The Free Market Reader

 

4 GREAT ECONOMISTS

A Call to Activism

Margit von Mises

Thank you, Mr. Rockwell, for your most generous and gracious remarks. Thank you all who came here tonight, for without you, I would not be here. And thank you especially for your kind welcome. I know, of course, that this welcome is really meant for my husband, in whose name I gladly and gratefully accept it.

People often ask me, “Aren’t you proud about what you have done?” I can only say, “no.” I really am not. I am happy that the ideas of my husband get more and more recognition, but I am not proud. I did only what I had to do. It was an inner “must.”

Perhaps you will be interested to learn how this book, which you will all receive through the kindness of Mr. Rockwell, came into being.

When my husband died on October 10, 1973, I could not even cry. I was like a stone. It took two months until the first tears came into my eyes. My daughter, Gitta, and Don, my son-in-law, who live and work in London, insisted that I come and stay with them for a while. They suggested that I make a reservation on the Queen Elizabeth, which at that time still regularly crossed the Atlantic. They knew how much I loved the sea. And so I got my reservation for the month of February 1974. The sailing was rough, but I loved every minute of it. Most of the time I spent on deck, where I was pretty much alone. It was so stormy and cold that most passengers preferred the warmth of the staterooms. But a friendly steward kept a chair for me facing the water. He covered me with blankets, and I could watch the seagulls following the boat from morning to night, shrieking, their wings fluttering, always moving. Dark clouds covered the sky. Sometimes the wind was so strong that water came over the railing. But I was safe and warm, watched over by this kind steward.

I tried to read, but I couldn’t. Always I thought of my husband, the years we spent together, but suddenly, it was as if a thunderbolt struck me. “Why don’t you write about him? Why don’t you put down on paper everything you know?” And I decided to do so.

I did not even have a notebook or pencil with me when my mind started to work. But in my thoughts I divided the book into eleven chapters. I decided on all their titles, and I never changed a single one of them. For example, I knew I had to write one chapter about Human Action. People had to know how my husband suffered about this, his greatest work.

The boat landed one day late, and I stayed with my children and started writing, never telling anyone a word. It took me two years to finish the book. Often I rewrote a chapter four or five times, but I never changed the table of contents. (Except for the second edition, which has two new chapters.) All research was done carefully, and every word I wrote is true.

If I told you before that I am not proud of the work I have done, then I must tell you now that there is something I am proud of. And that is that all of my husband’s former students, from the Vienna seminar as well as the New York seminar—with very few exceptions—became, since my husband’s death, my friends also. They stayed by my side all the time, all the way, and helped me when I needed help.

I want to mention first of all my very dear friend Professor Fritz Machlup, who died on January 30, 1983, of a heart attack. Since his student days in Vienna, he had been especially devoted to my husband, even though they did not agree in all their economic views. But it was as if—after my husband’s death—he wanted to prove his great admiration for his beloved teacher by helping and advising me. It was on his advice that I wrote the new chapter about the Vienna seminar. He guided and supervised and helped me, in his wonderfully kind and charming way, and I shall never forget him.

I also want to give special thanks to Professor Israel Kirzner, who helped me put the material together for a chapter on Austrian economics. Here is another example of a famous man who has helped me because of his devotion to his great teacher. Another one of these famous pupils who has always most willingly helped is Nobel Prize winner Friedrich von Hayek, about whom I wrote so much in My Years With Ludwig von Mises.

But now I have to come back to the story of how the book came to life. I had already finished five chapters, and still no one knew anything about it.

Let me first tell you about a good friend of mine, Nellie Erickson. Nellie is the creator of the famous bronze bust of my husband, with copies now in so many different parts of the world. One day Nellie and her husband George invited me to join them on a Sunday trip on their yacht on Long Island Sound. With them were Ilo and George Koether, our mutual friends. It was a beautiful day. The sun was hot and the sea glittered like gold. I was sitting on a winch when George Koether joined me and said, “You know, Margit, I thought so much about you. I wonder why you don’t write a book about your husband.” It was then that I could no longer keep my secret. The words poured out of me, and I told him everything.

He was enthusiastic about the news, and immediately offered all the help he could give. I asked him to keep silent about it, and told him I would accept gladly—but I wanted no ghost writing. The story was absolutely mine. He promised, and from that moment he became one of the best advisors and helpers I could have found. Always ready to do something for me, he never let me down.

When I finished the book, George Koether showed the manuscript to Neil McCaffrey, then president of Arlington House, Publishers, and one day later the book was accepted. No other publisher had ever seen it.

What happened afterward came without my asking for it: one work followed another. And so these ten years went by, and it still seems as if my husband died only yesterday.

Those who have read my book will remember much about my husband that the general public does not know. But there was one aspect of his life that I did not describe in my book, and this is an appropriate occasion on which to emphasize it.

Professor Hayek once called my husband “a great radical, an intelligent and rational radical, but nonetheless a radical on the right lines.” This was correct, but Ludwig von Mises was also an activist—an activist of the mind. Not only did he write scholarly books containing great wisdom—he also promoted the free market in speeches, articles, lectures, and seminars. And he worked hard as an activist at his desk in the solitude of his study.

He did not confine his interest and time to writing and to contact with scholars only—although the brilliant scholars who developed out of his teachings, the professors Hayek, Haberler, Morgenstern, Machlup, and many more, could justifiably have claimed all his attention. He also had the time and interest for others: businessmen, journalists, and members of many professions other than teaching. To all of those people with whom he came in contact he was an activist of the mind. He stimulated the interest, and then the understanding of all the people he met. And he did even more. He stimulated them to action.

Think, for example, of Professor Murray Rothbard, who has written, and is still writing, brilliant books extending the influence of Austrian economics, and who—with some friends—founded the Center for Libertarian Studies which works to foster libertarian scholarship, following in economics solely the ideas of Ludwig von Mises.

Think of Antony Fisher, whose Atlas Economic Research Foundation has brought about the creation of nineteen institutes in twelve countries throughout the world, always mentioning Ludwig von Mises and quoting Weaver, “Ideas have consequences.”

Think of Leonard Read, the late founder of the Foundation for Economic Education, who—after meeting my husband and reading all of his books—gave students as well as teachers the opportunity to learn about individual freedom and the free market. Out of this foundation came great men like Baldy Harper, who founded the Institute for Humane Studies, and George Roche, who is now president of Hillsdale College, which shelters the Ludwig von Mises Library, and who heads his own Shavano Institute in Colorado, never asking for help from the government.

And last, but certainly not least, think of Lew Rockwell and the Ludwig von Mises Institute, which in a very short time has attracted 14,000 contributors, begun an extensive teaching, fellowship, and publications program, held a very successful conference on the gold standard in Washington, D.C., and become integrated with Auburn University. Never before has a university and an institute of this kind entered into a partnership.

Yes, Ludwig von Mises was an activist, whose influence has reached—and is still reaching—far over the world. Imagine how much better our world would be today if all those “activists” who chant for womens’ rights, for gay rights, for tenants’ rights, for minorities’ rights, were working to correct the true cause of our social problems! Imagine how much better off we would be if those who blame the West for the plight of the so-called underdeveloped nations could be taught the economic facts of life as demonstrated by Ludwig von Mises!

They can be taught, if all of us become activists of the mind. If each of us will do this—in his or her own way—we may accomplish more than we now imagine. And we will do it, not like mindless sports fans cheering for their hero, but out of dedication to those principles of truth and freedom for which my husband fought. We must do it—not simply out of admiration for a man like Ludwig von Mises. We must do it because we are dedicated to the principles which he elaborated so well in his many great works.

Is it idle—now, in these dark days when the shadows of Communist dictatorship reach over more than half the world—to dream of a day when knowledge instead of ignorance, respect instead of hate, peace instead of war, freedom instead of force, will reign over the world? Not if we spread the truth as my husband did.

I can see a day when every great university will have in its economics department a bust of Ludwig von Mises, when all of his writings will be combined in one grand edition available in every library of any size.

I can see a day when economics will be taught as human action—including every subject that those words imply—and not broken up into courses that produce mathematicians instead of economists.

I can see the day when more and more followers of my husband’s thoughts will produce book after book and paper after paper elaborating on the fundamental ideas contained in his works. (And this day has arrived already.)

I can see an anthology of my husband’s thoughts published in a series of books dealing with specific issues that are getting attention in the daily press. The special edition of the Freeman magazine that appeared on the 100th anniversary of my husband’s birthday indicates the possibilities I see in this direction.

I can see more universities asking the Ludwig von Mises Institute for assistance in choosing professors to teach the economics of the free market. And I can see, as an activity of the Institute, establishment of fellowships to permit young journalists to enjoy a full year of study in Austrian economics to further their understanding and ability to better report events in the daily press.

I could go on and on—but many of you will have even more ideas than those I have just mentioned. In order to achieve anything, however, we must all become activists. We have no choice. As Ludwig von Mises said many years ago, in words I once quoted at Hillside:

“Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. No one can stand aside with unconcern: the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.”

I feel confident that the Ludwig von Mises Institute will do much more than “carry its part of society on its shoulders.” We have the intellectual leadership, the managerial expertise, and the burning desire to succeed. And, happily for us, we have the truth on our side.

If anyone doubts that, let him or her look at all the calamities, the miseries, the cruelties, and the stupidities of every form of collectivism and interventionism. With truth on our side we cannot, we must not, we will not fail!

Thank you. Thank you very much for listening to me.

Ludwig von Mises: Hero

Llewellyn H. Rockwell, Jr.

When Ludwig von Mises died in New York City in 1973 at the age of 92, the liberals hardly noticed. There was no front page obituary in the New York Times and Walter Cronkite didn’t mention it on the CBS Evening News. But libertarians and conservatives knew that a giant had fallen, for Mises had the greatest mind of our time, and he had employed it in a life-long, uncompromising, and effective fight for freedom.

Today, his influence is more widespread than ever before. And his ideas remain the core of the movement for a free market, sound money, private property, and individual liberty. As his great student Murray N. Rothbard pointed out, “If the world is ever to get out of its miasma of statism, it will have to move to the high ground that Mises developed for us.”

Ludwig von Mises was born in 1881 in the Austro-Hungarian Empire city of Lemberg, the son of a successful engineer. At the age of 19, he entered the University of Vienna, and received his doctorate at 27.

At this time, the university was the world center of free-market economics, and Mises studied under its two greatest teachers, Carl Menger and Eugen von Böhm-Bawerk. These two founders of the Austrian school of economics were responsible for a revolution in economics that successfully refuted Marxism—something the followers of Adam Smith had been unable to do.

