"Last Knight" Live Blog 5 -- Ransom
Hulsmann’s impressive research begins to pay off in chapter 3 of his Ludwig Mises biography, which gives us a rich account of Mises university education. The key events here are (1) Mises’ research papers under historical economist Carl Grunberg and “Austrian” economist Eugen Philippovich; (3) Mises’ (likely) encounter with Friedrich Wieser and his subsequent reading of Carl Menger’s Grundsatze der Volkswirtschaftslehre; and (4) Mises’ participation in the economics seminar of economist Eugen Bohm-Bawerk.
Hulsmann doesn’t make much out of it from an economic point of view, but the way I see it Mises’ immersion in the nuts and bolts of economic law, specifically the changing laws governing the peasant class in Galicia and the changing laws governing the employment of children in Austria, gave the student Mises a rich historical and institutional grounding for the subsequent development of his theoretical understanding of the economy. Mises also did research on housing conditions and changes in the laws governing domestic servants. This sort of concrete knowledge of economic institutions and empirical conditions is today pathetically lacking among economic students, especially graduate students in economic theory. (The AEA has actually labeled these students “idiot savants” for their gross incompetence these areas, among others). Before he ever understood economic theory, Mises had some insight into how the variability of institutions could alter the incentives and environment of economic actors — he needed then only to acquire the improved lens of sound economic theory to better perceive what he was beginning to observe intuitively. Hulsmann characterizes Mises shift during this time as a “transition period from statism to liberalism” but I think it is better to characterize this as the nascent metamorphosis of a legal historian into a budding economist.