Speaking of Liberty

3. Ludwig von Mises

MISES AND LIBERTY

[The keynote address at the Mises Institute’s new building dedication in Auburn, Alabama, June 6, 1998.]

We come together at a crucial time in the history of the Mises Institute and the history of liberty. This weekend, we dedicate a new home, which we see as a new headquarters of the Austrian School of economics and the scholarship of liberty. We are deeply grateful to all who have made it possible. You show your commitment to the ideas that underlie the free and prosperous commonwealth of Mises’s vision.

The autobiography of Milton and Rose Friedman tells a story about Ludwig von Mises that was retold in the Sunday New York Times book review. In 1947, some free-market economists, including Friedman and Mises, came together to form the Mont Pelerin Society. But Mises was clearly agitated at the ideological tenor of the discussion. Finally, he stood up and shouted, “you are all a bunch of socialists,” and stamped out. In the story, the Mont Pelerin Society went on to glory as the fountainhead of the classical-liberal revolution.

The point of the anecdote is to make Mises appear to be a fanatical ideologue, and Friedman a man of reason. It assumes that for Mises, sticking to principle was some sort of fetish that prevented him from thinking strategically or cooperating with like-minded scholars. It conveys the message that adherence to strict standards of truth is the enemy of practicality.

Mises’s adherence to such standards assured that his audience would be limited to a small set of followers, and that his way of thinking would be ignored by intellectual leaders and statesmen who could actually make a difference in the world. Now, I’ve heard this kind of talk for years, and some of the same accusations are leveled at the Mises Institute. So, I would like to take up the task of defending firm adherence to principle, and of speaking honestly and forthrightly, and respond to the charge that Mises and the Misesians marginalize themselves by being inflexible. I would like to show, instead, that truth is our greatest weapon, and that ideological pragmatism works against the cause of liberty in the long run.

First, let’s clear up some matters of fact. It turns out there is much more to Friedman’s story, and the details illustrate why Mises, in his life and in his work, continues to be an inspiration.

The event happened, not at the opening meeting of the Mont Pelerin Society in 1947, but in the mid-1950s, as the Chicago School was gaining dominance over the free-market movement, and the Mont Pelerin Society was falling under their sway.

Mises knew then what has become obvious today, namely that it’s a long, long way from Chicago to Vienna. The Chicago School has long embraced a positivist methodology, which claims that all questions of theory and policy must be submitted to empirical testing. We cannot know in advance whether a tight price ceiling will lead to shortages; we can only try it, and observe the results. This application of positivism to economic theory and policy has been a bad development for liberty.

As James Glassman pointed out at the Austrian Scholars Conference, this accounts for why so much policy debate boils down to a pointless numbers game. When someone suggests raising the minimum wage, interest groups inundate Congress with supposedly scientific empirical tests designed to show that such a raise would have no effect, or even lead to more employment.

Opponents of the wage increase then attempt to debunk the assumptions of these studies and trot out their own, showing the opposite effect for this specific raise. The battle rages back and forth, but the real truth of the matter eludes most everyone.

The trouble is that human affairs cannot be treated as a laboratory experiment. In abstract models, we can hold things the same, but in human affairs, there are no controllable constants. There are only established laws of cause and effect, precisely what empirical testing cannot discover on its own.

Empirical tests can illustrate principles, but in human affairs, unlike the physical sciences, they don’t yield the principles themselves. To discover the effects of price and wage controls requires us to use economic logic of the kind the Austrian School has pursued.

And this is where seemingly arcane differences in methodology can have profound effects. While generally arriving at free-market conclusions, the Chicago School has made exceptions in a host of important areas. This is because, as a matter of principle, they have no fixed principles. To be true to their doctrine, all Chicago policy recommendations must bow to the latest empirical analyses, with the most elegant among them winning.

I recently heard a talk by Gary Becker, a Nobel laureate, true gentleman, and brilliant economist of the Chicago School. He was asked about the effects of gun control on crime. He hesitated, and then made it clear that he could give no a priori answer. He had no principle about whether people ought to be allowed to own guns. But, he said, in light of the empirical and econometric work of economist John R. Lott, and his nicely titled book More Guns, Less Crime, he would tend to say that we should not rush to think gun control is the answer to crime problems.