Smith could not understand why, for example, diamonds should be more expensive than food, since food is so much more useful. This “value paradox” could never be solved, he said. All value that could be understood, however, came from the labor that went into production. Followers of Smith agreed, and said that diamonds must have a higher “exchange” value while food had a higher “use” value. They also saw a class conflict, claiming that if wages went up, profits would have to go down, and vice versa.

Karl Marx, building on these errors, preached class war, and said that profit must therefore be “surplus value” stolen from the workers, and that the only just system was production for “use” rather than profit.

The Austrian economists solved the problem by focusing on the individual, and not on classes. They built their theories on the actions of consumers in the real world, and saw that each of us makes decisions based on our own personal preferences, and that business people are constantly trying to serve those preferences. Therefore, economic value cannot be inherent in products; it is only conferred by consumer desires.

I might spend an entire week making a giant mud pie, but a product that has no value to consumers has no economic worth, no matter how much labor goes into it.

And, yes, all the foods in the world is more valuable than all the diamonds, but we are never forced to make that choice. Instead, we make our economic valuations “at the margin.” That is, the greater the number of units of a desired economic good, the less we will value any given unit, and vice versa. That’s why a canteen of water has so much more value in the desert than in your kitchen sink.

The Austrians also showed that capital—and its share of production, i.e. profit—was as necessary as labor, and that in a free market, they work together to satisfy consumers. The only “conflict” is between competitors, not between owners and employees, and that conflict is over who can best satisfy consumers.

The classical economists—Smithian and Marxian—also did not understand the role of interest. The Austrians, again looking at individuals, saw that people would rather consume now than in the future. All other things being equal, we would rather take a vacation this year than next. Thus “time-preference” is the reason for interest: the payment for deferring consumption.

Investors who put up capital to start a business are also deferring consumption (whereas employees get paid immediately), and their payment is called profit. In fact, the “normal” rate of profit in a free market is the interest rate.

In this stimulating atmosphere the young Ludwig von Mises studied, and in the honored tradition of scholarship, went on to surpass his teachers. For, as great as the founders of the Austrian school were, there were serious gaps and errors in their theories. Mises filled the gaps, corrected the errors, and went on to rebuild the entire science of economics on a sound free-market basis.

This would have been a magnificent and enduring achievement had Mises, like his teachers, been able to work in peace. His great work is all the more incredible because it was accomplished at great personal cost and despite unceasing opposition from academic leftists in Europe and the U.S.

After receiving his Ph.D., the young Mises set to work on The Theory of Money and Credit, his first great work published in 1912. The earlier Austrians, mimicking one of Smith’s mistakes, had put money in a separate category from the rest of the economy. Mises repaired this split, showing that just as the price of any commodity is determined by supply and demand, so is the “price” of money, its purchasing power. The demand for money is determined by the desire of consumers to hold cash rather than something else.

Some of the classical economists, especially David Ricardo, had seen that an increase in the supply of money causes prices to increase. But Mises showed that this increase is not proportional. When the government increases the money supply, the “price level” doesn’t rise by that amount. The amount and speed of price increases depend on the people’s desire to hold cash. That’s why, during an inflation, prices can increase faster or slower than the money supply.

Mises also showed that inflation, through relative price changes, brings about a redistribution of wealth, from savers and earners to the banking system and the government and related special interests. Even more damaging, he showed, are the misinvestments that inflation brings about.

When government inflates, it lowers the interest rate below what it would otherwise have been. This encourages bad business and investment decisions during the inflationary boom. When the inflation slows or stops, these mistakes are seen for what they are, and the result is bankruptcies and unemployment. That is, government is the cause of the business cycle. Through inflation, it brings about recessions and depressions.

In this pathbreaking book, Mises also showed that the institution of money originated in the market as a valuable commodity, and was only later nationalized (and debauched) by government. He also demonstrated that gold is the best monetary commodity, and that only a gold standard could prevent inflation. A central bank (like the Federal Reserve to be established the next year), he noted, would inevitably bring recessions, depressions, and suffering for the majority, although a small minority would benefit from its depredations.

The publication of The Theory of Money and Credit made the 31-year old Mises one of the top economists in Europe, but World War I was soon to end the gold standard and relative laissez-faire of the previous century, and renew the ancient evils of statism and inflation.

The new atmosphere was, of course, much less conducive to a man like Ludwig von Mises, and as a result he never received the academic rewards that were his due. Although he was appointed a professor of economics at the University of Vienna, it was to an unsalaried position. His income, from 1909 until 1934 when he left Austria, came from his position as economic advisor to the Austrian Chamber of Commerce, a government body roughly equivalent to the U.S. Department of Commerce. This was also where he established the prestigious Austrian Institute for Business Cycle Research.

Among his duties, he had to write economic analyses of proposed government actions, and he managed almost single-handedly to keep Austria from following Germany into hyperinflation during the early 1920s.

His famous Mises seminar in these years attracted the best minds in Europe, and produced many great economists including Nobel-prize winner F. A. Hayek. In addition to his unpaid teaching and his government work, Mises continued his writing and research. His next major work came in 1922: Socialism.

This book demonstrated that socialism could not function in an industrial economy. Since they have no free-market price system, socialist planners are incapable of calculating costs or rationally planning production. The result of any socialist system, he predicted, would be economic chaos.

And, just as important, he showed that semi-socialism or government interventionism cannot function efficiently either. So, he noted, if total or partial government planning cannot work, we are left with the free market.

Not content with being the leading champion of the free market, Mises also set to work on the foundation of economics—its “methodology.” Mises saw that economics was increasingly coming under the sway of the nihilistic “institutionalism” which virtually denies economics altogether, and of the pseudo-scientific “positivism,” which apes physics and treats people as mere consciousless objects.

Mises’s answer was the science of “praxeology,” which bases economics on the deductive logic that human beings are unique individuals, each with their own purposes and their own ideas about how to achieve them. His major works here were Epistemological Problems of Economics and especially the later Theory and History and Ultimate Foundation of Economic Science.

Mises saw that positivism, which has since swept the non-Austrian portions of the economics profession, was especially dangerous. Not only was it scientifically invalid, but by treating people as inanimate objects to be manipulated, it gave would-be social engineers the perfect intellectual framework and justification for their destructive activities.

Despite all the early opposition, Mises, during this time, saw a quickening of interest in his ideas, although it was only a temporary spring. When other economists were proclaiming the new age of perpetual prosperity in the 1920s, Mises was the only one to predict the Great Depression. In the early 1930s, many important economists became Misesians, but after the publication of John Maynard Keynes’s General Theory swept the academic world, Mises’s followers—with the shining exception of F.A. Hayek—became Keynesians.

Undaunted, and in exile in Geneva from fascist Austria, Mises next set about to reconstruct the whole of economics upon the individualistic foundation he had built. He did it in his monumental Nationalökonomie, published in 1940 and instantly forgotten in the turmoil of World War II. It was this work, later expanded and translated into English as the 900-page Human Action, that was his crowning achievement.

In Geneva came another milestone in Mises’s life; he married the beautiful Margit Sereny—after warning her that while he would write much about money, he would never have much of it—and in 1940 they immigrated to the United States.

At a time when every left-wing professor was given a high academic post in the United States, Mises was refused any job—a permanent blot on American universities. Finally, with the help of Henry Hazlitt and Lawrence Fertig, Mises secured a visiting professorship at New York University’s Graduate School of Business. His salary was paid by business people and foundations, and he was never a regular member of the faculty.

Treated as a second-class citizen by the university, whose business school dean lobbied good students not to take his classes (which were relegated to the basement and scheduled at inconvenient times), Mises was neither bitter nor resentful. With gentle brilliance, he carried on the fight for Austrian economics and freedom. “We well knew,” wrote Professor Rothbard, “that in the very aura and person of Ludwig von Mises that we were seeing an embodiment of the Old Vienna of a far nobler and more charming day. Those of us privileged to attend his seminar at NYU could well understand how Mises was a great teacher as well as a great economist.”

When he retired in 1969, a spry 87, Ludwig von Mises had been the oldest active professor in the United States. He could look back on a lifetime of teaching and writing—25 books and more than 250 scholarly articles—and of incredible achievements for liberty. His students Wilhelm Roepke and Ludwig Erhard had turned West Germany towards freedom and the resulting “economic miracle.” In Italy, Mises’s student Luigi Einaudi had, as president, led the successful fight against postwar Communism. In France, his student Jacques Rueff—as economic advisor to General DeGaulle—led the fight for the gold standard and pushed back many statist economic controls. In the United States, Mises produced—despite his circumstances—such students as Murray N. Roth-bard and Israel Kirzner.

Sadly, he did not live to see the renaissance of interest in his work, which began with F. A. Hayek’s Nobel prize in 1974, granted for the Mises-Hayek theory of the business cycle.

Since Mises’s death, the center of this new interest has been his widow. She has been, in Murray Rothbard’s words, “a one-woman Mises industry,” supervising the reprinting, translation, and new editions of his works, and chairing the Ludwig von Mises Institute. She has also written her own moving memoirs, My Years with Ludwig von Mises.

Socialism and its variants still control most of the world, but, notes Dr. Rothbard, “everywhere, in all spheres of thought and action, the modern statism that Ludwig von Mises combatted all his life, is coming under a swelling drumfire of criticism and disillusion.” This resurrection of the spirit of freedom—and our work to encourage it—is the only appropriate monument to the life and thought of a great and noble man.

Memories of Ludwig von Mises

William H. Peterson

I look back with special pleasure and deep respect on that giant of our age, Ludwig von Mises (1881-1973). How he shone in his students’ lives and minds, gently schooling us in the meaning of human action and the free market.

Today we glory in the truth of Misesian economics, and marvel at his lonely and courageous struggle against heavy odds. As the 20th century’s uncompromising defender of laissez-faire economics and human liberty, and as the leader of the Austrian school, his spirit is still very much alive—and growing more influential day by day.

I was privileged to take three courses from Lu Mises at New York University’s Graduate School of Business Administration in the early 1950s: “Socialism and the Profit System,” “Government Control and the Profit System,” and “Seminar in Economic Theory.” So eye-opening were they that I continued to participate in his seminar even after graduating and joining the faculty myself.

In these courses he developed a theory of individual action and the indispensability of freedom in the marketplace. He focused on social cooperation springing from individual action, which came from the human condition of subjective valuations and limited means.

