Economic Theory Completed

In the Dresden discussions of value theory, Mises had emphasized that a productive debate could take place only among those who did not rule out the possibility of a universally valid social theory. Those who excluded this possibility on a priori grounds were forced to endorse what Mises would eventually call polylogism—the extreme historicist hypothesis that there is no such thing as a generally valid social theory because the structure of the human mind was in a state of constant flux.

Twilight in Vienna

The discussion of the epistemology of economics was continued in Mises’s private seminar in Vienna, where his views found far more opposition (and more competently offered) than in Dresden. Several members of the seminar, including Felix Kaufmann and Robert Wälder, were also members of a discussion group of the positivistic philosophers, the Vienna Circle.

THE ECONOMIC CRISIS HEIGHTENED political antagonisms throughout Europe. Fewer and fewer citizens believed democracy could meet the current challenges. Only two alternatives seemed available, both based on violence: either the dictatorship of the proletariat (or more precisely the dictatorship of labor union bosses and socialist party leaders), or an authoritarian dictatorship bent on restoring the old order.

Institut des Hautes Études Internationales

Geneva had been a quiet town before World War I, even though it already hosted the International Red Cross Committee. After the war, it became the home of the International Labor Office (1919) and of the League of Nations (1920). The latter was the result of an initiative of U.S. President Woodrow Wilson. The idea was to create an international political organization that would resolve conflicts between nation states without resorting to war. Ironically, Wilson did not receive the necessary ratification from the U.S.

Academic Life

Rappard quipped that the Institute owed the excellence of its teaching staff to Hitler and Mussolini. A case in point was Guglielmo Ferrero, who had been under house arrest in Italy before coming to Geneva as a professor of history; and it was also true for men like Mises, Kelsen, and Röpke, who found in the Institute a political safe haven.

Alienation from Former Associates

The 1930s witnessed the first phase in a process that distanced Mises from some of his closest associates. The most dramatic cases were those of Fritz Machlup and Lionel Robbins, both of whom would in the course of the years change their views on a number of important issues, particularly on money and the gold standard. In Machlup’s case, Mises eventually broke off all contact for a few years. The issue for him was integrity.

Mises and the Neo-Liberals

The disagreement on the question of socialist calculation was but a symptom of a larger dissent between Mises and his erstwhile comrades-in-arms.

Popular Fronts

Meanwhile the enemies of civilization made further inroads. By the mid-1930s, Stalin had launched a new offensive both in national politics and in the international theater. Through a series of show trials he effected the wholesale execution of his most important rivals as well as their constituencies within the Communist Party.

Profound Transformations

From August 1 to August 6, 1937, Mises took part in the meetings of the ninth international congress of philosophy, where he presented a paper on “The Logical Character of the Science of Human Conduct.” Here he met the Polish philosopher Tadeusz Kotarbinski, who delivered a fascinating paper on the “idea of the methodology of general praxiology.”67 Though the paper itself did not have a lasting impact on Mises’s thought, he was intrigued by the fact that Kotarbinski had used the word “praxiology” to designate a general theory of human act