Archive for Ludwig von Mises

Ludwig von Mises’s ‘Erinnerungen’ Is Back in Print

31q5pvH6REL._Ludwig von Mises’s Erinnerungen is back in print! Publisher Lucius & Lucius, Stuttgart, has produced a very nice format, including a foreword written by yours truly.

This German-language book is available on Amazon here, and is from Mises’s original manuscript, written in German.

English-language readers will know this book as Memoirs or Notes and Recollections.

[From Guido Hülsmann's foreword to the 2009 English version (written prior to the completion of Last Knight of Liberalism):

"Much if not most of what we know is based on the present autobiographical recollections, which Mises started to write upon his arrival in the United States in August 1940. By the end of that year he had finished a first draft of the German-language manuscript and then polished his memoirs for another two years. Finally he gave the handwritten text to his wife Margit for custody and eventual publication. In 1978, five years after his death, she published both the German original and an English translation..."]

 

Entrepreneurship without Romance

3279740532_d4105eb4fa_oJames Buchanan’s work on the economics of public choice has been called “politics without romance,” because it looks beneath the glossy exterior of government and reveals the underlying reality of political behavior. Unfortunately, the “romantic” view of politics is shared by supporters of all types of political power, who seem to don rose-colored hazmat suits in order to promote their particular candidates, parties, or ideologies. As I’ve mentioned elsewhere, from the perspective of economics, politics looks less like romance and more like an abusive marriage.

Entrepreneurship also attracts a kind of mistaken romanticism, although in a different way than politics. A couple of weeks ago, Isaac Morehouse wrote an insightful post on the Praxis blog warning that we should take care to avoid glamorizing creativity too much. His point is that creative success, especially in entrepreneurship, can derive from relatively straightforward decision making. Creativity is often simply an attempt to solve a problem while avoiding harm to oneself, as opposed to the flashy, dramatic, and heroic struggle against the odds we sometimes imagine it to be.

In other words, we often place undue emphasis on the personal magnetism and economic “heroism” of entrepreneurs. Yet despite being the “driving force of the market,” entrepreneurship is often quite mundane. Taking a romantic view can be misleading if we end up thinking in terms of only the most dramatic cases of disruptive innovation or personal entrepreneurial charisma (or lack thereof!), and less on the pervasive and vital role of entrepreneurial calculation and judgment.

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The High Price of Delaying the Default

Politician kicking the can down the roadThorsten Polleit writes in today’s Mises Daily:

Running the electronic printing press will be perceived as the policy of the least evil — a reaction that could be observed many times throughout the troubled history of unbacked paper money. Since the end of 2008, many central banks have successfully kept their commercial banks afloat by providing them with new credit at virtually zero interest rates.

This policy is actually meant to make banks churn out even more credit and fiat money. More credit and money, provided at record low interest rates, is seen as a remedy of the problems caused by an expansion of credit and money, provided at low interest rates, in the first place. This is hardly a confidence-inspiring route to take.

It was Ludwig von Mises who understood that a fiat money boom will, and actually must, ultimately end in a collapse of the economic system. The only open question would be whether such an outcome will be preceded by a debasement of the currency or not:

Read the full article.

Mises Explains the Ukraine Conundrum

Tory_Refugees_by_Howard_Pyle

Loyalists exiled by American revolutionaries

Obviously, Mises could not anticipate the specific conflict now at work in the Ukraine, but here we see the sorts of conflics we have witnessed time and time again within multiethnic countries, in two or more groups fight over control of the central state which enables one ethnic or linguistic group the ability to crush another.

We’ve certainly seen similar conflicts in the United States (sometimes along ethnic lines and sometimes not), and we see it today in the Ukraine. Anywhere a strong state exists, different factions will battle to control that state. As Mises noted, as long as states exist, the only way to deal with this reality is to lessen the need and desire to control the central state, and this is done by making the state weak.

In Liberalism (1929),  Mises wrote:

Modern imperialism is distinguished from the expansionist tendencies of the absolute principalities by the fact that its moving spirits are not the members of the ruling dynasty, nor even of the nobility, the bureaucracy, or the officers’ corps of the army bent on personal enrichment and aggrandizement by plundering the resources of conquered territories, but the mass of the people, who look upon it as the most appropriate means for the preservation of national independence. In the complex network of antiliberal policies, which have so far expanded the functions of the state as to leave hardly any field of human activity free of government interference, it is futile to hope for even a moderately satisfactory solution of the political problems of the areas in which members of several nationalities live side by side. If the government of these territories is not conducted along completely liberal lines, there can be no question of even an approach to equality of rights in the treatment of the various national groups.There can then be only rulers and those ruled. The only choice is whether one will be hammer or anvil. Thus, the striving, for as strong a national state as possible, one that can extend its control to all territories of mixed nationality, becomes an indispensable requirement of national self-preservation. [Emphasis added.]

