leaders of the Enlightenment, both held, for
example, that language was a conscious human invention (Gordon, "The
Origins of Language; A Review," pp. 246-49).
[20] Salerno, .'Ludwig von Mises as Social Rationalist," p. 215.
[21] Ibid., p. 242.
[22] Ibid., p. 243.
[23] Ibid., p. 244.
[24] Many years ago, some American Austrians were involved in what
proved to be an abortive attempt to found a graduate,
degree-granting school of Austrian economics. Mises was to be the
President, and those of us who were then "young" Austrians
constituted the Board of Trustees. Mises kept exhorting us that, in
the pursuit of scholarship, we must not neglect giving periodic
lectures to businessmen and to the general public. At the time I was
a bit puzzled at his insistence, but now it is clear that this
program fit in with Mises's epistemology, his rationalist social
philosophy, and his overall strategy.Mises Shop