For your bookshelf

Jorg Guido Hulsmann, professor of economics at the University of Angers in France has written a magesterial biography of Ludwig von Mises, running over 1100 pages. This allows sufficient space to permit generous coverage of  the historical and intellectual background with close attention to his major works and the salient features of his life and social relations.

Mises (1881-1973) is one of the sleeping giants of the 20th century. For many decades he was the leader of the “Austrian school” of economics and social thought but he is scarcely a household name, even among economists and classical liberals where he should be well known and appreciated.

It is appropriate that he lived almost from the time that Carl Menger published the book that launched the Austrian school  to the year before the conference at Royalton in the US that signaled the revival of the tradition. 

The Austrians adopt an evolutionary or ecological approach to social and economic systems to emphasise the role of individual initiative and planning in a framework of  traditions and institutions. They were virtually buried in professional circles by the rise of Keynes and mathematical economics. The Austrians are skeptical of mathematics and they tend to be robust free traders and so they were dismissed for many years as unscientific and reactionary. A head count in the professional association in the US indicated that they are out-numbered by other schools by 50 to 1, despite robust growth since the revival of the 1970s. 

The first quarter of the book is Young Ludwig and The Austrian School. This sketches the social, political and intellectual context for his life and work, including an endearing portrait of Carl  Menger, the founder of the school. The second quarter is Officer, Gentleman, Scholar, covering the start of this career, his first major scholarly works on monetary theory, socialism and the politics of nationalism, and his involvement with Max Weber in the politics of the social science society. The third is Mises in his Prime including the years he spent in Geneva with the opportunity to address intellectual issues without the distraction of public administration or teaching. The fourth is Mises in America, a time when the school was practically invisible. This includes some little-known insights on the internal strains of the Mont Pelerin Society and some gossip from the Ayn Rand circle in New York which for a time included libertarians like Murray Rothbard and von Mises himself.

When Mises was born the Austro-Hungarian empire encompassed Austria, Hungary, Slovakia, the Czech Republic, as well as parts of present-day Poland, Romania, Italy, Slovenia, Croatia, Bosnia and Herzegovina, and Serbia and Montenegro. In earlier times Austria was the centre of the Holy Roman Empire until defeat at the hands of the French and Germans at Austerlitz in 1806 precipitated a long period of decline. After World War I the empire was dismembered in the name of national self-determinism, and so the Balkans were Balkanised, laying the foundations for further conflagrations up to the present day. The glory of the empire at its height can be seen from the number and size of the public buildings, monuments and museums in Old Vienna today.

Writers, scholars, administrators, entrepreneurs and revolutionaries moved backwards and forwards between the major centres of the empire. They created a rich tradition of culture and learning that was multicultural in a way that is scarcely comprehensible to Anglo-Saxons. With at least ten languages in the empire, they fed on the thoughts of  Russians, Poles and Germans with the same facility that they absorbed ideas from England and France, thought their accents betrayed them when they fled to safety in the west during the 1930s.

Some of the most important threads of modern thought passed through Vienna, not necessarily through the university but also through the coffee shops and private seminars. It is impossible to understand the intellectual life of Vienna between the wars without reference to the great private seminars. The best known were the circles of Schoenberg (progressive music) and the Vienna Circle of logical positivists. Others included a Freud group and seminars convened by Ludwig Mises, Karl Menger (son of the great economist) and Richard Mises (brother of Ludwig).

Mises was born of Jewish parents in Galica,  now located in the Ukraine. His father was an engineer and his brother Richard was a physicist and mathematician. The family moved to the ancestral home in Vienna where he took a doctorate in law. In 1903 he read Carl Menger’s classic book  and he recorded that this experience “made an economist of me”. In 1906 he took a doctorate in economics and from 1909 to 1934 he worked in the Austrian Chamber of Commerce , much of the time as the chief of the finance department, giving advice to the Government on monetary and financial policy. This was broken during the Great War when he served with the artillery in the Ukraine.

