The New Theoreticians
The New Theoreticians
Mises’s hope for a wiser future monetary policy did not seem quite as naïve at the time as it now seems in retrospect. The year 1928 marked the high point of his influence on German monetary thought. The majority of the contributions to the meeting of the Verein für Sozialpolitik in Zurich elaborated on his writings.
The Theory of Value Reconsidered
The Theory of Value Reconsidered
For Mises, it was a sign of hope that a new generation of students had risen to fill the ranks of the theoreticians. The spell of the Historical School was definitely broken. But another danger loomed on the horizon—bad theory.
Toward a New Epistemology of the Social Sciences
Toward a New Epistemology of the Social Sciences
Mises’s reflections on the scientific and political significance of value theory were part of a more general effort on his part to pull together the different strands of his previous works, to discuss their implications, and to fill in the gaps.
A Private Boom-Bust
A Private Boom-Bust
Mises had been surprised and delighted by the failure of the general strike on July 15, 1927. What did not surprise him was the massacre that took place when the masses rallied in the streets of Vienna. One of his first thoughts was to alert Margit Serény of the danger. Under no circumstances should she let the children out. Margit was away during the day, however, and Mises left detailed instructions with the housekeeper.77
15. Crises
The Causes of the Great Depression
The Causes of the Great Depression
In a mere 34 pages, Mises presented a concise and penetrating analysis of the crisis. He pointed out that the market economy was regulated by the requirement that entrepreneurs satisfy consumer preferences. Inflation disrupts this self-regulation of the market. It induces businessmen to overestimate the possibilities for profitable investment, so that they make bad investment decisions and squander resources. These errors become apparent in a crisis—the U.S. stock market crash of 1929, in this case.
A Lieutenant in London
A Lieutenant in London
In the spring of 1931, the political prospects for Europe were bleak. The Roaring Twenties had turned out to be a short interlude of relative liberty and international economic cooperation. Now the pendulum had swung back to interventionism and state idolatry. The only signs of hope were those few individuals and groups that had liberated themselves from the political prejudices of the time. The most promising group was the one led by Lionel Robbins at the London School of Economics.
Return to Foreign-Exchange Controls
Return to Foreign-Exchange Controls
After his return from the ICC meeting in Washington, Mises spent two busy months trying to limit the political damage of the Credit-Anstalt crisis. When he left Vienna at the end of July, he had helped beat back attempts to officially establish a system of foreign-exchange controls that would have thrown Austria back to 1922. He returned to Vienna in mid-September—just in time to learn that the Bank of England had abandoned the gold standard, refusing to redeem its notes in gold.66 Mises was shocked and feared the worst.
Second Edition of Socialism
Second Edition of Socialism
The battles on the political front had their impact on Mises’s academic pursuits, especially on his teaching. The 1931–1932 private seminar met more irregularly, or at any rate was less well planned than usual. At least some of the sessions apparently dealt with the theory of capital and the business cycle, featuring lectures by Machlup, Morgenstern, and Bloch.95
Dresden Meeting of the Verein fiir Sozialpolitik
Dresden Meeting of the Verein für Sozialpolitik
On January 4 and 5, 1932, in meetings of the board and of the committee of the Verein für Sozialpolitik in Berlin, Mises met some of these colleagues whom he so overestimated. He had unsuccessfully encouraged Hayek to attend the sessions, saying, “doubtlessly it will be interesting; maybe it is the last meeting before the abolition of usury [Brechung der Zinsknechtschafi].”113
