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Who was Ludwig von Mises?

Who was Ludwig von Mises?
by Jörg Guido Hülsmann

von Mises, Ludwig (29 Sept. 1881-10 Oct. 1973), economist and social philosopher, was born Ludwig Heinrich Edler von Mises in Lemberg, Austria-Hungary (today, Lviv, Ukraine), the son of Arthur von Mises, a railroad engineer and civil servant, and Adele von Mises, born Adele Landau. Von Mises was still a small boy when his family moved to Vienna. In 1892 he entered the Akademisches Gymnasium, where he received a humanistic education and befriended Hans Kelsen. Early on, von Mises was particularly interested in history and politics. After graduation, in 1900, he therefore began to study at the department of law and government science of the University of Vienna.

Studying under Carl Grünberg, von Mises started off as an exponent of the so-called Historical School of government science, which stressed fact-finding and despised theoretical analysis. But in the fall of 1903 he read Carl Menger's Principles of Economics, the foundational text of the Austrian School of economics. The book turned him away from the historicist approach, and in the following years he deepened his studies of economic theory, especially in the seminar of Eugen von Böhm-Bawerk, a former finance minister and champion of the Austrian School.

Von Mises graduated in February 1906 (Juris Doctor). He started a career as a civil servant in Austria's financial administration, but after a few months he quit in disgust with bureaucracy. For the next two years he worked as a trainee in a Vienna law firm and also started lecturing on economics. In early 1909, he joined the Vienna Chamber of Commerce and Industry, where he worked for the next twenty-five years. The chamber was at the time a semi-governmental organization and through its publications exercised a considerable influence on Austrian politics.

Parallel to his pecuniary activities, von Mises pursued ambitious scholarly interests and wrote a treatise on money and banking. In his Theorie des Geldes und der Umlaufsmittel (1912), translated into English in 1934 as Theory of Money and Credit, he made two lasting contributions to economics: he demonstrated how Menger's value theory applied to money, and he presented a new business-cycle theory in the light of which economic crises appeared as resulting from inflation-induced misallocations of resources. He also showed that money could not possibly be neutral, and that increases of the quantity of money always had redistribution effects.

During World War I von Mises served as a front officer in the Austro-Hungarian artillery and as an economic adviser to the War Department. He gained firsthand experience of the realities of war socialism, which he would later digest in his theory of socialism, and of the dynamics of interventionism. In the last year of the war, he received a prestigious but unpaid appointment as professor extraordinarius at the University of Vienna.

After the war, von Mises briefly became an adjunct member of the new republican government of German Austria (the name carried by the Austrian state until September 1919). He was the authority on financial matters pertaining to foreign affairs. But his main practical achievement in this period was to persuade socialist leader Otto Bauer, a former friend and fellow student, not to attempt a Bolshevik coup. He also published a book explaining the collapse of multicultural Austria-Hungary. In Nation, Staat und Wirtschaft (1919; translated as Nation, State, and Economy [1983]), he argued that German imperialism had resulted from applying the power of the State to solve the problems of the multicultural communities that prevailed in the eastern provinces of Germany and Austria.

In the fall of 1919, von Mises wrote his most famous essay, on "economic calculation in the socialist commonwealth." He argued that a socialist leadership lacked the essential tool for the rational allocation of resources--economic calculation--and that only the money prices of a capitalist economy make it possible to compare alternative investment projects in terms of a common unit. Two years later he published a treatise on socialism (Die Gemeinwirtschaft, 1922), which had a decisive impact on a whole generation of rising intellectual leaders--men such as F. A. Hayek and Wilhelm Röpke, who after World War II would lead the nascent neoliberal movement.

During the early 1920s, von Mises successfully fought inflation in Austria and had a decisive impact on the monetary and financial reforms of 1922. But he could not prevent the steady increase of government regulations and the deterioration of Austria's public finances. He developed an entire new theory of interventionism showing that government intervention is inherently counterproductive. Practically this ruled out all variants of third-way policies and left laissez-faire capitalism as the only meaningful option on the political menu. In 1927, he published a concise presentation of his utilitarian political philosophy in Liberalismus.

In the late 1920s he started publishing papers on the epistemological character of economics. Von Mises argued that economic science could not be verified or refuted through the analysis of observable data. Economics was an a priori science like mathematics or logic or geometry. Moreover, economics was just a part of a larger social science, which he would later call "praxeology"--the logic of human action.

Von Mises eventually found the time to synthesize the various strands of his work into a praxeological treatise when, in 1934, he was called to a chair in international economic relations at the Graduate Institute for International Studies in Geneva. He would hold the chair until 1940, the same year in which his treatise was finally published under the title Nationalökonomie. While in Geneva, in 1938, he married Margit Serény (née Herzfeld), whose daughter Gitta Serény later became a well-known author. They had no children from the marriage.

In July 1940, von Mises left Geneva to avoid being captured by the German armies or being delivered to them by the Swiss government. He moved to New York City and started a new life, receiving U.S. citizenship in 1946. Von Mises first found employment with the National Bureau of Economic Research, then worked as an advisor for the National Association of Manufacturers, and eventually became a visiting professor at New York University in 1945. He would "visit" with NYU for the next twenty-four years.

In the U.S. he became the spiritus rector of the renascent libertarian movement, to which he gave a distinct Austrian School flavor. Close ties to the Foundation for Economic Education, the William Volker Fund, and the Earhart Foundation gave him the necessary organizational and financial backing. Von Mises's influence reached a peak in the years following the publication of the English version of his praxeological treatise under the title Human Action (1949). In the 1950s, his NYU seminar produced many important intellectual leaders of postwar libertarianism, such as Murray Rothbard, Hans Sennholz, George Reisman, Ralph Raico, Leonard Liggio, and Israel Kirzner.

In the 1960s, von Mises's vigor and productivity declined very considerably. He taught at NYU until 1969 and died in New York City. For almost four decades, he had been the uncontested dean of the Austrian School of economics. His legacy as a social philosopher inspired a thriving movement.




Bibliography

Von Mises's post-1938 personal papers are collected in the archive of Grove City College in western Pennsylvania. Copies of both the Moscow Archive papers and the Grove City Archive papers are held at the Mises Institute in Auburn, Alabama. Smaller notable collections of correspondence and other materials can be found at the Vienna Chamber of Commerce, at the Graduate Institute for International Studies in Geneva, Switzerland, and at the Hoover Institution of Stanford University. An essential source on von Mises's life and work is his autobiographical Notes and Recollections (1978), but this work only covers the time until 1940 and it only deals with his intellectual development in the context of the times. Another important source, dealing more with von Mises the man, is Margit von Mises's My Years with Ludwig von Mises (1984). Von Mises's pre-1938 personal papers are collected in the Special Archive for Historico-Documentary Collections, in Moscow, Russia. In 1938, these papers were stolen from von Mises's Vienna apartment. At the end of World War II, the Red Army found them, together with many other collections, in an abandoned train in Bohemia and brought them to Moscow. There is not yet any comprehensive biography of von Mises in print. Good intellectual biographies are Murray Rothbard's Ludwig von Mises: Scholar, Creator, Hero (1988) and Israel M. Kirzner's Ludwig von Mises: The Man and His Economics (2001). Rothbard also wrote The Essential von Mises (1973). An obituary is in Human Events, 20 Oct. 1973, p. 7.
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Jörg Guido Hülsmann
Citation: Jörg Guido Hülsmann. "von Mises, Ludwig";
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American National Biography Online August 2003 Update.
Access Date: Wed Aug 01 2007 08:19:14 GMT-0500 (Central Daylight Time)Mon Aug 18 11:00:32 CDT 2003
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