Becker came up with the right answer, thanks to the new book by Lott, who, incidentally, is influenced by the Austrian School, but when you hear this kind of answer, you can only be unsettled. If Lott’s book had not been written, or had not received a huge amount of publicity, Becker would have had to rely on last year’s empirical studies, many of which were designed to reach the opposite conclusion.

Moreover, we can’t know with any certainty whether another book may appear next year, one even more technically sophisticated than Lott’s, that would seemingly demonstrate the opposite. Someone once said that empirical studies in the social sciences are like government laws and sausages: you do not really want to see them being made.

The net result of this policy agnosticism on a base of empiricism is a tendency to embrace halfway schemes to inject market signaling into essentially statist institutions, with inferior results. The school voucher movement, whereby taxpayers fund not only the public schools but also the private ones, and do so in the name of competitive markets, is a scheme that originated with Chicago.

The negative income tax, the principles of which ended up in the hugely expensive earned-income tax credit, is another Chicago notion. So is the withholding tax, which disguises the true burden. And Chicago’s refusal to provide a theory of justice to back its defense of property rights has led judges to toy with the institution of ownership the way they toy with the law itself.

Mises knew from his earliest years that economists who claim to do science on the model of physics were overlooking the distinctiveness of economics as a social science. Mises saw the task of economics as deducing from first principles of human action the entire workings of the market economy, and in this, he was only formalizing the de facto method of his predecessors in the history of thought.

He also saw that economists who abandoned the deductive method lacked a sure theoretical footing to oppose invasions by the State, since one can never know in advance of testing what the effect of a policy will be. And even after the supposed tests are run, you can never be sure about the data set chosen, the methods of analysis, or the subtle ways in which the bias of the author is built into the model.

Let me provide one final illustration of the problem of doing economics strictly by the numbers. In 1963, Friedman and Anna Schwartz published a history of the money supply in the US, in which they argued that if the money supply rises at the same rate as output, and velocity is relatively stable, prices will also be stable.

The policy conclusion was embodied in Friedman’s proposed constitutional amendment that would have had the Federal Reserve increase the money supply at 3 percent per year, an idea that somehow eluded men like James Madison.

Had Friedman really discovered an empirical law with variables so simple that government officials could control them at will? In the first place, as the Austrians have long argued, there is a hidden assumption in the Chicago model that the money supply enters the economy evenly, as if dropped from a helicopter. But as we know, in real life, new money enters the economy from the banking system through the credit markets.

New credit infusions send false signals to borrowers who are led to make bad judgments about real economic conditions. The result is the business cycle, for which Friedman was never able to provide a causal explanation.

But the reason Chicagoite monetarism became unworkable as a theory goes to the heart of the empirical case. After financial deregulation and the internationalization of currency markets, their old reliable system for measuring the velocity of circulation and how much money was in the economy became unviable. The monetarists themselves couldn’t agree on whether the money supply was going up or down, much less to what degree. This is akin to the builders of a new house not agreeing on how many inches there are in a foot. But in economics, if you live by the numbers, you eventually die by them.

Meanwhile, the Austrian money and banking theory has been used, in the pages of our journals and newsletters and books, and those of many others, to explain a host of recent money and banking problems arising in the US, Mexico, and Asia.

At the Mont Pelerin Society meeting where the famed blowup occurred, several economists were debating how to structure the tax system so the government could collect the most revenue while not distorting the operation of the market.

To Mises, this discussion presumed several wrongheaded notions. First, that the government is entitled to collect as much revenue as it can get away with collecting. Second, that the taxes of the 1950s were not fundamentally injurious to the market economy. Third, that economists should be in the business of giving advice with an eye to what is best for the State. Fourth, that there is a branch of economics dealing with tax theory that can be considered as separate and distinct from the whole of economics. Fifth, that economists should try to design measures of government interference to achieve optimal results.

To Mises, economists have a role in the political life of the nation. But it is not in making life easier for the State and the political class. It is not in becoming specialists in providing rationales for the expansion of State power. To Mises, this was a betrayal of economics.