The first of his three major books was The Theory of Money and Credit (1912) which applied the concept of marginal utility to money and also set forth the first version of the Austrian theory of the trade cycle. In 1913 he was appointed as a Professor the the university, not a paid post but one that entitled him to give lectures if he could attract an audience. Due to Menger’s inactivity during the 25 years before he died in 1921 and Boehm-Bawerk’s early death in 1914 it was left to Mises to consolidate the Austrian program, not by teaching undergraduate students but through his writing and his seminar where the leading lights included Hayek, Haberler, Machlup, Morgenstern in economics as well as Alfred Schutz and Felix Kaufman in sociology and philosophy respectively.

He saw what was likely to happen when Hitler came to power and he moved from Vienna to Geneva in 1934. When Hitler swallowed Austria some Nazi agents raided his apartment and stole his library, if he had  been living there he would have ended up in a death camp. He no longer felt safe in Switzerland and he moved on to the US in 1940. His library ended up in Moscow, neatly catologued and filed, after the Russians captured a trainload of German booty late in the war.

Through the 1920s and 1930s he wrote a series of papers on philosophical and methodological issues that underpinned his approach to economics and the socal sciences at large. It is interesting to recall the time when Mises spent his days trying to steer the Austrian economy and the nights grappling with the fundamentals of economics (Grundprobleme der Nationalökonomie).  Not far away in the same town Karl Popper taught high school maths and science, then went home to work on the fundamentals of scientifc method (Grundprobleme der Erkenntnistheorie). It seems that the two titans might have well have been on different planets because the twain never met in any satisfactory manner.

In Geneva he completed the German version of his third major work which the book that later appeared in English as his third major work Human Action (1949). There is an exciting section on his escape to the US through France as the Germans moved in.

There are some nice human touches.  Mises learned to drive in middle age and enjoyed it so much that he took to long distance touring with his wife. At least twice he almost drove off the road in the Alps and there were two moderately serious accidents.

The Mises Institute published the book after one academic press rejected the ms for its size and another wanted to price the book well over $100US. It is on sale from the Institute for less than $50. It is beautifully produced as well.

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10 Responses to For your bookshelf

  1. Nicholas Gruen says:

    In the few things I’ve read of him he had a very arrogant style, which doesn’t befit a scholar much less a social scientist. My impression on reading Hayek was that, though H didn’t say it in so many words, Hayek eventually got the creeps with him.

  2. Don Arthur says:

    Hayek criticised Mises for his insistance that market theory was a priori. He argued that Mises’ fundamental mistake was his rationaism.

    In an interview with W W Bartley III, Hayek explained that his problem with Mises began in 1937. He wrote an article that attempted to persuade Mises “that when he asserted that the market theory was a priori, he was wrong; that what was a priori was only the logic of individual action, but the moment that you passed from this to the interaction of many people, you entered into the emprical field.”

    He went on to say:

    Mises never could free himself from that fundamental philosophy, in which we have all grown up, that reason can do everything better than mere habit. From this he could never loose himself. In this respect, although I accept nearly evertying of his criticism of socialism, I now understand why it has not been fully effecive, becuase in his case it’s still based on the fundamental mistake of rationalism and socialism, that we have the intellectual power to arrange everything rationally, which is now in conflict with the assertion — In one place he says we can’t do it, in another place he argues, being rational peple, we must try to do it (p73).

  3. Rafe says:

    Come on Nicholas, that is not a criticism of his ideas!

    Hayek took issue with some aspects of Mises’s methods but not with the substance of his theories or his policy prescriptions.

    Human Action is spoiled by almost 200 pages of methodological preliminaries, especially the claim that economic principles should be based on a priori insights into the nature of human action. This adds no value to the economics and presents a massive barrier for acceptance by other schools of thought which are hooked on the methods of positive science or scientism which the Austrians reject.

