The Free Market 26, no. 7 (July 2005)
The 20th century was a time when the world sang the praises of despots and despotism. The more wars government leaders fought, the more they centralized their control, the more they hobbled the economy, the more liberty they stole, the more they cut off trade and exchange with other nations, the more their gain was our liberty lost, the more these very government leaders have been celebrated by historians and pundits of all stripes.
To right the wrongs requires, as a first step, that we stop celebrating people who have done evil. It also requires that we begin to celebrate the real heroes, such as Ludwig von Mises. He started out with what seemed to be a simple vocation, to be an academic economist, but eventually came to play a major role in the history of ideas in the world. His life would be dominated by terrible tragedy and yet come to represent a grand vision of the social and political future.
Mises was born in 1881 as a Jew in the outer reaches of the Austro-Hungarian empire and died in New York City in 1973. In his life, he wrote 25 books and taught students of all ages. His theme cut against the grain of the 20th century. Instead of socialism, fascism, and war, he advanced a case for freedom and peace.
He began his adult career as an economist who sought to advance the profession’s understanding of what money is and how it integrates into the theoretical apparatus of economics. But history called him to work of a different sort. His first step as a formidable intellectual dissident came with his shocking claim in 1920 that departed from what nearly every educated person on the European continent believed. He said that socialism cannot work as an economic system—not that it has problems and difficulties or that it has a downside but that it is literally impossible owing to its lack of a market price system.
The article was followed up with a book that came out in 1922. If you have never read it, I can only describe the effect it might have on someone who is sympathetic with socialism. It is akin to playing chess against a genuine master who seems to be tightening the noose with every move. By the time you have reached the end, it produces the kind of shock that delivers the most dedicated socialist from intellectual illusion. Many people did change their minds, including F.A. Hayek who would later win the Nobel Prize for his contribution.
But he didn’t stop there. His treatises such as Human Action, Liberalism, and Theory and History revolutionized economic science and political philosophy. Not only that, he single-handedly saved Austria from communism and rampant inflation. And in the course of a lifetime, he personally stood up to despots of every stripe, and inspired several generations of intellectuals on two continents.
In the second half of his life, he did not hold a prestigious post. In fact, his career prospects sank pretty much from their height in the late 1920s—mostly because of his anti-collectivistic politics—all the way to his death in 1973. He started out as a famous economist in Europe but his life ended after years in the United States without a paid faculty position and without access to any of the prestigious publishing outlets in his profession. He once wrote that he had set out to be a reformer but only ended up as a historian of decline.
What inspires us, however, is not his victimhood but his triumph over evil. As a boy he adopted the motto of Virgil: Tu ne cede malis, sed contra audentior ito (Do not give in to evil, but proceed ever more boldly against it). Immediately after regretting the fate of his ideas, he had said that he had no regrets about the choices he made. He said he only regretted his compromises.
And while I can hardly relate every case in point, I would like to draw your attention to an event that impacted directly not only the founding of the Mises Institute but on the future of freedom itself. It concerns Mises’s time of sanctuary when he lived as an intellectual refugee in Geneva, Switzerland, during the Second World War. He found himself in a privately funded research center with other refugees from Austria and Germany, driven out for having fought against the rising tide of socialism, both left and right.
He observed the tide changing in Vienna in the early thirties in Austria, where he had been conducting a fortnightly seminar for the leading economists and philosophers of his generation. But as prominent and important a thinker as he was, he could not alone stop the trends that changed his fate and that of Austria as a country. The Bolshevist threat seemed to recede but another form of socialism was advancing, that of the nationalist and imperialist sort. The German Nazi party had rising support in Austria.
In 1934, a letter arrived from Geneva’s Graduate Institute for International Studies that offered him a position. As a Jew, an old liberal, and an opponent of German expansionism, he was wise to have accepted the offer, even though it meant a huge cut in pay. When the German armies arrived in Vienna in 1938, they were dispatched to Mises’s old apartment, where Mises had left his notes and papers from his years of teaching. The place was ransacked and the papers boxed up and stolen.
Mises was safe in Geneva, a country that took in many Jews during those years but thankfully stayed neutral in the conflicts that otherwise wrecked so many countries. Mises immediately began work on his master treatise that sought to integrate many of his previous contributions to economics, philosophy, and political theory. It began with a reconstruction of the methodological basis of the social science, explained money and exchange, integrated monetary theory with price, wage, and production, provided a full-blown attack on socialism, made the case for free trade, and . . . well, rather than list the whole contents, let me just use the word Murray Rothbard employed when asked what the book contained: everything!