Man is a unique being, Mises said, because he alone has a vision of the future, possesses abstract reasoning power, integrates thought and action, and acts with particular purposes in mind. Simplistic notions like Homo Economicus miss the richness of Misesian economics.

Mises’s seminar, first held in the Wall Street area and later on Washington Square, always attracted his great students like Murray N. Rothbard, Henry Hazlitt, Lawrence Fertig, Israel Kirzner, Ralph Raico, Hans Sennholz, Leonard Liggio, and many others. Sometimes a graduate student would ask a less-than-intelligent question, but Mises would always respond with kindness and understanding. One such question in the 1960s followed his discussion of the inflationary implications of deficit finance, in which a student asked why President Johnson couldn’t have both “guns and butter.” Mises smiled and replied: “Ah, President Johnson can have both,” but added with a twinkle in his eye, “if he is willing to pay for them.”

Because of Mises’s uncompromising stand for liberty, the rest of the business school faculty and NYU itself isolated him. They dismissed him as an ideologue and an iconoclast. But Mises was always a very tolerant and courageous man. Although attacked by other people in the department and in the profession, Mises continued to read, study, teach, and write—quite content all the while.

Sometimes Lu and Margit would invite my wife Mary and me, and sometimes our children, to dinner at their warm and lovely apartment on West End Avenue. There we enjoyed the company of the Fertigs, Hazlitts, Reads, Petros, and others. The parties were always sparkling affairs, graced with the enchanting beauty of Margit and the courtly charm of Lu.

When the Mont Pelerin Society met, Mises’s students were always among those attending, including F. A. Hayek, Gottfried Haberler, Fritz Machlup, and Wilhelm Roepke. Also attending were scholars who had read and admired Mises’s writings—men like James Buchanan, W. H. Hutt, George Stigler, Gordon Tullock, Warren Nutter, and many others.

Mises’s courage and integrity showed at one meeting when he expressed concern that some of Mont Pelerin members were becoming infected with the virus of interventionism, approving of state ownership of transport, government social insurance, minimum wage laws, countercyclical policy, and other interventions.

One member asked, “But what would you do if you were in the position of our French colleague, Jacques Rueff,” who was present at the meeting and responsible for the fiscal administration of Monaco. “Suppose there were widespread unemployment and hence famine and revolutionary discontent in the principality. Would you advise the government to limit its activities to police action for the maintenance of order and protection of private property?”

Mises stood fast: “If the policies of nonintervention prevailed—free trade, freely fluctuating wage rates, no form of social insurance, etc.—there would be no acute unemployment. Private charity would suffice to prevent the absolute destitution of the very restricted hard-core of unemployables.”

The academic world did not take kindly to Ludwig von Mises. Many economists felt he was too impolitic, too adamant, too pure, too uncompromising. Then, like now, the conventional wisdom was in fashion.

Because of his staunch adherence to liberty, Mises never held a regular professorship at the University of Vienna. And it was no different in America. He was a “visiting professor” at New York University for 24 years, with his modest salary paid not by the university but by foundations and friends.

His prolific writings and magnificent contributions to economics were largely ignored by the profession. Among these contributions, he pulled together monetary theory and the theory of marginal utility, proved that socialism cannot calculate rationally and therefore couldn’t work, and systematically developed the science of economics as a major subset of the science of human action, praxeology.

Mises set an example for us. He held that it is the duty of everyone to read, think, and speak about the importance of freedom. The preservation of civilization depends upon it. Lu Mises would be happy to know that the torch he lit is burning brighter than ever.

Mises vs. the Green-Eyed Monster

Bradley Miller

Atruism among free-marketeers is that collectivism is flawed because it flies in the face of human nature. But many writers on our side also ignore a key aspect of human nature. They write about politics and economics as if they were logic or mechanics. Pull lever X for output Y. Disseminate the evidence of capitalism’s success and collectivism’s failures, and the capitalist paradise, in time, will come.

Most true-believing collectivists—and frauds increasingly swell the ranks—underestimate the force of self-interest. But many capitalist thinkers underestimate the force of envy, and in this regard are far more naive than collectivists. Lenin never tired of stressing that his goal was to make class envy flare into revolutionary hatred.

Capitalist thinkers continue tabulating collectivism’s follies and savageries, and capitalism’s virtues—tabulations that at this stage of history shouldn’t seriously be disputed—while watching indignantly and incredulously as collectivism claims more and more ground even in the very citadel of capitalism, the United States, where six and a half years into the reign of the supposedly most free-market president since the 1920s, federal spending is at an all-time high. Why?

Ludwig von Mises showed 31 years ago in The Anti-capitalistic Mentality that reason, evidence, and humaneness have about as much impact on public policy as an Oral Roberts sermon would have on Nietzsche. As too few contemporary economists do, Mises realized that for libertarian economists to have a practical as well as scholarly impact, they must understand the non-rational factors that breed hostility to capitalism:

In a society of equality under the law the inequality of men with regard to intellectual abilities, will power and application becomes visible. The gulf between what a man is and achieves and what he thinks of his own abilities and achievements is pitilessly revealed. Daydreams of a “fair” world which would treat him according to his “real worth” are the refuge of all those plagued by a lack of self-knowledge.

The more sophisticated sublimate their hatred into . . . the philosophy of anti-capitalism, in order to render inaudible the inner voice that tells them that their failure is entirely their own fault. Their fanaticism in defending their critique of capitalism is precisely due to the fact that they are fighting their own awareness of its falsity.

The anti-capitalism of intellectuals tends to be greater than that of common men because, Mises wrote, the latter tend to associate with other common men, and so have mere abstractions—e.g. Wall Street, the plutocracy—as objects of their envy and resentment. These can’t rouse nearly as much hatred as direct contact with people, and intellectuals often have daily contact with colleagues far wealthier and more prominent than they are.

This happens far more today than in 1956, when The Anti-capitalistic Mentality was written. Today’s obscure prof in Pine Bluff, Arkansas, with a break or two, could become tomorrow’s darling of the publishing house, think tanks, talk shows, and lecture circuits, while his ex-colleagues remain obscure and rage against the system that catapulted him to the top. To rage at him directly not only would be bad form, but also would reveal small, ungenerous souls. So they rage at the Unjust Capitalist System. Should the prof actually be a capitalist—a rarity but not yet illegal in America—no obloquy and punishment would be too severe.

Thus do the envious find scapegoats and, more important, project images of sophistication and rebelliousness. Average Americans in their parochialism and philistinism actually admire the rich and famous—intellectuals sneer—being blind to the system’s tawdriness and injustice. Only they are worldly enough to see the truth and daring enough to call attention to it.

Mises found these attitudes to be even more pronounced among intellectuals in America than in Europe, since intellectuals have far more contact with businessmen here. The greedy, philistine businessman is likely the most common stereotype in American literature, not to mention television and movies. I don’t dispute that plenty of Americans are serious when they ask, “If you’re so smart why ain’t you rich?” But then, as Mises says, most intellectuals who ignorantly disparage business as too vulgar to bother learning about, show less intellectual capacity than businessmen.

Some business is vulgar. Some get rich pushing products that have no more moral, cultural, or aesthetic worth than Christian Marxism. “Nobody ever contended,” Mises said, “that under unhampered capitalism those fare best who, from the standpoint of eternal standards of value, ought to be preferred.” What capitalism ensures is the dictatorship of consumers: in other words, the populism Marx thought would ultimately accompany destruction of property.

Anti-capitalists blame capitalism for all the vulgar and vacuous products that enchant the masses. They might have at least a small point if (1) they were themselves fit to decide what the masses should buy, (2) noncapitalist nations had higher levels of culture, or (3) the vulgarities and vacuities of capitalism prevented quality from being produced.

In fact, in countries where capitalism has been crippled or eliminated, citizens are lucky if they can afford the bare necessities of daily living, let alone culture, and in communist countries being a mere spectator of true culture, which requires intellectual freedom, is illegal. In Czechoslovakia forming a jazz club lands you in jail. But filthy-rich capitalists often underwrite high art. Pictures of nude beauties bring Hugh Hefner the wealth with which he commissions award-winning journalism. Such examples are endless.

Successful capitalism means satisfying the very masses in whose name anti-capitalists push their pishposh. Market forces may take a while to take effect, but soon enough an entrepreneur must shut down if his products aren’t popular (assuming he’s not rich enough to keep operating in the red).

Anti-capitalists’ chief delusion is that X’s wealth causes Y’s poverty. Greed does run amok from time to time in capitalist societies, and not always to society’s benefit. But what’s remarkable under capitalism is how individual greed usually enhances the commonwealth.

The fact is that only in the ignorant, envy-fueled hallucinations of anti-capitalists is capitalist greed all-consuming. For every jackass obsessed with upping his annual income from seven figures to eight, there are millions who care nothing for yachts and Rolls Royces, and want only to be comfortable and have “the-heck-with-you” money, i.e., enough to be able to say “the heck with you” if asked to do demeaning or dishonorable work. Indeed, the hallucinations to the contrary richly suggest that it is not capitalists but anti-capitalists who are obsessed with money.

Perhaps, indeed, the ideal of most anti-capitalists is former Soviet General Secretary Leonid Brezhnev, who owned, among other delights of Veblenian conspicuousness, 25 Western cars, including two Rolls Royce limos, a Lincoln Continental, and a Mercedes Benz. As many Western socialists prove as well, cornucopian can be the blessings that flow from a life of selfless striving to free the working class from its chains.

Hazlitt, Hutt, and Rothbard: Three Economists Who Are National Treasures

Llewellyn H. Rockwell, Jr.

To most Americans, economists don’t leap instantly to mind as treasures, let alone national treasures. Whether making arrogant and fallacious mathematical predictions; filling the minds of college students with Keynesian and socialist buncombe; or giving a theoretical cover to state inflation, taxation, regulation, and spending—the typical economist is not a friend of liberty.

But all this is a perversion of real economics as exemplified by the Austrian school and its greatest exponent, the late Ludwig von Mises. Professor Mises was not only the 20th-century’s greatest creative force in economics, he was also its radiant champion of liberty.

When my old friend Scott Stanley of Conservative Digest—who is to editing what the Austrian school is to economics—asked me to write this article, he mentioned the Japanese custom of naming great achievers as living national treasures. “Who are our three living national treasures in economics?” he asked.

There are other worthy contenders, but three men stand out as great economists and freedom fighters in the Misesian tradition: Henry Hazlitt, W. H. Hutt, and Murray N. Rothbard.

