On 29 September 1881, Ludwig Von Mises – eminent “Austrian School” economist, liberalist, freedom fighter and social philosopher of last century – was born to Jewish parents in Lemberg, Galicia, part of the then Austro-Hungarian Empire (now Lviv, the largest city in western Ukraine).
Attending the University of Vienna from 1900, Mises became influenced by the works of Austrian economist, Carl Menger, founder of the Austrian School of economics. This school – with its strong advocacy for:
- the sanctity of the individual (who acts deliberately to achieve desired goals, but who is notoriously hard to understand and predict, particularly for a “Big Brother” state)
- free people, markets, speech and thought (liberty)
- fiscal and monetary conservatism (not activism), and
- government limited to little more than the defence of person and property within its territorial area
became a key bulwark against the rising ideological tide of collectivism, statism and totalitarianism in the early 20th century, typified by this tide’s subordination of the individual, basic rights, freedoms and markets for the “collective good” (as defined by the oligarchy in/seeking power).
The first wave of totalitarianism was in the pandemic form of Marxist socialism and communism (full state ownership of property, full government control and scant regard for nation, institutions, culture and borders).
The second wave was the reactionary form of fascism and nationalist socialism (less state ownership of property but still massive government control of the territory it held).
The Austrian school, of which Mises became a leader, was also a key bulwark against the rise of Keynesianism with its bigger government, market-interventionist instincts and preference to reflexively stimulate and spend in downturns – as opposed to addressing the underlying causes of the ups and downs in the business cycle (of which government and regulators are so often major contributors).
- Mises would have been aghast at the enormous Keynesian-style stimulus package the Rudd Labor government indiscriminately and futilely rolled out in response to the 2008 GFC. It raised the size and spending of government to new levels (ie beyond 25% of GDP) that have not subsided since.
Being Jewish, prominent and opposed to totalitarianism in all its forms, Mises fled central Europe to the US in the early WWII years – along with many of the Austrian school economists – where he continued his work fighting the good fight for:
- greater sanctity of the individual, liberty, freer markets and discourse, and
- less government, taxation, regulation, activism and intervention.
Milton Friedman of the Chicago School of Economics (and Father of Monetarism) came along later, joining forces in some/many respects to quell the worst ravishes and inflationary effects of Keynesian economic ideology that had gripped the western world, particularly in/by the 1970s.
Without Mises and then Friedman, the cancerous cult of Keynesianism, with its inflationism, interventionism and big statism, in the 20th century may have had few, if any, effective checks and rigorous bounds (see further details below).
Celebrate the birth of Ludwig von Mises – foremost Austrian School economist, political theorist, anti-Keynesian and champion of liberty – by:
- reading more on Mises’ life and philosophy
- browsing the website of the Ludwig von Mises Institute
- watching these clips on Ludwig von Mises – or listening to the man himself
- observing some of the key differences between the Austrian and Chicago Schools of economics and libertarianism (both usefully anti-Keynesian, liberalists and fighters for freedom), and/or
- sharing this Action Plan post on social media with family, friends, conservatives, classical liberals and those that see the futility in socialism, big statism, evermore interventionism and central planning.
Further details on Ludwig von Mises
Economists from the Austrian School are noted for:
- their strong advocacy of free market, liberalist and laissez-faire policies
- greater focus on the individual when building economic theories and frameworks
- their philosophy that economic life is not mechanical, but human – notoriously hard to understand and predict (eg utopianism and central planning is futile, conceited and dangerous) and that too many economists are/become in effect frustrated physicists
- their monetary framework, that:
- the money supply needs a hard, tangible anchor (eg the gold standard, cf be fiat-based), and
- loose money and credit causes inflation and business cycles (ie booms and thus inevitable, painful busts), and
- their fiscal conservatism and staunch criticism of big government, statism, interventionism, regulator’s conceit, Keynesian economic ideology, socialism and Marxist ideology.
Mises was most effective at arguing and prosecuting these common sense, liberalist, personal responsibility-based frameworks and views. As chief economic advisor in the 1920s to the Austrian government, equipped with his hard-headed, “restrictionist” monetary framework, Mises’ advice slowed Austria’s rampant post-WWI inflation back to respectable levels.
He and his protégés, adherents and admirers were instrumental in containing the allure and spread of (otherwise near-unfettered) Keynesian economic ideology in the pre- and post-WWII years. They also heavily influenced key administrations after WWII including in France (under General Charles de Gaulle’s presidency, late 1950s to late 1960s) and in Italy (under Luigi Einaudi’s presidency, late 1940s to mid-1950s) by steering them away from the then rampant zeitgeists of Keynesianism, big statism and socialism.
This excerpt from the Mises Institute’s website probably best sums up the mindset and framework of the man:
“As a free trader and a classical liberal in the tradition of Cobden, Bright, and Spencer, Mises was a libertarian who championed reason and individual liberty in personal as well as economic matters. As a rationalist and an opponent of statism in all its forms, Mises would never call himself a “conservative,” but rather a liberal in the nineteenth-century sense.
Indeed, Mises was politically a laissez-faire radical, who denounced tariffs, immigration restrictions, or governmental attempts to enforce morality. On the other hand, Mises was a staunch cultural and sociological conservative, who attacked egalitarianism, strongly denounced political feminism as a facet of socialism. In contrast to many conservative critics of capitalism, Mises held that personal morality and the nuclear family were both essential to, and fostered by, a system of free-market capitalism.”
One of Mises’ best known protégés is Friedrich (August or F.A.) von Hayek, who wrote the famous book, “The Road To Serfdom” (1944) and won the Nobel Prize in economics in 1974 for elaborating on Mises’ monetary-driven business cycle theory. Increasingly many consider its key take-out, that:
“Economic theory has demonstrated in an irrefutable way that a prosperity created by an expansionist monetary and credit policy is illusory and must end in a slump, an economic crisis. It has happened again and again in the past, and it will happen in the future, too.”
aptly describes our current, credit-fuelled economic times and much of the 21st century, pre- and post-GFC.
Mises’ work also influenced other Americans, including:
- novelist Ayn Rand (known for her two best-selling novels, “Atlas Shrugged” and “The Fountainhead” and her philosophy of “Objectivism”), and
- heterodox Austrian School economist, Murray Rothbard, who was instrumental in developing modern right-libertarianism, anarcho-capitalism and (most importantly for this post) establishing the Ludwig von Mises Institute in Alabama, US (1982).
While no school of economic or philosophical thought is perfect or faultless, some like the Austrian school are particularly vital to help maintain our prosperity and freedoms against the collectivist zeitgeists that, history shows, continually buffet our societies and best minds.
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