    Mises made a huge mistake to think that the methods of positivism and empiricism worked ok in the natural sciences. Nerds may be interested in an argument along the lines that economics can use the same approach as the natural sciences but not the official positivist version of those methods.

  4. Don Arthur says:

    Rafe – I don’t think Hayek’s disagreement with Mises is over a minor issue with no practical consequences. Hayek’s anti-rationalism is a central element of his thinking.

    Mises dogmatism has deep roots in his theoretical approach to economics — his a priorism.

    My experience is that classical liberals who follow Hayek are more reasonable and open to argument than those who follow Mises. When someone tells me they prefer Mises to Hayek I immediately suspect they’re a bit nutty (but maybe this is unfair).

  5. Rafe says:

    Don you are correct about the difference between dogmatic Misians and others, that is a problem between Auburn and othes like the group at George Mason University. I think on policy and economic principles Mises and Hayek are peas in a pod, it is the level of methods where the divide occurs and also the justification for the principles. On that score I see the strong apriorists (Rothbard and nowadays Hans-Hermann Hoppe) as misguided and nutty.

    Austrian economics will go nowhere with strong apriorsm. Nobody else will have a bar of it, but it is irrelevant to the substance of the theories. They make a mountain out of a mistake!

  6. Rafe, I konw it’s bad manners, perhaps bad tactics in an argument to mix the person with what they’re saying. But, as I suggested in my initial comment, even insisting on that distinction too heavily can be a mistake. There are lots of nuts who are very clever and economics seems to be a haven for them. There are the nuts whose mania is dressed up in mathematics – like Ed Prescott, and then there are nuts whose mania is dressed up in high blown philosophy like Ayn Rand. I have only a limited amount of time before being planted and if I read people like that, I’ll only be doing it when someone I respect points out somehting of theirs that they recommend as worth my time. I’m afraid Mises is in this category. I don’t doubt that within the confines of the thousands of pages he’s written (complete with 200 page methodological introductions which are both hubristic and more or less trivially wrong) there are bits I’d like to have read, but in what experience I’ve had they’re few and far between.

  7. Tods says:

    There are the nuts whose mania is dressed up in mathematics – like Ed Prescott, and then there are nuts whose mania is dressed up in high blown philosophy like Ayn Rand.

    Would you categorize the Daily Kos and other nut cases that run threads accusing every right wing supporter as racist (that you have quoted), or are they the good guys, Nic?

  8. There are lots of nuts who are very clever and economics seems to be a haven for them.

    The other haven is the upper houses of Parliaments.

  9. Nicholas Gruen says:

    But they’re just nuts – not particularly clever.

  10. Tom N. says:


    When Rafe poppered up on Troppo a couple of years ago and threatenned to start posting a series of long rants on Mises, the first to deal with how his great grandparents met, the next with his great grandmothers’ labour pains, the next with his grandparents’ early childhoods, and so on down to the funeral of Mises himself, each detailing the key happennings and their consequences for Mises’ subseqent intellectual developments and insights, I protested that such material belonged on a dedicated Mises blog (like this one), rather than clogging up ClubTroppo.

    I was subsequently relieved to find that Rafe had taken the hint and was posting various Hayek and Mises eulogies over at the parallel universe known as Cattallaxy instead. The Cattallaxy echo-chamber is of course purpose-built for Rafe and other Libertarian types, who are able to sit around in cyberspace and bond with each other using their invisible hands. Indeed, not only does Rafe fit in well over there, remarkably his contributions actually increase the relevance of the average post on Cattallaxy to the real world!

    Against this background, I hope this post does not herald the start of a new campaign by Rafe to start ‘educating’ we Troppists with the essential information about Mises et al that we obviously have been missing, as determined by Rafe. Of course, the odd Mises post – and can there be any other type? – is probably okay. I thus look forward to Part II in 2025.

    Tom N.

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