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December 10th, 2009 Posted in Book Review, Economics by

vonmisesMises was an Austrian in the sense that he was born into a high bourgeois  German speaking family in the Habsburg Austro-Hungarian Empire.  Mises was from a high bourgeois Jewish family which had roots in Vienna.  However, he was born in Lemberg, now the Ukrainian town of Lviv, which has been also been part of Lithuania and Poland.  The range of languages and ethnicities in the town reflected that history and in Liberalism he refers with great emphasis to the conflicts and suffering of that situation, arguing that the situation can only be experienced in that way in a non-liberal society.

His father was a liberal politician, and Liberalism also refers with great emphasis to the decline of the old liberalism, the liberalism of the late Eighteenth and early Nineteenth centuries.  The family moved back to its roots in Vienna, and Mises attended the university there, first becoming qualified in law, and the coming under the influence of the ‘Austrian School’ economists Carl Menger and Eugen von Böhm-Bawerk.

Mises became an economist in that school, and for many Austrian School economists and libertarians now, he is the most important figure in that school.  Hayek was his student, when Mises became an academic economist.  Mises also worked as an adviser to governments and the Vienna Chamber of Commerce until 1934 when he moved to Switzerland.

He moved to New York in 1940 to escape Nazi-dominated Europe and had some difficulty finding an appropriate niche, but was able in the end to become a recurrent visiting Professor at New York University, though this was privately funded by sympathetic business people.  In his time in Europe, his students included many future economists, government advisers and politicians.

At least some of the more liberal aspects of post-war European economics were under Mises influence.  His students, and others under his influence, in the United States ensured the continuation of the Austrian School, most famously the economist and Anarcho-Capitalist thinker Murray Rothbard.

Mises’ most influential books are probably: Socialism (1922), a lengthy critique of socialism in many aspects and varieties; and Human Action (1949), developed from Nation, State, and Economy (1919), a long treatise which grounds economics in the broadest categories of human life.

He also took part in a famous 1920  debate with the Marxist Oscar Lange about the possibility of economic calculation under socialism.  Mises denied the possibility of economic calculation without a price mechanism guiding the decisions of economic agents.  As he argues in Liberalism, the pursuit of a completely planned economy can only collapse into chaos as decisions will be made with no regard to the best allocation of resources. Liberalism, though probably not one of his most influential books, is a convenient place to introduce his ideas.

We shall return to the other books, and to Rothbard.  Mises was not an Anarchist, and is at great pains in Liberalism to establish that liberalism is not opposed to the state.  His vision of the state is very minimal though, and he strongly condemns deviation from such a view.  This leads to him to reject John Stuart Mill as an authentic liberal, because of Mill’s increasing tendency over time to think that society could evolve towards socialism, or even communism, and preserve liberty.  Mises’ reaction seems harsh in relation to On Liberty and some other Mill texts.  It’s true that at the time of On Liberty, Mill toys with the idea of socialism in Principles of Political Economy, but very briefly and it is only later that Mill makes sustained gestures towards socialism.  In any case, this illustrate Mises’ view that in every way real liberalism has been declining since the mid Nineteenth century, and has become a form of moderate socialism.  Mises does not quite adopt the minarchist view that the state only exists to protect life, liberty and property, but he certainly regards these as the essential aspects of liberalism and rejects most forms of state action going beyond them.

He argues against unemployment benefits, on the grounds that they increase unemployment, and hold back changes in the labour market, of a kind necessary for economic development.  He does think that labour exchanges to help workers find new employment are allowable.  Mises does not completely exclude education from the state sphere, but certainly thinks that in the circumstances in which he grew up that compulsory schooling is dangerous, because it inevitably creates problems about which languages are preferred and more or less disguised pressures to adopt the majority language.  In this context, he also argues that a large state machine worsens relations between different groups, because of the competition to control the state in order to gain economic benefits that results.

Only liberalism respects both individual rights and objective sociological and economic realities.  Wealth is only created if there is private property and associated laws and institutions of the market, which allow the incentives to invest and produce.  Anyone who rejects this rejects reality and is a neurotic.  Mises supports the idea of the League of Nations (the forerunner of the United Nations), arguing it needed stronger powers to prevent war and to prepare colonies for self-government.  Though he supports a world structure to prevent aggression, he opposes European federation on the grounds that this would just promote a European level version of statist nationalism.

8 Responses to “LUDWIG VON MISES (1881-1973) LIBERALISM (1927”

  1. Gandhi Says:

    Ah Ludwig, lovely Ludwig. There’s a proper libertarian/liberal for you. That John Stuart Mill was a mere gateway drug to state socialism, as the composition of the Lib Dems testifies!

  2. Barry Stocker Says:


    Mises quite openly and directly supports the Italian fascist regime in ‘Liberalism’. I chose to present Mises without referring to the most controversial parts of what he says. If you think Mises is more clearly opposed to statism than Mill, I have to disagree, and what more evidence do I need. I think Mises was someone of great intellectual stature who made a big contribution to liberal thought, and I think liberal minded people should read him and learn from him. He is not however perfect. I greatly regret Mill’s increasing leanings towards socialism, but that does not take away from the value of ‘On Liberty’ and other texts. It’s certainly wrong to say that ‘On Liberty’ is socialist or a gateway; or it could only be correct if you think that the only non-socialist choice is minarchism, which Mises does not endorse.

  3. Me on Mises’ Liberalism at LiberalVision and some supplementary comments « Stockerblog Says:

    […] December 12, 2009 at 4:03 am (Uncategorized) Tags: Austrian Liberalism Click here to see my introduction to Ludwig von Mises and summary of Liberalism. […]

  4. Gandhi Says:

    I have to confess I’m not particularly hot on Mises, and have read only parts of Human Action, so I’ll bow to your superior knowledge … but he’s not the only [liberal] who supported the Italian fascists, one PJ Proudhon is also guilty there, ’tis curious. But there’s ideology and there’s pragmatism, and pragmatism leads people to compromise with people who they may think are the best available option. Many are the dictators posing as liberators … well that’s the defence anyway.

    The big problem (at least for libertarians) with Mill is utilitarianism. If you take the utilitarian “greater good” position then there’s really no limit to the evils you may attempt to justify, and every politician in this country thinks this way. It’s a cop-out at best, at worst it’s truly horrific (I’m thinking Iraq war). I can’t help but wonder if Mill hadn’t been indoctrinated with utilitarianism many things might be different today.

  5. Gandhi Says:

    Sorry I’m talking total balderdash, Proudhon was supposedly an inspiration to Italian fascists, and was massively anti-semitic (correction). He did not have an actual time machine!

  6. Tom Papworth Says:


    I’ve just finished reading Liberalism and I can find nothing about him “openly and directly support[ing] the Italian fascist regime in ‘Liberalism’”

    Citation, please?

  7. Barry Stocker Says:

    It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.
    page 51

    Direct reference to Italian Fascism, a bit less favourable than the above, but favourable to Fascism as better than Bolshevism

    Mises was chief economic adviser to the Dolfuss, the Austrian leader who ended parliamentary democracy in Austria, there’s debate about whether Dolfuss was properly speaking a Fascist, but he was certainly an authoritarian leader who had much in common with Fascists.
    This is a link to John T. Flynn’s account as posted at the Mises Institute

  8. Barry Stocker Says:

    Something got lost, go to page 48 of the online version of ‘Liberalism’ at the Mises Institute for direct comment on Italian Fascism