Henry Hazlitt

Henry Hazlitt’s career as economist and journalist spans more than seven decades. An outstanding teacher of the economics of freedom, he did pathbreaking theoretical work, and made the ideas of Austrian, free-market economics accessible to everyone.

One of the most quotable economists of all time, his writing sparkles. And his clear and sprightly style seems—like his commitment to freedom—only to grow stronger with the passing years.

One of his chief accomplishments is the masterful Economics In One Lesson. This small volume has converted millions (in eight different languages) to an understanding of the free market and Austrian economics. It destroys the arguments of socialists and interventionists as it explains the truth. Although it was written more than 40 years ago, there is still no better way to start learning good economics.

But it’s scorned by establishment economists. And no wonder. If Hazlitt were followed, interventionist politicians and their intellectual bodyguards in the academic world would be unemployed.

If that’s not bad enough, his airtight case for the free market is accessible to the layman, and that’s anathema to the economic establishment. Thumb through any issue of a top economic journal and you’ll know why Hazlitt’s book is considered heretical. Not because it doesn’t make sense, but because it does; not because it isn’t logical, but because it is; not because it isn’t true to life, but because it is.

Translate their jargon into English, and we find establishment economists beginning with such axioms as “let’s assume everybody knows everything” or “nobody knows anything” or “people never change their minds.” Men and women are stripped of their individuality to make them fit into mechanistic computer models, and the economy is seen as static, or at best a series of shifting static states. Deductions from such axioms must, of course, be false.

Hazlitt, like Mises, starts with the assumption that individuals act, that they do so with a purpose, and that as conditions change, their plans change. Do we need to know anything else about mainstream economics than that this is considered “unscientific”?

Most economists are notorious justifiers of special-interest legislation because they ignore what Hazlitt so eloquently charts in Economics In One Lesson: the unseen and long-run effects of government policy. To Hazlitt, as an Austrian school economist, “economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Central bank inflation of the money supply, for example, lowers interest rates initially, but leads to higher interest rates and lower purchasing power in the long run, not to speak of the business cycle of booms and busts. Inflation may benefit the government and those who get the new money first, but it hurts everyone else.

Although a formidable scholar, Hazlitt did not spend his career in a university. He was a working journalist of whom H. L. Mencken once said: “He is one of the few economists in human history who could really write.” Born in 1894, Hazlitt went to work in 1913 as a reporter for the Wall Street Journal. He was also an editorial writer for the New York Times and a columnist for Newsweek.

As a very young man, Hazlitt read the Austrian economists Carl Menger, Eugen von Böhm-Bawerk, and Philip Wicksteed. But the main influence on him was Ludwig von Mises. And in 1940 Hazlitt helped—with the late Lawrence Fertig—to raise funds for a job for Mises at New York University.

At a time when every second-rate European Marxist was getting a professorship at Harvard or Princeton, Mises was blackballed by U.S. universities as “too right-wing.” Eventually Hazlitt and Fertig were able to persuade NYU—where Fertig was a trustee—to allow Mises to be an unpaid visiting professor.

Mises and Hazlitt became close friends and he later arranged the publication of Mises’s Omnipotent Government, Theory and History, Bureacracy, and the monumental Human Action by Yale University Press, and helped edit the manuscripts as well.

During Hazlitt’s years at the New York Times, he wrote about the troubles that would flow from the Keynes-designed Bretton Woods monetary agreements. (His eloquent editorials are collected in From Bretton Woods To World Inflation.) Bretton Woods, which Supply-Siders wrongly look back on with nostalgia, guaranteed—as Hazlitt predicted—a world of paper money inflation. It also gave us the International Monetary Fund and the World Bank, still major sources of funding for statist regimes.

As Hazlitt has argued, only a true gold standard, with the dollar redeemable in gold domestically as well as internationally, qualifies as sound money. And institutions like the IMF and World Bank only benefit governments and banking interests at the expense of the American taxpayer and the poor in other countries.

Another Hazlitt masterpiece is The Failure of the “New Economics.” Here Hazlitt did what no one else has ever attempted: a line-by-line refutation of Keynes’s General Theory. The book is a patient and meticulous shattering of Keynes’s fallacies, contradictions, and muddled thinking.

A Renaissance man in the Mises tradition, his output includes 25 books—on economics, philosophy, politics, history, and a wonderful novel, Time Will Run Back—plus hundreds of persuasive columns and articles.

The Bretton Woods system did break down, of course, as Hazlitt had predicted. But when, many years before, the publisher of the New York Times asked him to reverse his position and endorse Keynes’s phony gold standard, he resigned rather than do so. That act of courage and principle exemplifies his whole life.

W. H. Hutt

It’s possible for a student of economics to go all the way through graduate school without hearing the name William H. Hutt. Yet his scholarship, bravery, and dogged adherence to economic truth make him a hero.

Hutt, now a visiting professor at the University of Dallas, has labored quietly and with little acclaim for more than 60 years. He is responsible for major breakthroughs in economic theory, a dozen books, and hundreds of articles. Among his most important works are The Theory of Collective Bargaining (1930), Economists and the Public (1936), Economists of the Coulour Bar (1964), The Strike-Threat System (1973), and A Rehabilitation of Say’s Law (1975).

Born in 1899, Hutt graduated from the London School of Economics. He published his first major academic article in 1926, refuting the leftist charge that the Industrial Revolution impoverished workers, when in fact it raised their standard of living dramatically. He went on to become the great defender of working people, and scholarly opponent of their enemy: labor unions.

Many books had been written about labor unions, usually from a leftist perspective, yet no comprehensive theory of collective bargaining had ever been advanced. Hutt did so while teaching at South Africa’s University of Cape Town.

In his The Theory of Collective Bargaining, which Ludwig von Mises called “brilliant,” Hutt exploded the still-common myth that the interests of labor and management naturally clash. That is nothing but a disguised version of Karl Marx’s theory of exploitation. On the contrary, Hutt said, the free market brings harmony. Only government intervention-such as laws favoring labor unions against employers and non-union workers—creates conflict.

Hutt also proved that collective bargaining and other union activities depress wages for non-union workers and the poor. He showed how much better off all countries would be if government-sponsored union activities were banned.

Unlike “liberals” and socialists, Hutt recognized that unionization’s equal wage structure is destructive. Paying everyone the same, regardless of contribution, destroys the incentive to improve.

He is also an articulate opponent of the force and violence that are endemic to unions, and he has shown that they are necessarily an integral part of their functioning.

These ideas, of course, did not sell well in the 1930s. But that never hindered Hutt. And he took on another leftist idol: Keynes. While Hazlitt was fighting Keynesianism in the U.S., Hutt did the same in the British world.

Economists and the Public was published in the same year as Keynes’s General Theory, 1936. Hutt’s book was already in page proofs when Keynes’s book appeared, but he inserted a warning about the dangers of Keynesianism.

In the book, Hutt sought to explain why the obviously superior free market was under attack, and why economists were held in such disrepute. The problem, he said, was that neither economists nor the public understood the nature and effect of competition.

Only unfettered competition protects the general interest against the government and its interests, said Hutt. Far from being a destructive force, competition is the “sole principle of coordination in a complex world” and the greatest liberator of the poor, a class which Marxists and Keynesians claim to love, but succeed only in increasing.

Hutt also unveiled his concept of “consumer sovereignty,” which influenced Ludwig von Mises. In the free market, Hutt said, consumers have the right to buy or not to buy, and therefore producers play a subservient role. The only path to success in a free market is for the producer to serve the consumer. In a statist economy, pleasing politicians is the road to riches.

In 1939, Hutt delivered another blow to Keynesianism with The Theory of Idle Resources, which exploded Keynes’s theory of unemployment. Hutt showed that a resource like labor can be idle only through government intervention that raises its price higher than the community can afford, in light of other demands. This is why minimum wages and unions are so destructive: they inhibit flexibility in the price of labor.

Not satisfied with attacking Keynesianism, in 1964 Hutt wrote the first detailed critique of South Africa’s economic apartheid in The Economists of The Colour Bar.

Hutt didn’t call for “one-man-one-vote” or similar schemes. He criticized the South African government’s pro-labor union socialism and interventionism as giving an opening to Communism. Unless the market were freed from state intervention, he showed, there would be bloodshed and a destruction of freedom for everyone. He pleaded for blacks to be given a chance to own their own businesses, and to seek and hold any jobs they were capable of holding, without state discrimination.

Hutt showed that South Africa’s economic apartheid was designed largely to protect white labor union members from black competition. The free market, he said, offers the only hope to minorities and the disadvantaged, and for a free society in South Africa. Government controls benefit only loot-seeking special interests.

The Economists of the Colour Bar—which anticipated Walter Williams’s analysis of race and government—is a triumph of the union of theory and policy. This is something most economists shun as “unscholarly.” But Hutt makes no secret of his desire to influence public opinion toward laissez-faire. For this, he was banned from working in South Africa.

As Ludwig von Mises wrote, W. H. Hutt “rank[s] among the outstanding economists of our age.” That he is not ranked as such by the mainstream is a tribute to his achievements and his courage.

Murray N. Rothbard

Ludwig von Mises was the greatest economist and defender of liberty in the 20th century. In scholarship and in passion for freedom, his heir is Murray N. Rothbard.

Rothbard was born in New York City in 1926. His parents, a chemist and a journalist, had met at an anti-big government ball, so from his earliest days he was properly oriented.

He received his Ph.D. from Columbia University, and studied for more than 10 years under Mises at New York University. However, his degree was delayed for years, and he came close to not receiving it at all, because of the unprecedented intervention of a faculty member who was outraged at his topic.

Rothbard’s dissertation—The Panic of 1819—showed how the Bank of the United States, the Federal Reserve’s ancestor, caused the first American depression. This offended Professor Arthur Burns, later chairman of the Federal Reserve under Nixon, who was horrified by Rothbard’s anti-central bank and pro-gold standard position.

Ph.D. finally in hand, Rothbard began writing for the libertarian Volker Fund in New York. Like his great teacher Mises, Rothbard’s views prevented him from getting a job at a major university. Finally he was hired by Brooklyn Polytechnic, an engineering school with no economics majors.

He worked there, in a dark and dingy basement office, until last year, when—thanks to free-market businessman S. J. Hall—he was offered a Distinguished Professorship of Economics at the University Of Nevada, Las Vegas.

But his lack of a prestigious academic base did not prevent Rothbard, any more than Hazlitt, Hutt, or Mises, from reaching a wide audience of scholars, students, and the general public. Rothbard is the author of hundreds of path-breaking scholarly articles and 16 books, including Man, Economy, and State (1962), America’s Great Depression (1963), Power and Market (1970), For a New Liberty (1973), Conceived in Liberty (1976), The Ethics of Liberty (1982), and The Mystery of Banking (1983).

