The Mises Reader

Knowledge of the principles of the free society is not something that everyone is born with or something that we just catch like the common cold. The principles of liberty must be carefully passed on from one generation to the next if they are to survive, let alone flourish. Each generation must learn anew from their predecessors the virtues of private property and the consequences of statism. It is even more crucial today, in our contemporary intellectual environment, to have something to offer besides empty platitudes about how we can all “just get along.” Today’s citizen who is interested in things economic, can do no better than to turn to Ludwig von Mises. In his life and work Mises provides the intelligent person a vision for the importance of truth, economics, liberty, and scholarship that continually inspires to greatness.1

The reason Mises is so important can be understood by looking at our halls of learning. It is no secret that state-run elementary and secondary schools are failing their charges. Year after year we hear the all-too-familiar reports telling us again and again how test scores are falling. Such dismal performance sows the seeds for a meager harvest reaped by these same students as they enter college. Fewer and fewer of them graduate high school with a basic knowledge about history, literature, science, and math. It should not surprise us that 20 percent of all college freshmen in the United States need remedial classes.2 It is particularly disheartening to observe the decayed condition of modern American higher education. Not so very long ago, the college was seen as a most important institution charged with transmitting Western civilization from one generation to the next. It was here that students had the luxury of critically examining what different voices throughout time have answered when considering the big questions regarding man, life, death, and God. The goal was not an endless pursuit for pursuit’s sake, but was indeed pursuit for true answers to these questions.

Most people, I am sure, recognize that this is no longer the case. Most college faculties are now dominated, especially in the humanities, by one manifestation or another of deconstructionism. Everything is up for grabs and, at worst, the intellectual sees his chief end as the destruction of the foundations of Western civilization so that we can all dance on its ruins.

On the economic front, things are not much better. Several years ago a college near mine was having a political debate of sorts and evidently could not find anyone on their campus to defend the free market position, so they asked some of my students if they would participate. The report back from my students was by turns outrageous and depressing. From their opponents, there were numerous serious calls for stronger anti-trust regulation, energy regulation, increased state funding of education, subsidization of business, increased welfare, socialized health care, state urban planning, increased environmental regulation, an $11/hour living wage, regulations forcing insurance companies to cover abortions, and increased gun ownership restrictions.

This is what happens when intellectuals, teachers, and college professors see themselves as destroyers instead of cultivators. If we want to preserve our noble cultural inheritance, we cannot think that it will happen automatically. It is always easier to destroy than to maintain and build up. If civilization is not to descend into barbarism, we must teach each generation the importance of truth, liberty, and private property. It is not called culture for nothing. We must cultivate civilization. A former colleague of mine reminds me from time to time that as professors we are indeed the thin tweed line separating civilization from barbarism. Recently, however, the barbarians have been winning because the troops charged with manning the thin tweed line have been either absent without leave or actually fighting for the enemy.

What makes the fight more difficult is that to preserve society, it is not enough merely to oppose destructive philosophies, although oppose them we must. We also must offer a positive and real alternative. As Mises warns us at the end of his book, The Anti-capitalist Mentality,

An “anti-something” movement displays a purely negative attitude. It has no chance whatever to succeed. Its passionate diatribes virtually advertise the program they attack. People must fight for something they want to achieve, not simply reject an evil, no matter how bad it may be. They must, without any reservations, endorse the program of the market economy.3

In this, Mises was, perhaps unwittingly, in agreement with the Apostle Paul who told us many years ago to hate indeed that which is evil, but also to cling to that which is good. In order to maintain our cultural inheritance, we must not only oppose statism but also teach our students to cultivate and nurture the roots of civilization: the free society of voluntary exchange built on private property.

In today’s intellectual vacuum, students need someone to whom they can look for an example of sound scholarship that provides true answers to the important economic and political questions of the day. They could do no better than to turn to the writings of Ludwig von Mises. The life and work of Mises provides students with a magnificent example of what an economist, a scholar, and, in many ways, what a person should be.

