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vonmisesAuthor: Barry Stocker

Mises 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.