In America’s Great Depression, building on Mises’s work, Rothbard proved that the Federal Reserve caused that economic calamity, and that other government interventions prolonged and deepened it.

He has also demonstrated that only a gold coin standard, with no central bank and 100% reserves, brings sound money and economic growth. Central banking and its inevitably inflationary monetary policies causes recessions and depressions that are not inherent in a free-market economy. Government, Rothbard shows, is the source of every business cycle in history.

Rothbard was also the first to show that a free market cannot create monopolies, and that government is, as always, the enemy of competition. The real monopolies are open ones like the Post Office, somewhat obscured ones like electric power companies, and worst of all the least-questioned one, the Federal Reserve.

In his great work Man, Economy, and State, he provides a logical answer to virtually every argument used against the free market. In the days of real economics, every scholar aspired to write a treatise that covered the whole subject. Since the Keynesian warping of the profession, this has gone out of fashion, and Man, Economy, and State is the last such magnum opus. In it, clearly and logically, Rothbard deduces the whole of economics from first principles. It is a tour-de-force unmatched in the modern profession.

In his Power and Market, originally part of Man, Economy, and State, he develops a comprehensive critique of government coercion. There are two types of government intervention, he shows: triangular, in which the government “compels a pair of people to make an exchange or prohibits them from doing so,” and binary, where government directly coerces a citizen for its own benefit, as in taxation. He carefully outlines the bad effects of every possible intervention in the economy, and is especially good on the harmful effects of taxation.

Rothbard also broke new ground in attacking government statistics. As he shows, the government collects statistics to help it plan the economy. (Of course, after millions of pages gathered every year, it still can’t get it right!)

Among Rothbard’s least favorite statistics is the “trade deficit,” which is only considered a problem because government keeps the figures. Thank goodness, he has noted, that trade statistics aren’t kept on Manhattan and Brooklyn. “Otherwise we’d hear cries from Brooklyn politicians about the dangerous trade deficit with Manhattan.”

Another statistic he dislikes is GNP. This number counts welfare payments and all other government spending as “productivity.” His PPR—Private Product Remaining (to producers)—shows a much clearer picture by subtracting government spending from the economy. He has also constructed an Austrian “M”—the True Money Supply—which reveals the Federal Reserve’s depredations, unlike the constantly changing Ml, M2, M3, etc., which are designed to disguise inflation.

Not only is he a brilliant economist, he is also a master of narrative political history, as his four-volume colonial history of the United States, Conceived in Liberty, shows; and a great philosopher in the individualist tradition, as demonstrated in Ethics of Liberty.

His current project is a massive history of economic thought from an Austrian perspective, commissioned by investment advisor and Austrian economist Dr. Mark Skousen, which covers the ancient Greeks to the present. Judging by the chapters so far, this will be the greatest study of its kind ever written.

The real Great Communicator, Rothbard is a writer of singular style, humor, and power. His words glisten on the page, while statist prose is usually a muddled, hermeneutical mire.

Like Mises, he has inspired millions with his vision of the free society. In the academic world, where devotion to principle is as popular as it is in Washington, he has carried the torch of pure Misesianism.

Three Giants

Like Mises, these three giants exhibit extraordinary ability, courage, personal gentleness, and an unbending adherence to principle.

In an age when selling-out is the norm among politicians-governmental and academic—Hazlitt, Hutt, and Rothbard have held high the banner of truth and freedom. They have faced immense pressure to retreat, but never wavered. Today they are still at work extending the scholarship of freedom.

Despite the barriers they have faced in the past, today their influence is spreading. And it will continue to do so. In their fight for liberty and the free market, these masters have one asset the other side cannot match: the truth.

Murray N. Rothbard: Giant of Liberty

Walter Block and Llewellyn H. Rockwell, Jr.

Murray N. Rothbard is a scholar of unique, indeed, monumental achievements: the founder of the first fully-integrated science of liberty. Consider, first, his accomplishments in economics. His Ph.D. dissertation from Columbia University—The Panic of 1819—showed how the Bank of the United States, the Federal Reserve’s ancestor, caused the first American depression. It remains the only in-depth historical account of that particular monetary debacle.

In America’s Great Depression, still the most definitive work on the subject, Rothbard used Austrian trade cycle theory to show that the Federal Reserve caused that economic calamity, and that other government interventions prolonged and even deepened the Depression. In addition, the first two chapters present the most clear and convincing explanation of the Austrian theory of the trade cycle in existence.

Both books utilize tools drawn from the great tradition of Austrian economics—Carl Menger’s theory of the development of monetary institutions, Eugen von Böhm-Bawerk’s theory of capital and the time-preference theory of interest, and Mises’s trade cycle theory and method—perfect each, and weave them together into a systematic praxeological model. He succeeded not only in explaining cyclical fluctuations caused by central bank intervention, but also proved the case for the gold coin standard, no central bank, 100% reserves, and laissez-faire.

After Rothbard’s masterful integration, economists can no longer dismiss recessions and depressions as an “inevitable” part of the market process. Instead, he showed, they are caused by central bank inflation and the corresponding distortion of interest rates, malinvestment of capital, theft of savings, and price increases that go with it. Government, of which the central bank is only one arm, is the real source of business cycles.

Rothbard was also the first to explode the fallacy of distinguishing between monopoly prices and competitive prices. This distinction makes sense only in neoclassical pricing models, where businessmen charge higher and higher prices in the inelastic portion of consumers’ demand curve. But these static models have nothing to do with the dynamic market process. In the real world, we can only distinguish between free-market prices and those controlled by the government.

This discovery has momentous policy implications: in a free market, where we never see “monopoly (non-competitive) prices,” there can be no unjust monopoly profits. This destroys the entire neo-classical justification of anti-trust policy. Monopolies do exist, Rothbard shows, but only when government erects a barrier to entry into the market by granting some firm or industry a special privilege.

Rothbard also revolutionized the entire field of utility and welfare economics—and laid a foundation for other Austrian scholars to build upon—by showing that utility is something that we can know only by observing individual preferences revealed through human action. Utility, a strictly ordinal and subjective concept, cannot be aggregated among individuals, and thus there can be no social utility.

Because of Rothbard’s irrefutable theory of utility and demonstrated preference, neo-classical welfare economics can no longer be used to justify state planning. When individuals are free to trade without interference from government, we know that each party expects to benefit from the exchange, i.e. maximize his own subjective utility, or the parties would not exchange in the first place. His conclusion: free markets maximize utility and welfare, whereas government intervention, by the very fact that it forces people to behave in ways in which they otherwise would not, only diminishes utility and welfare. It was this foundation that allowed Rothbard to integrate a rigorous theory of property rights with a scientific theory of economics. Today, others within the profession are trying to do the same, but they will not succeed so long as they cling to theories of efficiency built around faulty utility and welfare concepts.

In his great work Man, Economy, and State, Rothbard provides a rigorous defense of economic science and the pure logic of action. In the by-gone days of “real economics,” every scholar aspired to write a treatise covering the whole subject. Since the Keynesian and neo-classical warping of the profession, however, this has gone out of fashion, and Man, Economy, and State is the last such great work. In it, clearly and logically, Rothbard deduces the whole of economics from its first principles. It is a tour-de-force unmatched in modern economics.

If only his contribution to economics in general were considered, his refutations of neo-classical, socialist, interventionist, and Keynesian fallacies would put him head and shoulders above all other living economists. If only his accomplishments in the field of Austrian economics were taken into account, his place in the firmament would be secure. For it is an understatement to say that he is the most productive of the students and followers of Ludwig von Mises. But his attainments in economics are only the tip of the iceberg. His productivity as a historian is more than sufficient to establish him as a leader in that field as well. In addition to many scholarly articles, his four-volume colonial history of the United States, Conceived in Liberty, shows that libertarian ideas have been an American staple since almost the earliest days, and that the American Revolution was very much a libertarian affair. He shows that the received wisdom in history is almost always wrong, since it usually reflects the state’s bias.

Permeating all of Rothbard’s historical writing is a brillant and original revisionism, a unique and rigorous refusal to accept uncritically the official version. (He is also one of the few historians ever to place his presuppositions, his theory of history itself, on record. He does so properly in the introduction where it belongs, and not all throughout the book in the form of implicit presuppositions.) Whether discussing monetary history, the history of economic thought, the Progressive Era, the New Deal, World War I, or any of his other areas of expertise, Rothbard eruditely and unerringly turns the statist worldview upside down, in search of a commodity unusual among modern historians—truth.

But his exploits in economics and history, extraordinary as they are, are matched by what he has done for the cause of liberty. If he is an eminent historian, and the world’s leading Austrian economist, he is no less than the father of libertarianism. He is, as even National Review has acknowledged, “Mr. Libertarian.” In his Power and Market, Rothbard develops a comprehensive critique of government coercion. He vastly expanded the scope of the theory of intervention, and developed three useful categories: autistic, binary, and triangular. Autistic intervention prevents a person from exercising control over his own person or property, as with homicide or infringements on free speech. Binary intervention forces an exchange between two parties, as in highway robbery or income taxes. Finally there is the triangular mode, in which the government “compels a pair of people to make an exchange or prohibits them from doing so,” as in rent control or minimum wages. He carefully outlines the deleterious effects of every possible intervention in the economy, and is especially insightful in analyzing the harmful effects of taxation.

In For a New Liberty, Rothbard leaves the world of theory and gets down to brass tacks. How would a totally free society actually function? While it is always impossible to predict the future exactly, he shows how the challenges of education, poverty, private roads, courts, police, and pollution might be dealt with under a complete laissez-faire system. In his masterful The Ethics of Liberty, Rothbard deals with the hard questions: the criminal system, land redistribution, the vexing problem of children’s rights, bribery, boycotts, lifeboat situations; his critiques of other, less-pure advocates of the freedom philosophy such as Hayek, Nozick, and Berlin are alone worth the price of admission. Nor must we lose sight of yet another of Rothbard’s particular excellences: his masterful ability to integrate intellectual thought, to see connections where others see only a bewildering complexity, to weave the threads from all of knowledge into a shield which can preserve human rights. He has long called for, and has indeed been the leading exponent of, what he calls the “interdisciplinary study of liberty.” From this perspective, the disciplines of economics, history, law, philosophy, sociology, etc., must all be harnessed together to comprise a “seamless web” of liberty. All must be utilized in the glorious struggle to promote the free society, with the teachings of none remaining inconsistent with any other. Were Rothbard’s accomplishments limited merely to any one of the many disciplines he has so eloquently mastered, we could be very laudatory. But when we reflect on the fact that he has already made significant contributions to each of them, of the sort that any person would be justly proud to call an entire life’s work, we must simply stand in awe.