Weekend Daily: Mises and Schumpeter: Friendly Rivals?

Cafe house in Vienna, AustriaMatt McCaffrey writes in this weekend’s Mises Daily:

Another fact that may not be well-known is that Schumpeter attended Mises’s famousprivatseminar. At the time, due to the intellectual milieu fostered by the German Historical School, the Mises circle was one of the few places in Viennese academia where discussions of economic theory were welcome. Simply being theoretical economists apparently constituted enough common ground to continue to bring the two together, despite their significant methodological and theoretical differences.

Mises and Schumpeter: Friendly Rivals?

Joseph_Schumpeter_ekonomialariaLudwig von Mises and Joseph Schumpeter are the most famous economists trained by the older Austrian School, although generally Schumpeter has received the lion’s share of attention.[1] This is especially true, for example, in the field of entrepreneurship. To this day, the term entrepreneurship is almost synonymous with Schumpeter, whose fame was built on the success of his Theory of Economic Development (1911) and Capitalism, Socialism, and Democracy (1942). In particular, the 1911 book defined much of the theoretical framework for entrepreneurship research in economics for decades to come. Unfortunately, it also overshadowed numerous other economists in the Austrian tradition who were writing about the entrepreneur at the time, including Herbert Davenport, Frank Fetter, and Viktor Mataja. I’ve argued in a recent paper that Mises too has been unduly neglected, as he was already beginning to think seriously about the problems of entrepreneurial calculation and judgment in The Theory of Money and Credit (1912).

While plenty has been written about the theoretical differences between the Mises and Schumpeter (for example here and here), I want to comment on their personal relationship. We don’t have a great deal of information about their interactions over the years, but we do have a few intriguing hints regarding how they felt about each other. What is most interesting is that despite serious differences on economic issues that endured throughout their respective careers, they seem to have been reasonably friendly, especially in their Vienna years.

The two presumably met at the University of Vienna, where both participated in Böhm-Bawerk’s seminar. Although they drew on different economic traditions in their own works, they shared common research interests, and each showed a certain amount of respect for the other’s early work. In fact, as late as 1933 Mises described Theory of Economic Development as one of the top four German-language contributions to economics (Hülsmann, 2007, p. 172). In turn, Schumpeter applauded The Theory of Money and Credit, saluting “its ‘power and originality,’ [and] noticing that ‘as usual’ the critics had overlooked these qualities in their discussion of unsubstantial side issues” (Hülsmann, 2007, p. 208).

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Krugman Claims Mises Couldn’t Explain the Great Depression

6651Joseph Salerno writes in today’s Mises Daily:

In fact, economists are finally beginning to rediscover Mises’s explanation of the prolonged mass unemployment of the 1930s. For example, UCLA economist Lee Ohanian in his recent paper, “What—or Who—Started the Great Depression,” argues that Hoover’s policies of propping up wages and encouraging work sharing “was the single most important event in precipitating the Great Depression” and resulted in “a significant labor market distortion.” He estimates that “the recession was three times worse — at a minimum — than it otherwise would have been, because of Hoover” and that the severe labor-market disequilibrium induced by Hoover’s policies accounted for 18 percent of the 27 percent decline in the nation’s GDP by the fourth quarter of 1931. Ohanian concludes along Misesian lines:

the [Great] Depression is the consequence of government programs and policies, including those of Hoover, that increased labor’s ability to raise wages above their competitive levels. The Depression would have been much less severe in the absence of Hoover’s program. Similarly, given Hoover’s program, the Depression would have been much less severe if monetary policy had responded to keep the price level from falling, which raised real wages. This analysis also provides a theory for why low nominal spending — what some economists refer to as deficient aggregate demand — generated such a large depression in the 1930s, but not in the early 1920s, which was a period of comparable deflation and monetary contraction, but when firms cut nominal wages considerably.

How the Early Capitalists Saved Europe From Starvation

Wojciech_Gerson_-_Gdańsk_in_the_XVII_century[A selection from Economic Policy: Thoughts for Today and Tomorrow]

by Ludwig von Mises

Two hundred years ago, before the advent of capitalism, a man’s social status was fixed from the beginning to the end of his life; he inherited it from his ancestors, and it never changed. If he was born poor, he always remained poor, and if he was born rich-a lord or a duke-he kept his dukedom and the property that went with it for the rest of his life.

As for manufacturing, the primitive processing industries of those days existed almost exclusively for the benefit of the wealthy. Most of the people (ninety percent or more of the European population) worked the land and did not come in contact with the city-oriented processing industries. This rigid system of feudal society prevailed in the most developed areas of Europe for many hundreds of years.