The good economist is supposed to deliver uncomfortable truths that would likely make him unpopular to the political class. He is to explain to them how their high tax rates seriously damage the ability of entrepreneurs to make sound judgments about the future, how taxes prevent consumers from saving and investing for themselves, and how taxes hinder businessmen in serving consumers through innovative products and marketing. Moreover, a State receiving the maximum possible revenue would be an expansionist State that would never cease its interventions in the market. The good economist would point out that economic distortion can only be curtailed by minimizing the collection of tax revenue.

Yes, Mises thought that economists who attempt to make this possible, while failing to recognize that the postwar tax State and the market economy were at odds, are acting very much like the socialists of old. It was the socialists, after all, in the form of the German Historical School of institutionalists and empiricists, who first conceived of economics as a science in service to the State.

Mises had been through these struggles as a young man, had devoted a lifetime of teaching and writing to combating them, and had laid out a clear path for the future of economic science in his treatise Human Action. He wasn’t about to be party to a repeat of the same errors, especially not when he saw the administrative State engulfing the West.

What was his vision for the economist? When the economist isn’t making politicians angry at him, he should be raising up new generations of students and intellectual leaders, and educating the public in every way possible about the workings of the market economy.

He should be conducting research that applies market principles in new areas of history. He should be perfecting the theory and presentation of economic science consistent with the principles of logic and with an eye toward defending freedom above all else. He should be combating with all his might the legions of bureaucrats whose goal it is to maximize State revenue.

In quoting the passage from the Friedmans’ memoirs, book reviewer David Brookes, an advocate of what is called “national greatness conservatism,” was trying to make Mises look bad. But in our experience, the mention of Mises in this setting has the opposite effect.

Readers come across an anecdote like that, however inaccurate and incomplete it may be, and say: who is this uncompromising advocate of free markets, and why do the New York Times and its friends dislike him so much? My own view is that the New York Times can attack Mises as much as it likes. It’s good for attendance at our teaching programs, and only increases the circulation of our journals and other publications.

This is hardly the first time Mises has been criticized for not toning down his criticisms of government. He never followed the advice of the people who said: You’re a great economist, but you would be taken much more seriously if you were not so unyielding.

If Mises had listened to this advice, he would indeed have been much better off. He might have been appointed to a chair at the University of Vienna. Instead, he conducted his seminar from his offices at the Vienna Chamber of Commerce. He might not have been driven out of his country. Instead, the invading National Socialists regarded him as perhaps the most dangerous intellectual opponent of their ideology. Once arriving in the US, he might have been awarded a prestigious post at an Ivy League university. Instead, his salary came from outside sources, and he was never more than an unpaid visiting professor at New York University, relegated by the statist dean to a dank basement classroom.

So why did he do it? Why did Mises stick to principle above all else, even when he knew it was not in his self-interest? Murray Rothbard addressed this question in a powerful 1993 essay called “Mises and the Role of the Economist in Public Policy.” He pointed out that Mises was often criticized for his engagement with political questions, but that engagement was not the cause of the criticism. After all, Keynes was steeped in political battles himself, and so was Irving Fisher, the godfather of the Chicago School.

The problem for Mises was that he bucked the fashionable opinions of the time, rejected the planning mentality, and persistently and consistently insisted on holding the purest free-market position, even when everyone around him was caving in. He stood as an exemplar of the scholar who speaks truth to power, an all-too-rare figure in our century.

Mises’s perseverance in the cause of freedom cost him dearly. He writes in his autobiography that he was often reproached by his friends in Vienna “because I made my point too bluntly and intransigently, and I was told that I could have achieved more if I had shown more willingness to compromise.”

But, Mises said, “I could be effective only if I presented the situation truthfully as I saw it.” He concludes, “as I look back today.... I regret only my willingness to compromise, not my intransigence.”

He wrote these words in 1940, at a time when he had good reason to regret his refusal to compromise. He had been driven out of Vienna and his home had been ransacked. He had left Geneva due to the growing pressure on Switzerland to harbor fewer refugees, especially prominent opponents of National Socialism.