And when we realize that Rothbard has not only spread himself over practically every social science, but also has integrated them into a moral and intellectual product never before known, that he has, in effect, created an entirely new academic discipline of liberty, then all we can say is that we are delighted, proud, and honored to know him, and to be his students.

—An Excerpt From Man, Economy, and Liberty

Henry Hazlitt: Giant of Liberty

Various Authors

For more than seven decades, Henry Hazlitt has taught the economics of freedom. With pathbreaking theoretical work and a unique ability to communicate with the non-economist—shown forth especially in his Economics in One Lesson—he has both advanced Austrian economics and made it accessible to everyone.

Henry Hazlitt, a formidable scholar-journalist whom H. L. Mencken called “one of the few economists in human history who could really write,” is the author of 25 books and thousands of columns and articles. He also arranged Ludwig von Mises’s professorship at New York University and the publication of Human Action and three other Mises books by Yale University Press.

Like Mises, Henry Hazlitt combines courage, genius, and gentleness with an unbending adherence to principle. Today, at a very young age 93, he is still at work extending the scholarship of freedom. The Mises Institute has been fortunate indeed to have this great man as a friend and supporter since its earliest days.

On October 17, 1987, in New York City, more than 150 people gathered to pay homage to this extraordinary person at the Institute’s Fifth Anniversary Dinner held in his honor. In this special Henry Hazlitt issue of the Free Market, we have reproduced the homages and messages delivered at the dinner, and Henry Hazlitt’s own captivating talk.

If there were justice in journalism, Henry Hazlitt would have been showered with the Pulitzer and other prizes. But he was not, which matches his treatment by the economics profession.

To help carry on his ideas, we have established the Henry Hazlitt Fund for Economic Journalism to give promising young journalists a chance to study real economics.

Media bias against sound money and the free market can’t be cured overnight. But the educational programs sponsored by the Hazlitt Fund will have a lasting effect for good.

“The Meaning of Mises”

The Institute’s Fifth Anniversary Conference, “The Meaning of Ludwig von Mises,” broke new ground in Misesian scholarship on October 16-17 at Pace University in New York City.

Dr. Walter Block of the Fraser Institute compared the Misesian 100% gold standard with other allegedly free-market theories.

Professor Richard Ebeling of the University of Dallas spoke on Mises’s demonstration that socialism is an irrational form of social organization, and on the economists who anticipated some of his ideas.

Professor Roger Garrison of Auburn University discussed “Mises and his Method.” Mainstream economics believes that mathematics and statistics alone can yield economic theory. But Austrian economics relies on logic and reason for its theory.

Dr. David Gordon of the Mises Institute presented and built upon Mises’s critique of false doctrines of history which rely on determinism and relativism, for example Marxism, which teaches a historical “dialectic” instead of a history built on human action.

Professor Hans-Hermann Hoppe of the University of Nevada, Las Vegas, presented a comprehensive apriori deductive approach to Austrian economics, the Misesian theory of knowledge, and a laissez-faire public policy.

Professor Murray N. Rothbard of the University of Nevada, Las Vegas, talked about “Mises as Hero,” a ringing tribute to the greatest mind of his time and principled activist for liberty.

Professor Mark Skousen of Rollins College discussed those who predicted the Great Depression, and noted that one of the few who did was Mises.

And Professor Leland Yeager of Auburn University defended Mises’s and Hazlitt’s theory of ethics, rights, and law.

The papers—which will also include contributions by Professors Roger Arnold of the University of Nevada, Las Vegas, Israel Kirzner of New York University, and Joseph Salerno of Pace University—will be published by Lexington Books under the title “The Meaning of Ludwig von Mises.”

Messages and Talks From the Ludwig von
Mises Institute’s Fifth Anniversary
Celebration and Tribute to Henry Hazlitt

Margit von Mises, Chairman
Ludwig von Mises Institute

This evening we celebrate the fifth anniversary of the founding of the Ludwig von Mises Institute, and give thanks to a tireless champion of the free market and free society, Henry Hazlitt . . . .

I remember very well the day I met Lew Rockwell, the Institute’s president, for the first time. . . . Lew told me he had heard the tape of a speech of mine . . . in which I pleaded for the founding of an institute exclusively working for the Austrian theories of the free market. He asked for my permission to use my husband’s name, since he was prepared to found such an institute. At the same time he asked for my help, which I promised to give, if he would promise never to leave the Institute, but to make it his life’s work. This he promised, and so this meeting led to the founding of the Ludwig von Mises Institute.

That the Institute has its Fifth Anniversary today is solely the work of Lew Rockwell. Through his effectual administration, his indefatigable diligence, his thorough knowledge of people, and his love for liberty, the Ludwig von Mises Institute has reached its present state.

I have a special wish for the Institute which I want to tell you about. A Ludwig von Mises Institute needs a permanent location in the cultural center of the United States . . . , New York City. I hope that the many friends of Ludwig von Mises and the Institute will take up the idea, and will provide the Institute in the near future with a presentable house.

I myself cannot give it to the Institute, but tonight I promise that when I have to go, it shall receive the Ludwig von Mises bronze head, done so masterfully by Nellie Erickson . . . , which I have now in my apartment. In my thoughts I see the statue standing on a pedestal in the entrance hall of the building in New York City.

This evening is devoted to Henry Hazlitt. Therefore as the widow of Ludwig von Mises, the widow of one of Hazlitt’s best friends, I send him greetings and all good wishes.

John V. Denson, Vice Chairman
Ludwig von Mises Institute

It is a distinct privilege for me to join with all of you in honoring Mr. Henry Hazlitt tonight. Ludwig von Mises once remarked:

The intellectual leaders of the people have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization. What is needed to stop the trend toward socialism and despotism is common sense and moral courage.

Henry Hazlitt, through seven decades, has demonstrated the unflinching moral courage mentioned by Mises. He has also presented the ideas of the free market and individual liberty in concise, common-sense terms, which could be understood by the general reader.

When I studied economics at Auburn University in 1955, I was taught only Keynesian ideas. My intuition told me that what I was being taught was not correct, and that it would lead to the destruction of individual freedom. However, I had no intellectual ammunition with which to reply or rebut. It was not until several years later, when I was in law school, that I discovered Henry Hazlitt’s column in Newsweek. It was several years after this that I was introduced to the ideas of Ludwig von Mises and read both Human Action and Socialism. I have often wondered if I would ever have made the commitment to tackle those two large volumes without first having absorbed Henry Hazlitt.

Now we have come 180 degrees at Auburn University. In 1982, two years after I became a trustee, I began to work with Lew Rockwell who had just formed the Mises Institute. We worked together to establish Auburn University as an academic base of the ideas of Ludwig von Mises. The economics department at that time already had a strong contingent of free-market economists and several Misesian scholars. Now the ideas of Mises and Hazlitt are there.

Today on the drawing board at Auburn University are the plans for a new building for the College of Business that will include the Economics Department and a prominent place for the Mises Institute, which will provide it a permanent home for its academic endeavors.

Mr. Hazlitt, those who love liberty will always owe you a debt of gratitude. You have been a prime mover for over 70 years in the sometimes lonely struggle to establish correct economic principles. You have clearly demonstrated the common sense and moral courage that Ludwig von Mises stated would be necessary to change the trends that were on the point of destroying liberty and Western civilization. There are many hopeful signs that the tide is turning toward the ideas that you and Ludwig von Mises had advocated for many decades.

I am proud to join with all of those present, as well as the many thousands who could not attend, in saying thank you for your courage, for your intellect, for your integrity, and for your love of individual freedom.

Murray N. Rothbard, Vice President
Ludwig von Mises Institute

This is a marvelous occasion, but why haven’t there been 20 of these dinners?

In my own case, I was a Hazlittian years before I was a Misesian. In fact, before I had heard of von Mises I knew about Henry Hazlitt. When I was first getting interested in free-market economics, during and just after World War II, Harry was all over the place—in Newsweek, on radio and later television—lucid, sound, brilliant, and decisive, carrying the free-market message. And he was the only one.

H. L. Mencken said that Harry Hazlitt was one of the few economists who could write, and that was certainly true. He also got me into a lot of trouble. My first teaching job was at Baruch College, City University of New York, in 1948, before I had heard of von Mises. I was teaching principles of economics—this was before the micro/macro junk came in, so it was in the good old days. We used a fairly decent pre-Keynesian textbook. As a supplement we used Henry Hazlitt’s Economics in One Lesson, which, of course, was great. But we also had to use a monstrous little left-wing book refuting Harry’s book. So on the first day I denounced the left-wing book and told my students not to bother reading it. I was immediately reported to the dean and got in hot water.

Another of my favorites of Harry’s is his novel The Great Idea. It came out in 1951, and was later reissued as Time Will Run Back. This is the great economic novel. The hero falls heir to a world dominated by Soviet dictatorship and starts realizing that things are totally mucked up. Step by step he rediscovers the free market. It is a marvelous lesson in Austrian economics. For example, in what other novel is there a critique of mathematical attempts that try to claim that socialism can calculate? I got an emotional thrill out of this novel, especially when the hero discovers through the market that money is really a gold gram.

In addition to being a writer, a radio/television performer, and a novelist, Harry is also a great scholar. One who is horribly underrated and undervalued. This evening only just begins to rectify the balance.

His great contribution to economics is the Failure of the “New Economics”, which came out in 1959. It was a devastating demolition, paragraph by paragraph, of Keynes’s General Theory. He followed it up with Critics of Keynesian Economics.

There are many other contributions to scholarship by Harry. One of them I particularly like is his Man Vs. the Welfare State, 1969, the only good critique of Milton Friedman’s proposal to replace the welfare state with an even worse welfare proposal called the negative income tax. . . .

This is just a slight sketch of Harry’s scholarly and literary accomplishments. . . . He is also a magnificent person. God bless you, Harry.

Ron Paul, Distinguished Counsellor
Ludwig von Mises Institute

I am honored to help praise Henry Hazlitt. But first I want to compliment Lew Rockwell for a great five years with the Mises Institute.