This is certainly true in my own experience. As a freshman at a Christian liberal arts college in Northwest Iowa, I was instinctively conservative. I thought, for instance, that low taxes were better than high taxes, low inflation was better than high inflation, and communism was a bad economic and political system. However, I could not satisfactorily explain why.

That same year I joined the Conservative Book Club. As a member I agreed to buy four books from the Club over the course of three years. One month the Club was offering this book Human Action by some Austrian economist I had never heard of as its featured alternative. Because of its price, it was allowed to count for two of my required purchases. I thought, “hey, pretty economical,” and upon encouragement from my economics professor, I went ahead and bought it. The book changed my life. In Mises’s own memoirs, he recounts how near Christmas in 1903 he read Carl Menger’s Principles of Economics and that book made him an economist.4 Well, Human Action did the same for me.

I found the book at once inspiring and intimidating. I plowed into it with an eager mind and immediately was impressed with Mises’s intellect and his rigorous logic. What also impressed me was the density of Mises’s arguments. He did not waste words that did not advance his theories. As such, Human Action can be rather daunting for readers relatively new to economics. On the one hand, I had several eureka! moments as Mises unpacked the logic demonstrating another economic truth. A number of times I also found some of it rather slow-going. Many times I read and re-read pages to gain a sense of understanding. I would start at the top of a page and by the time I had worked my way down to the bottom, I forgot what the main point was, so I had to start again. Some of it is quite technical, so I had to slow way down to grasp material. I would read passages, sections, and chapters and need to set the book aside for a bit while I thought about, puzzled over, evaluated, and, finally, achieved understanding. It took me five years of off-and-on reading in the midst of my other studies and then work to complete reading it the first time through. Now all of this work was definitely worth it. The benefit from reading and re-reading Human Action is incalculable. Still, I began to look for a less taxing way of becoming acquainted with Mises’s ideas.

During my time in college, while I was still working through Human Action, I sought out other more accessible books by Mises. This was years before the advent of the internet and mises.org. I had to turn to that ancient institution called the library and I discovered that our college library had a collection of shorter essays by Mises published by Libertarian Press in a collection entitled Planning for Freedom and Sixteen Other Essays. This book proved to be a more accessible introduction to Mises’s thought. I began reading it during my free time and did not stop until I had come to the end. Planning for Freedom turned out to be the first book by Mises that I read completely. As I read, I began to put together an economic and political philosophy that revolved around private property. It was the writings of Mises that provided me the intellectual foundation to evaluate and integrate what I was being taught in school. Looking back on those years, I have grown to appreciate the wisdom expressed in the sentiment by Mark Thornton that one of the best ways to become introduced to the work of Ludwig von Mises is through some of his shorter, more popular works.5 While sacrificing nothing in the way of sound economic theory, they are more accessible and in any event are not as intimidating as Mises’s 881-page magnum opus.

In this anthology, I have sought to bring you the best of both worlds. An attempt has been made to acquaint the reader with the broad spectrum of Mises’s ideas and analyses in a way that is more accessible and less daunting. The selections include, therefore, several shorter, more popular works side-by-side with excerpts from longer, more scholarly and technically difficult works. A special feature of this collection is the inclusion of an appreciation of Eugen von Böhm-Bawerk, available for the first time in English, translated from the French by Karl-Friederich Israel. It is my hope that this book will provide a user-friendly gateway into the brilliance of Mises, because we desperately need his wisdom as much now as in any other time in our history.

The work of Ludwig von Mises is an important guide for thoughtful citizens because he strongly, yet matter-of-factly sets forth economics as the pursuit of truth. Not the truth of the passing fancy, nor the so-called “small t-truth” that is always in danger of being refuted by the latest bit of empirical data; but economic truth that will stand for all ages. Misesian economic theory is a triumphant response to the epistemological relativism of today because it is economics developed in light of reality.

Upon reading the works of Mises, one is immediately set forth on the right road, because Mises begins where economics must begin — human action. All of his economic theorems and corollaries are deduced from the non-controversial axiom that people engage in purposeful behavior. This immediately sets his theories on intellectual bedrock.