His masterwork, Nationalökonomie, the predecessor to Human Action, had appeared in Geneva in the midst of the war. But his book was only sparsely reviewed, and made no impact on the German-speaking world. In 1940, he had no fixed place to live, and no means of support. He would not be made an American citizen for another six years. He had a new bride and no real future. All the evidence around him suggested that his teachings about the market economy had been soundly rejected from one side of the world to the other.

Almost anyone else, particularly an intellectual today, would have concluded that he had been wrong. He had been tilting at windmills, and as a consequence, had destroyed his career, his relationship with his colleagues, and his reputation in history. Anyone else would have had regrets at this time, but they would have been about how he should have changed matters so as to avoid the tragic fate in which he had found himself.

And yet, at the lowest point of his life, Mises had only one regret: that he had not been even tougher and less compromising.

This is a remarkable impulse, not only because it involves putting aside personal interest for the sake of a fundamental commitment to higher ideals. It is remarkable for the virtue of hope that it displays.

Mises understood that no matter how bleak the present circumstances, the future could be very different. Even as the world collapsed around him, he believed that freedom could triumph, provided the right ideas emerged at the forefront of the intellectual battle.

He was convinced that freedom did have a chance for victory, and—this is the crucial part—that he bore some measure of personal responsibility for bringing that victory about.

Keep in mind, too, that Mises would not have had to become a full-scale socialist to have kept some or even most of his troubles at bay. The State and the postwar establishment made good use of free-market economists who were willing to be flexible.

In the US, there were several students of Mises who had good positions—at Harvard, Princeton, the University of Chicago—and who were not on the margins of academia. They proved more career-minded than he, and their marketability in the world of ideas was increased by their willingness to abandon some part of Austrian theory. They all made important contributions to economics, but at the same time, they were all useful, in small ways and large, to the partisans of power.

Alone among them, Mises was not swayed by the Keynesian revolution or the rise of welfarist ideology. Instead, he attacked both as species of the same interventionist mind-set, one attempting economic sorcery, the other bringing about sheer robbery.

Mises didn’t live to be rewarded for his intransigence. He died in 1973, at the height of the Keynesian-planning mentality, when the mainstream of the economics establishment was still promoting the Soviet economy as potentially the most productive in the world.

Even a few years later, with the basis of Keynesian fiscal planning in tatters, there would have been reason for hope. But Mises had no basis for thinking the truth would eventually triumph, other than this: he believed that the power of ideas is ultimately stronger than all the governments and armies and planning bureaucrats and even economics professors put together.

How ironic, then, to look back and notice that it is Mises who now stands as the worldwide standard bearer of the market economy. New editions of his books are selling in every major language and year by year, his reputation grows. Students return to him because they respect his case for the pure free market, and his unwillingness to compromise. Today, more than ever, the advocates of intervention know that it is Mises with whom they have to deal, in order to make their case.

What a remarkable body of work he left us. His book on monetary theory, written in 1912, still stands as the foundational work. His 1919 book Nation, State, and Economy, forecast the troubles that would rack Europe in the post-monarchical age, and held up secessionism as the only viable route out of the nationalities problems that still plague phony nations like Yugoslavia.

It was this book that also warned of the dangers that war posed to economic freedom, rightly identifying the militarized economy as a species of socialism. We are very pleased to have Leland Yeager, the translator of that brilliant volume, here with us at Auburn. Last year, he conducted a seminar on this book for us.

In 1922, Mises published Socialism, which among all the attacks on the totalitarianism of the century, remains the most comprehensive, deeply insightful, and devastating, from an economic, sociological, and political point of view. The answer to socialism was Liberalism, the title of his 1927 work that remains the most solid and compact statement of the classical-liberal view of society and economy.

As Ralph Raico has argued, it was this work that firmly entrenched the idea of private property at the very center of the classical-liberal agenda. In doing so, Mises was the first to clearly distinguish the old liberalism from the new, even as the new liberals were working to blur the lines for purposes of their own ideological advancement.

The trilogy was completed in 1942 with a book entitled Interventionism: An Economic Analysis. In it, he sees a world economy that is marooned between capitalism and socialism, and thereby buffeted mercilessly by the internal contradictions of the interventionist State.