I was one of the first people that Lew came to when he decided to start the Institute and, of course, I did what I could to help. I was a bit skeptical, but Lew, you have proved yourself, and I think it is great.

I, too, Murray, was very much impressed with Henry Hazlitt’s Time Will Run Back. We all know about 1984 and Brave New World. Yet Henry Hazlitt wrote a great novel on how to restore freedom. Toward the end of the book, there is a wonderful statement that I would like to quote:

“If you forbid what is harmful to others, you have a big enough job for any government to take care of. Moreover, you have definite logical boundaries to that job. But if you begin to demand altruism, legally, there are no logical limits until everybody has been forced to give away all he has earned or all he has earned above those who have earned less, and then you are back again to the point where no one has any incentive, whatsoever, to earn or produce anything. . . .

Any society worth living in must of course be infused with a spirit of generosity and benevolence. It can not depend solely on negative virtues, on people’s merely respecting one another’s liberty or their abstaining from deceit or violence. I concede all of that to be true, but it isn’t the function of the government to force people into these positive virtues, it couldn’t do it if it tried and the attempt would merely lead to horrible abuses. These positive virtues must come from within the society, itself, and that is merely another way of saying that they must come from within the individual.”

In politics today, conservatives want to make individuals better through government, whereas liberals want to make society better by redistributing the wealth. Both approaches lead to the omnipotent state.

In the early 1980s, when I was in Congress fighting the IMF bill appropriations, I called Henry Hazlitt to find out what people said about the IMF when it began. Mr. Hazlitt had been alone in warning the country about the IMF. He mailed me his articles from the 1940s. Possibly I made the suggestion to him, but not too long after, I saw From Bretton Woods to World Inflation.

I marvel at individuals who can buck the tide. At the very time of the Bretton Woods meeting, he called it the road to world-wide inflation. Unfortunately, not enough people listened. But fortunately, with our knowledge of Austrian economics today, the spirit of benevolence he talks about in his novel, the spread of Austrian economics, and the leadership of the Mises Institute, I am optimistic in the long run.

And all of us who care about the long run owe a very great debt to Henry Hazlitt.

Mark Skousen
Rollins College

It is really great that we are gathered here to honor Henry Hazlitt, author of the magnificent Economics in One Lesson, the book that every economist I know wanted to write. . . .

Several months ago I was talking on the phone to Murray’s favorite economist, Paul A. Samuelson, about the paradox of thrift. All of you who have been taught from the Samuelson book know about the paradox of thrift: that savings is bad, that it reduces consumption, and that it is bad for the economy. I said, “Henry Hazlitt refutes the paradox of thrift in Economics in One Lesson.” Paul said, “Ah, but Henry Hazlitt is not an economist.”

“Peter Drucker echoes Hazlitt in several of his books.” “Well,” said Paul, “Drucker is not an economist either.”

“What about Irving Fisher, who said one week before the stock market crash that stocks have reached a permanent plateau?” “Oh,” Paul said, “he was not a stock market expert.” “Yes,” I said, “he was an economist!”

Of course, that just shows what the Keynesians know. Henry Hazlitt is a very great economist. But, as the old phrase has it, a man’s measure is the work he does and not the title he holds. That is especially true when it comes to Henry Hazlitt, for his accomplishments have been abundant and stunning.

Lord Acton said: “At all times, sincere friends of freedom have been rare and its triumphs have been due to minorities.” Henry Hazlitt has been one of those friends, and one of that minority. However, as Josh Billings noted, “As scarce as truth is, the supply has always been in excess of the demand.”

John Fund, Editorial Writer
the Wall Street Journal

When Henry Hazlitt went to work for the Wall Street Journal the year was 1913 and the income tax and the Federal Reserve System had not yet come into being. Ever since then, as part of a career in journalism that now spans three-quarters of a century, Henry Hazlitt has argued for the restoration of free markets and basic freedoms with a wit and force seldom found in economic journalism. My father used to save Henry Hazlitt’s columns from Newsweek magazine, and I remember coming across a yellowing file of them when I was thirteen and Richard Nixon was imposing wage and price controls and closing the gold window. Those columns helped my young mind put political events such as those into perspective, and from the audience assembled in this room tonight it is clear I am not alone.

Kenneth Auchincloss
Managing Editor, Newsweek

Newsweek sends its warmest greetings and congratulations on this happy occasion. We have always prided ourselves on our columnists as one of the magazine’s distinctions, and we take special pride in Henry Hazlitt’s 20-year domicile in our pages. Henry always knew what he believed, he stated it clearly, and he never blew with the winds of fashion. What’s more—and this is more than can be said for most weekly columnists—his views have stood up very well before the bar of history. He warned against the growth of government deficits. He warned against social programs that hurt the very people they are designed to help. He warned against the expansion of government regulation and intrusiveness that has been, to a great extent, the story of this century. And he was right. Today, his views seem prophetic. At the time he was writing, there were readers—and perhaps even some Newsweek editors—who must have considered him old-fashioned, out of touch with the times. But Henry would never have considered trimming his opinions to the patterns of the day. That made him both a very strong journalist and one who was never out of date. Henry, we miss you.

William F. Buckley Jr.
Editor, National Review

It is especially mortifying that I should be kept from this celebration by the exigencies of politics. . . . I remember years ago being directed by Harry Hazlitt to the sentence from Mencken to the effect that government is the enemy of all well-disposed, decent, and industrious men. . . .

The last time I lunched with Henry Hazlitt in my home in Stamford, Connecticut, we walked to the car by the garage and he said to me: “How old is this house?” I answered, “It was built in 1907.” “Ah,” he said, “yes. That is the year I graduated from high school.”

I was staggered by this intelligence, but then it occurred to me that Henry Hazlitt was probably about seven years old when he graduated from high school.

His intelligence and his erudition are of the order that makes one wonder if it must not have been a hundred years ago at least that he began his industrious inquiry into the way the world works, or rather should work, if we are to encourage man to be free. I met him first when he was an editor of The Freeman. He was flattering enough to offer me a position as an editorial assistant, and I wish I had accepted the offer instead of going with Bill Huie to the American Mercury. Though come to think of it, both men were well equipped to teach me how to run a magazine that year after year runs at a deficit. . . .

We all owe him a great deal. I learned from him early on that no matter how highminded a man’s purpose in life, his capacity to laugh is indispensable to the atmosphere he creates. Harry Hazlitt is one of the best laughing companions I have ever known. He and Frances have been a noble couple, interested, interesting, learners and teachers. I am proud to be his friend, I salute him on his enduring accomplishments, and vow to be present five years hence at the next celebration of great gifts.

F. A. Hayek, Nobel Laureate
University of Freiburg

Delighted to learn that Henry Hazlitt is deservedly being celebrated for his long period of beneficial instruction of the public and particularly for having established in the United States the reputation of Ludwig von Mises when totalitarianism drove him out of Europe.

George Bush
Vice President of the United States

Henry, you have been a true giant in the resurgence of conservative thought in the 20th century. . . . I am delighted to join the Ludwig von Mises Institute in saluting you as guest of honor at its fifth anniversary dinner, and send my very best wishes for an enjoyable evening.

Ronald Reagan
President of the United States

Henry, I am pleased and proud to add my congratulations to those of your many colleagues and friends as the Ludwig von Mises Institute honors you at its Fifth Anniversary.

You’re being honored for many reasons—your more than seven decades as a scholar and journalist; your many and distinguished contributions to economics; your persistent efforts in behalf of Ludwig von Mises and other scholars; and the wide influence you’ve had among intellectuals, opinion-makers, and government leaders, including this one.

But, as everyone paying you this truly well-deserved tribute would agree, you’re being honored above all for the clarity, the eloquence, the rigorous consistency, and the utterly unflinching courage with which you’ve studied, explained, and defended economic freedom and individual liberty. In helping those within and without academia to understand the free market and the futility of socialism, you’ve done all mankind a tremendous and lasting service. I am happy to commend you, and to wish you well always.

Again, congratulations and God bless you.

Llewellyn H. Rockwell, Jr.
Founder and President
Ludwig von Mises Institute

Thank you all for coming to our 5th birthday party, and for helping us to honor a very special and a very great gentleman.

We’ve heard wonderful talks tonight about Henry Hazlitt’s accomplishments in economics, philosophy, and journalism. But, since this is the Mises Institute, I would like to talk for a moment about what he meant to Ludwig von Mises.

When Mises came to this country virtually penniless, Henry Hazlitt took charge. At a time when every second-rate leftist in exile from Western Europe was getting a cushy job at an elite university, Mises was shut out. For he came here with very unfashionable views. Henry set to work to find him an academic post. Together with Lawrence Fertig, he arranged a post at New York University. Consistent with the rest of Mises’s life, this was an unpaid professorship. Mises never once had a regular faculty appointment, and the money for his NYU professorship came from free-market individuals, businesses, and foundations. But the entrepreneur of the whole arrangement was Henry Hazlitt.

Henry Hazlitt also arranged the publication by Yale University Press of Bureaucracy, Omnipotent Government, Theory and History, and Human Action.

So, on behalf of the Ludwig von Mises Institute, and all of us here tonight, I would like to present you, Harry, with this illuminated scroll, which reads:

The Ludwig von Mises Institute

proudly presents to Henry Hazlitt,

innovative economist, path-breaking philosopher,

and outstanding journalist for liberty,

the Ludwig von Mises Award,

in grateful recognition

of his life-time of achievement

for the free market

in the tradition

of his friend and colleague,

Ludwig von Mises.

Presented in New York City

on the 17th day of October,

in the year 1987.

The scroll is signed by Margit von Mises, Chairman; Burton S. Blumert, Chairman of the Executive Committee; Congressman Ron Paul, Distinguished Counselor; Professor Murray N. Rothbard, Vice President for Academic Affairs; and myself as President. I should add that this beautiful parchment was donated by an admirer of Henry Hazlitt’s, calligrapher Alf Ebsen of Willowdale, Ontario.

Ladies and gentlemen, Mr. Henry Hazlitt.

Speech by Henry Hazlitt

If I believed half of this, there would be no living with me. I hope that my wife doesn’t notice any deep change when I get back.

My friends, I can’t begin to tell you how honored I am by this tribute to me. Such an event in one’s life cannot come too late—if the beneficiary is still there.

As I look back on my life it seems on net balance a happy one, though the beginning did not promise well. I was born in Philadelphia. (That is not the bad promise.) My father had diabetes, and died at the age of 28, when I was only two years old. This meant instant poverty for my mother and myself. My father left no life insurance; I do not know whether young men took it out then at such an early age.