As I read the opening chapters of Human Action during my sophomore year, I had a sort of epiphany as all of the conclusions I had learned in my economics classes began to fall into logical place. The law of demand was not merely a plausible sounding notion that is true only in an unrealizable ideal world. It was not the necessary implication of arbitrary assumptions that must be tested again and again. Mises showed that economics is logically whole and that demand is rooted in the law of marginal utility which itself is deduced from the premise that human beings act purposefully. Readers of Mises are not left walking on the shifting sand of empiricism, but on the solid ground of true axioms and sound logic.

A former student of mine who received his J.D. at Harvard Law School had a similar reaction. He once told me that while he appreciated the insights that economics in general gives him in the field of law and economics, what sets Mises above all others in his mind is Mises’s focus on individual human action. The modern focus on bell curves and treating people as rats in mazes, he said, makes it difficult to imagine the practical implication of economic theory relating to a contract case between Joe and Bob. Mises’s framework starts with people like Joe and Bob.

In arguing for economic truth, Mises explicitly rejects relativism. A much-too-large segment of our intellectual culture is under the spell of post-modernism. One root of such thinking is what Mises termed polylogism, the idea that different groups of people have different mental categories and systems of logic. Marxists, for instance, argue that there is an inseparable gulf between the proletariat mind and the bourgeois mind. Not that they have different opinions on things, but that they have entirely different laws of logic and ways of thinking. The same notions are found in feminist academic circles and in all brands of multiculturalism. These theories attempt to shield their subscribers from criticism made by those outside of their particular cults. Mises refutes such illogic by stressing that truth is truth no matter who says it. He writes,

A theory is either correct or incorrect. ... But a theory can never be valid for a bourgeois or an American if it is invalid for a proletarian or a Chinese.6

Mises’s demolition of polylogism provides students a basis from which they can reply to the Marxist, feminist, and racist theories of criticism that have been running amok within the humanities for some time.

The work of Mises is also important for today because Mises provides a clear understanding of why economics is important by asking the right and important questions and providing correct answers. His books and essays are not consumed with inquiries regarding what the stock market will do in the next six months, or will a federal funds rate of 0.25 percent achieve full employment or should it be 0.5 percent.

While Mises does help us speak to such questions, he focuses on the larger, more fundamental issues. A key theme that runs throughout the work of Mises, for instance, is the consideration of the survival of civilization. Mises warns that social progress is not automatic. In Human Action he explains that our

civilization was able to spring into existence because the peoples were dominated by ideas which were the application of the teachings of economics to the problems of economic policy. It will and must perish if the nations continue to pursue the course which they entered upon under the spell of doctrines rejecting economic thinking.7

The work of Mises is important to the survival of civilization because it helps pass along knowledge to a new generation of students. And this knowledge helps answer one of the most pressing dilemmas of our human existence — a dilemma that has been with us since the beginning of time. How do we deal with the fundamental condition of scarcity? As we are reminded by that eminent modern philosopher and former student of the London School of Economics Mick Jagger, “You can’t always get what you want.” We are presented with the question: How do we go about our business in this world of scarcity without descending into a barbaric struggle for survival?

Because of the relative material comfort we possess in the West, it is natural for this question to never have occurred to most people. The brilliance of Mises, however, lies in the fact that he invites us to ponder this very real question and then sets out the right answer. He explains that in order to escape starvation and a barbaric struggle for survival, it is crucial that we take advantage of social cooperation through the division of labor. Without the division of labor, everyone would have to produce all that he or she consumes. Each person would have to produce his own food, plus his own house, plus his own clothes, plus all the other goods that make his life better. Without the division of labor, no one would be able to specialize in that thing he does relatively better than everyone else. Our total wealth would be greatly reduced and we would be left living largely from hand to mouth.

By reading Mises, however, students clearly see that as the result of our ability to exchange goods with one another, we can specialize in producing only those things at which we are most efficient and then trade the surplus we don’t need for other things we want. As we specialize, our productivity goes up individually and the total wealth of our community increases. The division of labor through voluntary exchange allows us to rise above a barbaric struggle for existence in which we hope that we are one of the fittest that will survive. The division of labor allows us to build civilization.