He forecasted monetary crisis in essentially capitalist countries due to the deviation of central banking. He predicted the entrenchment of poverty due to welfare benefits. He forecast the artificial suppression of savings due to state pensions. He anticipated the burdens that would be placed on countries with governments that refused to rein in their imperialist international ambitions. Sadly, this book was not brought to print until this year.

In 1944, Mises wrote a brilliant essay on monopoly, in which he explained that the problem of monopoly was a problem of government, and that attempts by government to break up or curb the ability of businessmen to price and market their products in the manner most pleasing to consumers would only backfire to the detriment of prosperity. This essay also never saw the light of day, but fortunately, the summer issue of our Quarterly Journal of Austrian Economics will publish this important piece for the first time.

Lacking publishing venues, a full-time position, and even students to teach, Mises forged ahead to present his magnum opus to the English-speaking world. The result was Human Action, which made its appearance in 1949. It was the culmination of the classical-liberal vision of economics that dated back centuries, tightly integrated with the scientific rigor of the Austrian School formally founded by Carl Menger.

It was the most complete statement of good economics ever to appear, and it should have become the mainstay of the profession. But by then Keynesianism had taken root, and Mises was again denounced for his intransigence. One of his critics was John Kenneth Galbraith, whose review showed every sign that he never got beyond the book jacket.

Mises did not expect to see his treatise sweep the profession. Indeed, the publisher feared that the book might not cover the costs of production. But the sales were surprisingly good, for there was already a growing Misesian movement, helped along by his friends in New York like businessman Lawrence Fertig and journalist Henry Hazlitt, who used his position at the New York Times to promote Mises and his ideas. (Both of them were later to become great benefactors of the Mises Institute.)

Yet Mises—then in his 80s—experienced personal tragedy over the book. Due to some larger than expected last-minute changes, the second edition was mangled by the publisher, and rendered all but useless.

To commemorate the 50th anniversary of Human Action, the Mises Institute is reissuing the pristine first edition. This Scholar’s Edition will feature not only paper, printing, and binding for the ages, but also a new introduction by our senior scholars, three of whom are with us this weekend, Hans-Hermann Hoppe, Joseph Salerno, and Jeffrey Herbener.

In all, Mises wrote 25 books and hundreds of essays. In the future, we hope to publish a Collected Works. In the meantime, we are proud to have assisted in the republication of such great works as Theory and History and essay collections like Money, Method, and the Market Process, and to bring into print such classic works as “Liberty and Property” and “Economic Calculation in the Socialist Commonwealth.” And we are proud to have produced a film biography, sponsored many conferences centering on some aspect of his thought, and to have sponsored the world’s leading teaching programs, scholars conferences, and journals on Misesian economics.

As we meet, our Mises biographer, Jörg Guido Hülsmann, is in Moscow immersed in Mises’s papers, and those of Mises’s colleagues from Vienna, stolen first by the National Socialists and then by the International Socialists. Guido has just returned from a trip to Mises’s secondary school in Austria, where the carefully preserved records show the content of every class he took, and his grades. He was a straight-A student in everything from ancient Greek to higher mathematics. We expect Guido’s biography, the first of Mises, to have a tremendous effect in advancing our knowledge and admiration of the man and his ideas.

But, in the 1970s, as the Austrian movement experienced renewed interest, the two books that had carried the School during the postwar period, Mises’s Human Action and Rothbard’s Man, Economy, and State, began to be pushed to the sidelines.

The Mises Institute was founded in 1982, in part, as an attempt to correct that. But as soon as I started to talk about such an organization, I heard the same old song and dance. Mises was too extreme. He was better left to the historians of thought. He could never be made palatable to the economics profession. He should be forgotten as an embarrassing figure. He had unnecessarily linked the Austrian School to radical politics.

Yet today, the power of Mises’s ideas has mowed down his many detractors, and he is the undisputed godfather of the Austrian School. His name is cited by a broad array of scholars across disciplines and countries. His ideas are at last leading an international revival of classical-liberal scholarship and, simultaneously, driving forward a global movement against political control of society and economy.