However, as the rural population expanded, there developed a surplus of people on the land. For this surplus of population without inherited land or estates, there was not enough to do, nor was it possible for them to work in the processing industries; the kings of the cities denied them access. The numbers of these “outcasts” continued to grow, and still no one knew what to do with them. They were, in the full sense of the word, “proletarians,” outcasts whom the government could only put into the workhouse or the poorhouse. In some sections of Europe, especially in the Netherlands and in England, they became so numerous that, by the eighteenth century, they were a real menace to the preservation of the prevailing social system.

Today, in discussing similar conditions in places like India or other developing countries, we must not forget that, in eighteenth-century England, conditions were much worse. At that time, England had a population of six or seven million people, but of those six or seven million people, more than one million, probably two million, were simply poor outcasts for whom the existing social system made no provision. What to do with these outcasts was one of the great problems of eighteenth-century England.

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Mises on Economics, Education, and The Experts

Dunce_cap_from_LOC_3c04163u[To complement Robert Murphy's post today on economics and education:]

From Human Action XXXVIII: 

by Ludwig von Mises

In countries which are not harassed by struggles between various linguistic groups public education can work if it is limited to reading, writing, and arithmetic. With bright children it is even possible to add elementary notions of geometry, the natural sciences, and the valid laws of the country. But as soon as one wants to go farther, serious difficulties appear. Teaching at the elementary level necessarily turns into indoctrination. It is not feasible to represent to adolescents all the aspects of a problem and to let them choose between dissenting views. It is no less impossible to find teachers who could hand down opinions of which they themselves disapprove in such a way as to satisfy those who hold these opinions. The party that operates the schools is in a position to propagandize its tenets and to disparage those of other parties.

In the field of religious education the nineteenth-century liberals solved this problem by the separation of state and church. In liberal countries religion is no longer taught in public schools. But the parents are free to send their children into denominational schools supported by religious communities.

However, the problem does not refer only to the teaching of religion and of certain theories of the natural sciences at variance with the Bible. It concerns even more the teaching of history from the impact of nationalism and chauvinism. But few people realize that the problem of impartiality and objectivity is no less present in dealing with the domestic aspects of history. The teacher’s or the textbook author’s own social philosophy colors the narrative. The more the treatment must be simplified and condensed in order to be comprehensible [p. 877] to the immature minds of children and adolescents, the worse are the effects.

As the Marxians and the interventionists see it, the teaching of history in the schools is tainted by the endorsement of the ideas of classical liberalism. They want to substitute their own interpretation of history for the “bourgeois” interpretation. In Marxian opinion the English Revolution of 1688, the American Revolution, the great French Revolution, and the nineteenth-century revolutionary movements in continental Europe were bourgeois movements. They resulted in the defeat of feudalism and in the establishment of bourgeois supremacy. The proletarian masses were not emancipated; they merely passed from the class rule of the aristocracy to the class rule of the capitalist exploiters. To free the working man, the abolition of the capitalist mode of production is required. This, contend the interventionists, should be brought about by Sozialpolitik or the New Deal. The orthodox Marxians, on the other hand, assert that only the violent overthrow of the bourgeois system of government could effectively emancipate the proletarians.

It is impossible to deal with any chapter of history without taking a definite stand on these controversial issues and the implied economic doctrines. The textbooks and the teachers cannot adopt a lofty neutrality with regard to the postulate that the “unfinished revolution” needs to be completed by the communist revolution. Every statement concerning events of the last three hundred years involves a definite judgment on these controversies. One cannot avoid choosing between the philosophy of the Declaration of Independence and the Gettysburg Address and that of the Communist Manifesto. The challenge is there, and it is useless to bury one’s head in the sand.

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‘The Essential von Mises’ and ‘Scholar, Creator, Hero’ now in Japanese

51nmz72qOnL._AA278_PIkin4,BottomRight,-37,22_AA300_SH20_OU01_Rothbard’s  The Essential von Mises which includes Rothbard’s biographical monograph Ludwig von Mises: Scholar Creator Hero  is now available in Japanese, thanks, yet again, to the efforts of Tatsuya Iwakura.

Both are available in one volume now available as an ebook on Amazon. 

Following is a part of the ‘book description’ of Amazon (translated):

Rothbard’s ‘The Essential von Mises’ was published in 1973. And now it is coupled with another book  ’Scholar, Creator, Hero’ written by Rothbard in 1990. Each book corresponds to part 1 and part 2 of this book.

In part 1, the contributions to economics by Ludwig von Mises, are outlined in chronological order. This is useful as an introduction to Mises and Austrian Economics.

Part 2 is a biography of Mises. Rothbard talks about his feelings toward the results of of Mises’s search for economic truth and what he did in spite of many severe restrictions put on his efforts.

When I read this, I (the translator) imagine the following passage from Mises’s ‘Human Action’:

“Many a genius could have used his gifts to render his life agreeable and joyful; he did not even consider such a possibility and chose the thorny path without hesitation.” (The Scholar’s Edition, 1998) p.139