However the expansion of the division of labor has challenges of its own. And it is here that Mises is really in his element. An economy that has taken advantage of an extensive division of labor is very complex and yet, decentralized. Such an economy features a multitude of different markets in which the participants must coordinate their activities if we want to avoid recessions and depressions. The biggest problem for this decentralized economy to work is that all of the various producers have to know what to produce, how much to produce, and how to produce it.

This can only be done if some method of calculation exists. No other economist of his day stressed this point more than Mises. Indeed in the 1920s Mises demonstrated that the lack of economic calculation is the Achilles heel of socialism. Alternatives must be compared to one another if producers are to know how best to fulfill the desires of consumers for goods and services. Even if they know what consumers want they must be able to compare alternative ways to produce it. Should we build this house with wooden studs or metal? Blown or rolled insulation? Air or coil heating? This can be known only if there is a common denominator we can use to assess the relative value of each alternative. We cannot simply use physical units of goods for the comparison. Saying that ten two-by-fours are worth less than fifty nails because ten is less than fifty is like saying I’m taller than you because I’m 5 foot 8 and you are 98.6 degrees Fahrenheit.

Mises recognizes that what makes such comparisons even harder is that we all value goods subjectively, according to our personal preferences. We cannot, therefore, measure value because there are no objective units of value measurement.

Again it was Mises who demonstrated that voluntary exchange in a monetary economy opens the door to a solution. In a monetary economy, every good is exchanged against money, so every price is expressed in terms of the monetary unit — in our case dollars and cents. Even though value is subjective, in a free market, people manifest their values by voluntarily deciding what they will pay for particular products and services. These objective prices, therefore, are reflections of subjective values. Entrepreneurs are able to use these objective prices to calculate expected profit and loss and act accordingly. In a free market, Mises shows, entrepreneurs are able to plan for the future and consumers will receive what they most want.

Socialism, on the other hand, is doomed because there is no way for the central planner to efficiently allocate factors of production because there is no way to calculate profit and loss. In a completely socialistic economy all of the means of production are owned by the state. There is, therefore, no actual exchange of goods, and hence no actual prices that reflect the actual subjective values of human beings. Producers, then, have no way to calculate whether their actions are productive or wasteful from the point of view of society. What is called a planned economy is, instead, as Mises so eloquently put it, “groping about in the dark.”

I once had a student from China who cited Human Action as the book that finally turned him away from socialism. He had read all of Human Action, praising it for its readability. He told me that reading Human Action helped him realize that Communism was an impossible utopia. Mises’s explanation of the devastating economic consequences of war also attracted this student to read further works by Mises.

The moral of the story is that voluntary exchange in a monetary economy allows us to have the civilization we enjoy. In order to engage in voluntary exchange using money, however, Mises stresses that it is necessary for people to own private property. You cannot exchange what you do not own. If there is no ownership of private property, there is no actual exchange. If there is no exchange, there is no division of labor and there is no money so there are neither money prices, nor economic calculation. We would be left with chaos, not civilization. For civilization to survive, consequently, Mises teaches us that society must be a private property order. If people are able to own and trade their property as they see fit, wealth increases and civilization prospers.

The insights of Mises do not stop with his critique of socialism, however. From his 1929 collection of essays A Critique of Interventionism through the rest of his career, he continually explained to whomever would listen that even if the state does not fully socialize the economy, but intervenes only here and there, this too hinders the workings of the price system. To the extent that the state intervenes and curbs the free actions of individuals through price controls, monetary inflation, product restrictions, taxation, and subsidization, to that extent will prices for goods not accurately reflect the values of the people in that society. Such intervention will make it that much harder for entrepreneurs to do their job and one should expect to see shortages in some industries and surpluses in another.

