Free Market Defense Ludwig von Mises: Defender of the Free Market Ludwig von Misis thoughts on human behavior, socialism, and money and credit have had a major impact on economic thought. He championed true free markets and is seen as a defender of liberty. Former President of the United States Ronald Reagan said “Ludwig von Mises was one of the greatest economic thinkers in the history of Western Civilization. Through his seminal works, he rekindled the flames of liberty.
As a wise and kindly mentor, he encourages all who sought to understand the meaning of freedom.We owe him an incalculable debt”(Mises Institute). The remainder of this paper will outline the life of Ludwig von Mises. This will be accomplished by describing the social, political, technical, and economic environment that influenced his ideas. A description of his major ideas in economic thought will be presented. Next, the people and ideas that influenced his approach to economics will be addressed.Finally, the paper will conclude with an assessment of Ludwig von Mises contributions to economic thought.
Overview of the Life of Ludwig von Mises Ludwig von Misis was born on September 29, 1881 in Lemberg, Austria. He attended a private elementary school, the public Akademishe Gymnasium in Vienna from1892 to 1900. In 1900 Mises entered the University of Vienna. On February 20,1906 he received a Dr.Jur degree, a Doctor of both Canon and Roman Laws, from the University of Vienna. When Mises attended the University, it had no separate economics department; the only way to study economics was through law (Mises Institute).
From 1907 to 1914 Mises was employed as an advisor to the Austrian Chamber of Commerce. His first major thesis, the Theory of Money and Credit was published in 1912. In 1913 Mises was awarded the position of Privatdozent (unsalaried lecturer) at the University of Vienna (Mises Institute).
Mises academic pursuits were interrupted from 1914 to 1918 due to World War I.After World War I Mises returned to the University of Vienna and his position at the Austrian Chamber of Commerce. His next major thesis, Socialism, came in 1922. In 1934 Mises accepted a position as Professor of International Economic Relations at the Graduate Institute of International Studies, in Geneva, Switzerland. Even though he bad left Vienna to accept this position in Switzerland, Mises did work for the Austrian Chamber of Commerce on a part-time basis until Hitler’s annexation of Austria in March 1938 (Mises Institute). On July 6, 1938 Ludwig von Mises married Margit Sereny in Geneva.Ludwig von Mises immigrated to the United States in 1940 arriving in New York on August 2.
In the United States Mises taught as a Visiting Professor at the University of New York from 1945 to 1969. He also traveled to Central and South America giving lectures from 1942 to 1959. In 1949 Mises published his crowning achievement Human Action. This treatise summarized his thoughts on economics. Through out the rest of his life Mises received several distinguished awards.On October 10, 1973 Ludwig von Mises passed away at St. Vincent Hospital in New York City.
Factors Influencing Ludwig von Mises Ideas The major influence on Ludwig von Mises ideas was the Austrian school of economic thought. The political and economic events that influenced Mises included two world wars and an extended worldwide depression. In the political turmoil after World War I, the main theoretician of the now socialist Austrian government was Marxist Otto Bauer. Mises had befriended Bauer during his school years and the two often discussed economics and politics. Mises explained economics to him night after night, eventually convincing him to back away from Bolshevik-style policies (Mises Institute).
His actions kept Austria from following to the hyperinflation that the Germans experienced. The prevailing political climate during this time was Socialism. Mises strongly opposed Socialism and its prevalence inspired him to write his next great work Socialism. The Great depression brought about the rise of Keynesian Economics. Mainstream economics embraced Keynesian economics and as a result Mises theory of money and credit was pushed into the background as the cause for business cycles.Political activity in Europe, specifically Hitlers aggression, drove Mises from his homeland and then Europe just before World War II. Mises continued to lecture widely in the United States, Europe and Latin America. He served as economic advisor to the Foundation for Economic Education (FEE) from its founding in 1946 until his death.
He was appointed a Visiting Professor at New York University Graduate School of Business Administration in 1945 and served there until 1969 (FEE). In his life time Mises witnessed the completion of the industrial revolution in the western world as well as the pervasion of government intervention into the free market through fiscal policy, based on Keynesian Economics, and through the institutionalization of central banking. Ludwig von Misis: Money and Credit, Socialism, and Human Action During his lifetime of teaching and writing Mises wrote 25 books and more than 250 scholarly articles (Mises Institute).Percy Greaves gives a list of Mises more prominent books in Mises Made Easier, they include: Human Action (1st edition, Yale, 1949; 2nd revised edition, Yale, 1963; 3rd revised). edition, Regnery, 1966 Bureaucracy (Yale, 1944; Arlington House, 1969). Omnipotent Government (Yale, 1944; Arlington House, 1969). Socialism (Yale, 1951; Jonathan Cape, 1969). The Theory of Money and Credit (Yale, 1953; Foundation for Economic Education, 1971).
The Anti-Capitalistic Mentality (Van Nostrand, 1956; Libertarian Press, 1972).Theory and History (Yale, 1957; Arlington House, 1969). Epistemological Problems of Economics (Van Nostrand, 1960). The Free and Prosperous Commonwealth (Van Nostrand, 1962). Planning for Freedom (2nd edition, Libertarian Press, 1962). The Ultimate Foundation of Economic Science (Van Nostrand, 1962.) The Historical Setting of the Austrian School of Economics (Arlington House, 1969). According to Allen Dalton, Professor of Economics at Boise State University, Mises major contributions to economic thought appear in his three books The Theory of Money and Credit, Socialism, and Human Action.
In his first major work The Theory of Money, Mises argued that just as the price of any commodity is determined by supply and demand, so is the purchasing power of money, its “price” (Mises Institute). Money, according to Mises, is not a measurement of prices: it is a medium whose exchange ratio varies in the same way, although as a rule not with the same speed and to the same extent, in which the mutual exchange ratios of the vendible commodities and services vary (Koether). Mises showed that prices can increase faster or slower than the money supply, the amount and speed of price increases depending on people’s desire to hold cash. He also argued that because prices increase only relative to one another, monetary inflation has the effect of redistributing wealth, from savers and earners to banks and government and its connected interest groups that receive the counterfeit money first (Mises Institute).
Mises student, Murray Rothbard summarized Mises ideas concerning the effects of fractional reserve banking and central banking in his article The Case Against the Fed by stating that counterfeiting (c …