The work continued for six years until the final product appeared: Nationalokonomie in German. Now, there was a great tragedy about to unfold. It was wartime. The book was in German, printed in Switzerland. The author was being pressured to leave and find a new home, and soon would make a close escape through France and come to the United States. This great work would have no impact on the world, at least not for now.
When his boat arrived in the United States he faced remarkable barriers. This man of 60 years had no academic position lined up. His papers from Vienna were lost, seemingly forever. He would have to become fluent in a new language. He had very few contacts at all. Mostly he was burdened with a great sadness.
But then there were some rays of light. Henry Hazlitt, then an editor at the New York Times, had contacts at Yale University Press, where Mises found a sympathetic ear. Yale published his first book in English, which was an account of the causes of World War II. He showed that the seeds of German totalitarianism grew from unlikely soil: the policy goal of Hitler to achieve national economic self-sufficiency. This is what led to imperialism, national planning, socialism, and finally war. Mises emphasized in this volume that a policy of protectionism is not only cruel to domestic consumers and international producers but also leads to violence at home and abroad. Then as now, protectionism and mercantilism are disastrous paths that can only end in wrecking prosperity and peace.
Based on the commercial, not academic, success of this book, and another on bureaucracy that followed it, Yale approached Mises with a seemingly impossible task: translate his 1940 treatise into English. One can only imagine how difficult this must have been for him. But nine years after arriving penniless on US shores, it was done. In 1949, Human Action appeared. Even today, it remains a huge seller, and the best book in the social sciences ever written, in my humble judgment.
Among the staff at Yale were people who were doubtful about the wisdom of publishing this book. Within weeks, however, a memo circulated within Yale University Press expressing astonishment at the rapid sales of Human Action. How could such a dense tome of nearly 1,000 pages, expensive by the standards of the day, written by an economist without a prestigious teaching position or any notable reputation at all in the US, published against the advice of many on Yale’s academic advisory board, sell so quickly that a second and third printing would be necessary in only a matter of months?
Imagine how shocked these same people would be to find that the first edition, reissued 50 years later as the Scholar’s Edition of Human Action, would sell so quickly again. But this is what the Mises Institute has experienced since we printed our Scholar’s Edition in 1999.
Human Action appeared in the midst of ideological and political turmoil. The world war had only recently ended, and the US was attempting to reshape the politics of Europe with a new experiment in global foreign aid. The Cold War was just beginning. The old idea of the liberal society was gone, seemingly forever. It was a relic of a distant age, and certainly not a model for a modern industrial society. The future was clear: the world would move toward government planning in all aspects of life, and away from the anarchy of markets. As for the economics profession, the Keynesian School had not yet reached its height, but that was soon to come.
Socialist theory enthralled the profession to the extent that Mises was thought to have lost the debate over whether socialism was economically possible. In academia, a new generation was being raised to believe that FDR and World War II saved us from the Depression, and that there were no limits to what the State could do. Ruling the land was a regime characterized by regimentation in intellectual, social, and political life.
Human Action came not as a polite suggestion that the world take another look at the merits of free enterprise. No, it was a seamless and uncompromising statement of theoretical purity that was completely at odds with the prevailing view. Even more than that, Mises dared to do what was completely unfashionable then and now, which is to build a complete system of thought from the ground up. Even his former students were taken aback by the enormity of the argument and the purity of his stand.
When you read Human Action, what you get is not a running commentary on the turmoil of the time, but rather a pristine theoretical argument that seems to rise above it all. To be sure, Mises addresses the enemies of freedom in these pages—and they happen to be the same enemies of freedom that surround us today. But much more remarkable is the way he was able to detach himself from the rough and tumble of daily events, and write a book restating and advancing a pure science of economic logic, from the first page to the last. It contains not a word or phrase designed to appeal to the biases of the world around him. Instead, he sought to make a case that would transcend his generation.
We need to reflect on what it required of Mises personally to write the book. He had been uprooted from his homeland, and much of his beloved Europe was in tatters. Well past mid-life, Mises had to start over, with a new language and a new setting. It would have been so easy for him to look around at the world and conclude that freedom was doomed and that his life had been a waste. Try to imagine the intellectual courage it required for him to sit down and write, as he did, an all-encompassing apologia for the old liberal cause, giving it a scientific foundation, battling it out with every enemy of freedom, and ending this huge treatise with a call for the entire world to change direction from its present course onto an entirely new one.