You can see, then, that Mises builds his economic theory into a massive, logically integrated edifice of truth. More than any other economist of his day, Mises demonstrates that laws of economics are indeed laws every bit as universal and irrevocable as the laws of chemistry and physics, and we violate them at our peril. It is this fact that enables the study of economics to be a noble endeavor for everyone. In Human Action, Mises comments on the role of the economist by likening him to a chemist warning people against poisoning themselves. He writes,

A man who chooses between drinking a glass of milk and a glass of a solution of potassium cyanide does not choose between two beverages; he chooses between life and death. A society that chooses between capitalism and socialism does not choose between two social systems; it chooses between social cooperation and the disintegration of society. Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings. To stress this point is the task of economics as it is the task of biology and chemistry to teach that potassium cyanide is not a nutriment but a deadly poison.8

Indeed, one of the most important benefits received from reading Mises is the ability to critically evaluate public policy.

When assigned in a college class long ago to research the viability of the social security system, the first place I turned to was Human Action. The passage I read then I have never forgotten. It is a passage that is as timely as today’s headlines. Mises writes,

One may try to justify [social security] by declaring that the wage earners lack the insight and the moral strength to provide spontaneously for their own future. But then it is not easy to silence the voices of those who ask whether it is not paradoxical to entrust the nation’s welfare to the decisions of voters whom the law itself considers incapable of managing their own affairs.9

This is dynamite for the intelligent person who wants to truly understand the nature of hydra-headed interventionism that pushes a myriad of statist policies including inflationism, the welfare-warfare state, Keynesian fiscal management, socialized medicine, and countless business regulations that serve only to hamper mutually beneficial exchange.

Today people are increasingly urged to support this or that political program advertised as solving a vexing social problem with no understanding of economics and hence no frame of reference from which to evaluate different policies. All that is mustered in justification for interventionism are feelings that make people want to “do something.” The economics of Mises is the crucial antidote for the current interventionist ideology supporting the progressive march to economic fascism. Citizens acquainted with Mises quickly understand that any sort of middle-of-the-road economic policy does indeed lead to socialism.

Ludwig von Mises does not only provide us a vision of economic truth, however. He also inspires us to greatness by presenting the student an example of what an outstanding scholar should be. It does not take the reader of Mises’s work very long to see what a breadth of knowledge Mises had. Murray Rothbard once recounted how, when someone first recommended Human Action to him, he asked, “What is it about?” The response to Rothbard was “Everything.” A student in one of my managerial economics courses was impressed with the same observation. I had assigned from Human Action a brief section about the distinction between the manager and the entrepreneur. He liked what was assigned, so he began to read through the first part of the book. He was greatly impressed and told me, “He doesn’t write just about economics. It’s all there, of course, but he also writes about everything else.” This student now has a standard for real scholarship.

Throughout Mises’s works are insightful discussions about history, philosophy, political science, sociology, and even aesthetics. He makes not only references to, but thoughtful comments on the likes of Aristotle, Bentham, Bismark, Comte, Locke, Kant, Marx, Mill, Napoleon, Tacitus, Saint Francis of Assisi, and Spinoza. As he once explained in his New York  University Seminar,

One of the indispensable prerequisites of a master of economics is a perfect knowledge of history, the history of ideas and of civilization, and of social, economic, and political history. To know one field well, one must also know other fields.10

In another instance Mises cited a number of authors in French and German. One student spoke up, asking, “Why are you giving these citations, Professor? I can’t read French and German.” Mises replied simply, “Learn it. You are engaged in scholarly activities.”11 He also encouraged his students not only to read authors with which they agreed, but to read about an issue from all sides. A student who reads Mises is inspired to be such a scholar.

Looking at Mises the scholar, the contemporary student learns a valuable lesson in integrity. His life was a never-ending fight for economic truth, liberty, scholarly excellence, and the principles of the free market. As he notes in his autobiography, at a particularly depressing time in his life when it appeared that he had become merely “an historian of decline,” he remembered his personal motto adopted from a line out of Virgil: “Do not give in to the evil, but proceed ever the more against it.” Throughout his life, he did just that.