My mother had to get a job. She took one at my maternal grandfather’s children’s hat factory. Children’s hats were a big business then. He employed, I believe, over a hundred operators, and my mother became one like his other employees, with no special privileges. This was in spite of the fact that I had been named Henry after him, because he asked for that and promised my parents, if I were so named, that he would give me $10,000 on my twenty-first birthday. But he failed long before then, and I never got the $10,000.

When my mother worked at her job, she parked me at one of my aunts—Tante Mimi, Tante Emmy, or Tante Nellie—(we were originally a German-speaking family from Alsace-Lorraine, and retained these German titles). At her first opportunity, when I was six years old, my mother entered me in Girard College, a home that the Philadelphia philanthropist, Stephen Girard, had set up (and I quote) “for fatherless white boys.” (The college was not so long ago compelled by court order to take in fatherless black boys also.) I remained there till the age of nine, when my mother was married again, this time to a man named Frederick Piebes, then her employer, also a manufacturer of children’s hats. He took me out of Girard College and adopted me. (I took my original name back at the age of sixteen or so, after my stepfather had died.)

I continued my education at Brooklyn where we lived, at public school, at Boy’s High School, then at the College of the City of New York for about one year in the daytime and another year at night. But this college after work eventually proved too much, and I had to give it up.

Meanwhile I had found a job on the Wall Street Journal, as secretary to the managing editor, Lockwood Barr, a very kindly man. (I had barely heard of the Journal before I took this job, and was merely answering its advertisement in the New York Times.) I had not the slightest interest in or knowledge of finance; my head was full of what I thought of as Philosophy. I was taken on because I had given my previous salary as one dollar less a week than the other applicants, and Barr decided I was the “most honest” of the applicants. (The figure I had given was in fact my previous salary.) I was hired at that rate.

I remained on the Journal for three years, first as the secretary of the Managing Editor and later as that of the Editor, W. P. Hamilton, an irrascible but brilliant Scotsman. Then I received an offer from the New York Evening Post at a higher salary. It came through Palmer Harman, my previous colleague on the Journal.

But I had not intended to make this talk an autobiography, or a history of successively better jobs. Rather I should like to use it chiefly to compare some conditions in my early life with those at later times and at the present. The changes in my lifetime—which means in all our lifetimes here—have been enormous, greater than in any previous period. There has been a growth in invention and in accumulated knowledge. The telephone was invented by Alexander Graham Bell in 1876, and began to be installed in significant numbers in homes in 1895. The automobile had no single day of invention, but began to exist in large numbers in the 1890s. Together these two inventions took an outstanding lead in transforming the face of civilization. But did the knowledge and culture of the man in the street make any corresponding advance? Except in knowledge of the inventions themselves, apparently very little.

If I try to make a comparison of public education in the two periods, I am limited by a good deal of forgetfulness about the past and little knowledge of what is going on at present. But I do remember that in languages, for example in public high school, we had native Germans teaching German and native Frenchmen teaching French. If there is anything similar going on today, I do not know about it.

But enough of trivialities.

It has been my privilege to know, and to be the friend of, a great man, the late Ludwig von Mises. He was an economist, the greatest of the present age, fit to rank with Adam Smith and Ricardo. The title of his masterpiece, Human Action, enlarged the conception of the realm of economics. I am happy to pay tribute to him here.

Well, when it comes to speeches, old people have the reputation of having no terminal facilities. I want to disprove that. Right now.

The Life and Work of a Dissident Scholar

Jeffrey A. Tucker

Samuel Johnson wrote that the great minds of history are “of large general powers accidentally determined in a particular direction.” Ludwig von Mises (1881-1973) had such a mind. We are lucky that he turned to economics—and reconstructed the entire science.

Yet Mises was never given his due. The universities denied him a full-time post. And Mises’s stature as a scholar and economist is still largely ignored.

Why is one of the great minds of our time so unrecognized? First, Mises taught reason and logic in an era when the social scientists lauded irrationality and illogic. And second, Mises believed in freedom in an age of omnipotent government.

Yet despite the odds, this dissident scholar was remarkably productive. First, he reconstructed the whole of economic science. And second, he laid a systematic foundation for further rigorous research into the social sciences.

Like other scholars of similar achievement, Mises worked outside the prevailing wisdom, even against the intellectual trends of his time.

Mises’s first exposure to Austrian economics came when he read Carl Menger’s Principles of Economics, and then attended Eugen von Böhm-Bawerk’s lectures at the University of Vienna.

Early in Mises’s career, government control over money and banking had swept the world. Most economists doubted that money could have its origins or functions in the free market. Mises answered them in his first great work, The Theory of Money and Credit (1912).

The book remains the definitive classic on the economics of centralized money and banking. Economists had previously thought that the laws of economics—like the law of marginal utility—did not apply to money. Mises showed that they did. In the same way the free market provides other goods and services, it can also provide money and banking services. With this work, he broke from the past and forged his own school.

The First World War brought with it extensive social and economic control, both in Europe and the United States. The Warfare State destroyed economies and reversed the progress of liberty. Mises responded with a biting attack on statism and war socialism, Nation, State, and Economy (1919). He argued that “modern socialism of necessity must be imperialistic.” And that the only way to rebuild after the war, and to prevent future wars, was to expand free markets domestically, to promote free trade internationally, and to strive for political tolerance everywhere.

In the 1920s, the ideologies of socialism, fascism, and communism were overtaking Europe. He responded with a complete refutation of the theory, or non-theory, of socialist economic planning, Socialism: An Economic and Sociological Analysis (1922). Not only did he show that socialism was unwise; he showed that it was, in practice, impossible. Without free trade in capital goods, which socialism proposes to abolish, there can be no rational economic calculation. This insight earned him international fame and a group of devoted followers.

It was not enough for Mises to have confronted and destroyed the idea of socialism, including Benito Mussolini’s then-proposed stato corporativo. Mises also had a vision of society wherein freedom provides the way to social cooperation. His Liberalism (1927) is an inspiring defense of political and economic freedom and of the social order of individualism and freedom.

After the 1929 Crash and the publication of John Maynard Keynes’s General Theory (1936), the interventionists overwhelmed the capitalists in economics departments across Europe and the United States. Mises responded with a sweeping statement reconstructing the whole of the discipline, Nationaloekonomie (1940), which later became his English masterpiece Human Action (1949). In this, his magnum opus, Mises defines and defends economics as the deductive science of individual action, and proposes that all government intervention is not only misguided—it is also counterproductive. This unmatched economic treatise forged an American Misesian movement.

Positivism and empiricism took over as the dominant social science method in the 1950s. Mises responded by directly assaulting their intellectual foundations in Theory and History (1957) and The Ultimate Foundation of Economic Science (1962), both of which elaborated on earlier essays collected in Epistemological Problems of Economics (1933).

For Mises it was not enough to hold correct policy views. How one arrives at those views is also of utmost importance. “It is a complete misunderstanding,” Mises said of methodological questions, “to dismiss them as the scholastic quibbling of pedantic professors.” On the contrary, method is “the real issue,” the one upon which the validity of economics ultimately rests.

Mises’s term for the subject matter of economics is praxeology, the logic of action. Praxeological reasoning yields economic principles which are universally valid. No matter when in history or where on the globe one looks, the laws of economics apply. Do the facts fit the economic theory? They do. But empirical facts, and history in general, do not by themselves yield any economic knowledge at all.

The conclusions of non-praxeological schools must be as tentative as the historical data from which they derive. They cannot be universal theorems. They must be subjected to continuous empirical “testing” to “prove” their validity.

If this is our standard, free markets could work today but statism may appear to work tomorrow. It’s anybody’s guess what could work the day after. Not so with praxeology. If one desires prosperity and social cooperation, free markets are the only way.

Mises built a coherent system of economic thought, one which begins with the axiom of human action and deduces the whole of economics—from profits and prices to production and trade cycles. In the Misesian system, economic policy binds to theory that derives from method.

Policy, theory, method—all are part of Misesian economics. For example, Mises had fascinating views on central banking and the business cycle. But they are more powerful when one remembers that they derive logically from universal economic laws, which in turn derive from the fact of human purpose.

That is why Professor Murray Rothbard’s new book, Ludwig von Mises: Scholar, Creator, Hero (Mises Institute, 1988) is so important. Rothbard includes many hitherto unknown details on Mises’s life, and doesn’t shy from the harder questions like why most of Mises’s best students abandoned him for alien theories and policies.

The Mises who emerges from Rothbard’s book is decidedly one of the century’s most brilliant intellects. Mises didn’t squander his gift for scholarship. He created a system of thought, a science of action, which rescued economics from the depths of nihilism. But what about the “hero” of the title? Samuel Johnson wrote that “the heroes of literary history have been no less remarkable for what they have suffered, than for what they have achieved.”

Mises faced incredible challenges: he held no regular academic post, the Nazis ran him out of the country he loved, his brightest students abandoned him late in life, Keynesian doctrine became orthodoxy despite his work, and he watched in horror as statism and war engulfed his century. He once reflected that he “set out to be a reformer, but only became the historian of decline.”

Yet Mises remained an uncompromising advocate of economic science and pure laissez-faire until his death. By Johnson’s definition of heroism, Mises qualifies. Rothbard sadly notes that Mises never lived to see the Austrian revival which began in 1974 or the growth of the Mises Institute from 1982 to the present.

The Rothbard book does have one failing: it does not mention that Rothbard himself played the major role in keeping the Austrian fires burning during Mises’s later years. Where would Austrian economics be without Rothbard’s own courage, creativity, and scholarship? Mises’s Human Action is a masterpiece, but would it have had so much impact without Rothbard’s Man, Economy, and State (1962), which clarified and refined it? And it was Rothbard who incorporated Misesian economics into a broader science of liberty, which includes law, religion, literature, history, and politics. “Rothbard and the Legacy of Mises” is the missing and unwritten chapter.

In the forward to the German edition of Ludwig von Mises’s intellectual biography, Notes and Recollections (1977), Nobel Laureate F. A. Hayek wrote that when he looked “for similar figures in the history of thought, I do not find them among the professors, not even in Adam Smith; instead, [Mises] must be compared to thinkers like Voltaire or Montesquieu, Tocqueville and John Stuart Mill.”

Rothbard’s Ludwig von Mises: Scholar, Creator, Hero proves that claim. This detailed accounting and assessment of Mises life and work—the most thorough to date—should be read alongside Mises’s books. No one interested in the intellectual history of this century—or in the fight for liberty—can afford to be without it.

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