People were not ready for that message then, but they are more ready for it now, because we live in times when government routinely confiscates one half or more of the profits associated with entrepreneurship and labor, regulates all aspects of economic life, and presumes to care for us from cradle to grave. Republicans and Democrats call for expansions of government power. They disagree on the reasons but agree to disagree and get on with the business of taxing and spending. After all, it’s not their money anyway.
Indeed, the answer to our problems or the hope for a free society does not rest with politics. The best hope for freedom in our time comes from ideological change, and it will be the work of thinkers like Mises that will bring it about.
There are many ways we can assist though. We can read, study, and understand the teachings of the great liberal tradition. We can support those who work with students to acquire a broader understanding than they are given in most classrooms in this country. We can support professors who follow in the path of Mises by exercising independence of mind and dissenting from mainstream group think.
We can work toward a society that respects freedom of association and property. We can eschew the politics of envy. We can and must work toward a world in which nationalist consciousness remains within proper bounds and doesn’t degenerate into war and imperialism. We must have free trade. It was nationalism and protectionism that wrecked Europe in the Second World War, and these forces will wreck the US too.
The merit of thinking outside the borders is that it helps reinforce a very important source of peace, namely the economic interdependence of the world. Mises’s life was spared because he was permitted to leave a country that had become unsafe for him and enter another. The freedom to vote with your feet might be the most important voting right we ever exercise.
We also need more sanctuaries for freedom-minded intellectuals. The Mises Institute was founded in Mises’s honor to make sure that there would always be a place for dissidents, an institution to support their cause. Like the Graduate Institute in Geneva, we sought out and continue to seek independent means of support. This is why we accept no government grants or money or privilege. We strive to be an intellectual safehouse where freedom can live and breathe.
It was Mises’s firm conviction that ideas, and ideas alone, can bring about a change in the course of history. It was for this reason that he was able to complete his great book and live a heroic life despite every attempt to silence him. The scholarly followers of Mises in our own time exhibit these traits, and inspire us every day with their innovative, principled, and radical approach to remaking the world of ideas. In their work for journals, in their books, and in their teaching we see the ideals and the courage of Mises being fulfilled.
This much I’ve learned in my years as the head of the Mises Institute. It is not enough to have a good education. It is not even enough to hold the right ideas. What one needs to be a hero and to achieve the status of greatness is moral courage. To really make a difference in this world, one must be willing to stand up for what one believes, and be implacable in the face of political and social pressure. This is a trait far rarer than brilliance and wit.
When Mises died, he did not know that the papers looted from his apartment would eventually turn up in a secret Moscow archive. He did not know that the 1940 treatise would be made available to the world in an online publication. He did not know there would be an institute named after him. He did not know that his works would be read more and studied more a quarter of a century later than they ever were in the last half of his life. He did not know that the Nobel Prize committee would grant his student the economic prize for his elaborations on a theory originally advanced by Mises himself.
I often think back to a photograph of Mises when he was a young boy of perhaps 12, standing with his father. He was wearing the traditional Austrian garb popular in the 1890s, and holding a racket for sports. The picture was grainy and distant. And yet you sense that there was something in Mises’s eyes, a certain determination and intellectual fire, even at such a young age. His eyes seem knowing, as if he were already preparing himself for what he might face.
Yet it cannot be. He cannot have known that the world he then lived in would be destroyed and that the end of his life would find him on the other side of the world, speaking and writing in a different language, and advancing ideas rejected by the whole world. If he had known, would he have gone forward? I think so.
We look and try to discern what it was about him that caused him to be such a fighter, that caused him to stand while others fell, that gave him that sense of moral certitude to fight for enduring truths regardless of the political winds. Even in that grainy photograph, we have some sense that we see it in his eyes, that glimmer that reflects a heart that would never compromise with despotism but rather advance the truth of human freedom until his last breath.
Mises was a model and ideal among all too few in the 20th century. It is my highest honor and privilege, as president of the Mises Institute, to find myself in a position to draw attention to his life and work, and assist others who might similarly adopt that motto of Virgil’s as their own.
Llewellyn H. Rockwell, Jr. is president of the Mises Institute (Rockwell@ mises.org). From a speech delivered on the campus of Walsh College.