His research and logical analysis convinced him of the negative consequences of socialism and interventionism. He never wavered from those convictions and his steadfastness cost him plenty. He did without a salaried academic appointment because he was not willing to be a court intellectual. However, he never grew bitter about this. In his autobiography he writes,

I was sometimes accused of representing my viewpoint in a manner too abrupt and intransigent. It was also claimed that I could have accomplished more had I displayed a greater willingness to compromise. ... When I look back at my work … my only regret is my willingness to compromise, and not my intransigence.12

The reason for his uncompromising attitude is that he took his work as a scholar seriously. Mises thought, “In science, compromise is a betrayal of truth.”13 Would that more contemporary economists had the same convictions.

Ludwig von Mises truly was an intellectual giant among men and, as Murray Rothbard14 saw, his thought and causal-realist framework is the best alternative to the economic paradigm of our age. In the contemporary fog of the modern academy, Mises serves as a lighthouse, warning unsuspecting students of the perils of bad economics and statist economic policies, while illuminating students to the principles of the free society.

The book in your hands is intended to give a taste of the many facets of Mises’s thought in a way that accessibly communicates most of his key contributions to the social sciences. It therefore includes excerpts from his larger and more technically demanding works side-by-side with shorter, more introductory articles and lectures. The finished product is sort of an intelligent person’s guide to the work of Ludwig von Mises. It is especially suitable for those with an interest in Mises, but find jumping right into Human Action, Socialism, or The Theory of Money and Credit rather daunting. The hope is to give the reader a survey of Mises’s insights in a format that nourishes his intellectual soul, while also whetting the appetite for his larger corpus of work. Those ready to dive into deeper Misesian waters are encouraged to pick up The Mises Reader Unabridged which contains all of the material in The Mises Reader plus over 125 pages of additional material, primarily from his more scholarly works. It is hoped that together these two volumes will foster a rising generation of citizens more thoroughly acquainted with sound economics and the principles of the free society.

If we want to preserve our civilization from the cultural destroyers, post-modern relativists, and enemies of freedom, we must provide our generation of inquisitive minds with a sound alternative. We must direct our fellow sojourners to a literature that defends truth and property and inspires us to greatness. Fortunately we have such a literature to turn to — a literature of freedom. Those desiring to beat back the barbarians at the gate, would do well to begin with the works of Ludwig von Mises. In him, the reader will find, as Murray Rothbard found, a scholar, creator, and hero.

Shawn Ritenour
Grove City College

• 1For a good and accessible overview of Mises’s thought see The Essential von Mises and Ludwig von Mises: Scholar, Creator, Hero (Auburn, Ala.: Mises Institute, 2009), both by Murray N. Rothbard. They are combined in one volume in Rothbard (2009). A more extensive biography of Mises can be found in Israel Kirzner’s Ludwig von Mises: The Man and His Economics (Wilmington, Del.: ISI Book, 2001). Jörg Guido Hülsmann’s massive Mises: The Last Knight of Liberalism (Auburn, Ala.: Mises Institute, 2007) is the most extensive biography and the standard-bearer on Mises’s life and work.
• 2A. Lu, States Reform Remedial College Education (2013). Available at: http://www.pewstates.org/projects/stateline/headlines/states-reform-college-remedial-education-85899492704
• 3Ludwig von Mises, The Anti-capitalist Mentality (New York: D. Van Nostrand, 1956), p. 112.
• 4Ludwig von Mises, Memoirs (Auburn, Ala.: Mises Institute, 2009), p. 25.
• 5Mark Thornton, from a Mises Wire post “How to Read Mises,” October 8, 2013. https://mises.org/blog/how-read-mises
• 6Ludwig von Mises, Human Action (Auburn, Ala.:Mises Institute [1949] 1998), p. 91.
• 7Mises, Human Action, p. 10.
• 8Mises, Human Action, p. 676.
• 9Ibid., p. 613.
• 10John Chamberlain, “My Years with Ludwig von Mises,” The Freeman 27, no. 2 (February 1977): 126–27.
• 11Margit von Mises, My Years with Ludwig von Mises (New Rochelle, New York: Arlington Press, 1976), pp. 135–36.
• 12Mises, Memoirs, p. 60.
• 13Ibid., p. 61.
• 14Murray N. Rothbard, “Ludwig von Mises and the Paradigm for our Age,” Modern Age (Fall 1971): 370–79.