But would Mises’s influence be even stronger if he hadn’t been so uncompromising? It might have been, but then that influence wouldn’t have been all to the good. Let me explain.

Let’s imagine how history would have been different if Mises had been a different sort of man. Let’s say that somewhere in his writings, just for the sake of expediency, he had conceded the need for a welfare State, or antidiscrimination laws, or protectionism, or labor regulation, or old-age pensions, or some other socialist-inspired measure.

How useful these concessions would have been to the enemies of capitalism. These days, they would be inflicting on us the idea, for instance, that a social safety net is necessary. After all, even Mises conceded that this was the case. Such, of course, was never the case.

From time to time you see references in popular journals claiming that even Mises favored subsidies to the Vienna State Opera. This canard has been around for decades and has no basis in fact. The idea itself probably originated from a twisted interpretation of a passage in Human Action condemning such subsidies.

Why are so many so anxious to discover that Mises had actually compromised his position? Because for the power elite and the Left, free-market economists can add credibility to statist policies. If free marketeers can be caught in a contradiction or a compromise, surely it cannot be bad for the Left to favor the same thing, or so they say.

This is partly why so many have an interest in protecting the exalted status of Adam Smith as the primary theoretician of free enterprise. It’s true that he made a devastating case against mercantilism and explained the working of the market economy better than most of his contemporaries. But as Murray Rothbard has shown, and as the Left has long trumpeted, he also made a huge number of compromises. Protectionists enjoy quoting Smith’s periodic defense of tariffs and trade controls, for example. Smith can also be found defending controls on consumption, interest-rate ceilings, and government monopolies of all sorts.

So, yes, Mises could have been more famous in our time. In the short run, he could be cited more often and have his name invoked as frequently as others who were less tenacious and less unyielding. But, with the exception of the bogus opera anecdote, we can have assurance that most anytime the name Mises is invoked, whether in scholarly or popular culture, it is for his greatest virtue, whether or not it is being attacked.

What a joy to have as our hero a man whose ideas we can embrace so completely, without fear that his deviations or contradictions will be thrown back in our faces. He is a model and ideal, and his ideals are the standard which all principled proponents of liberty can be confident in celebrating.

In our own time, the problem of compromising free marketeers makes a very interesting study. Let’s set the context. For a century, the Left has been defined by its advocacy to two possible positions. The first is that government should plan the economy using fiscal controls, monetary controls, and regulatory controls. It is hard to remember, but there used to be an elaborate philosophical apparatus to justify this.

The economy was supposed to work like a machine. Pull this lever, and a certain result comes about. Pull that lever, and a different result comes about. But this model has been discredited. Even more discredited is the second option, the pure socialist model, still favored by a huge part of the academic elite.

The cultural, economic, and political Left has been largely discredited in the eyes of the public. Where does the State go for vindication? Ideally, it finds intellectuals with credibility on the right who are willing to make compromises with State power. They are very useful in shoring up the propaganda edifice in service of State power.

I noticed that when Bill Clinton was arguing for Congress to shell out more money for the United Nations and the International Monetary Fund, that he chose quotations from Ronald Reagan in which Reagan lavishly praised the UN and the IMF. This kind of tactic can be extremely useful.

Free marketeers beware. If you utter a word in support of the State and its interests, the Left and the elite will do all they can to make sure that word is all you’re remembered for.

These days, for example, when you pick up a scholarly treatise in defense of the transfer society, you can bet there will be an entry for F.A. Hayek. It will not cite his crushing attack on egalitarianism, his case against managed economies, his defense of the common law and the gold standard, or his demonstration that the mixed economy is contrary to freedom.

It will note his defense of freedom, but also cite his periodic concessions to the welfare State. As much as I regret Hayek’s concessions, he would surely be displeased to see his writings used in this manner. But free marketeers who make exceptions can earn a high return.

Of course, the use of market economists in the service of statism doesn’t always take place without their consent. I know a talented economist who was also a leading critic of the national sales tax. He debunked the claims that the present tax code could be entirely replaced, dollar for dollar, with a bearable fee on all goods and services sold at the retail level.

Rather than refute his arguments, the proponents of the sales tax hired him. He then proceeded to write the opposite. (The Mises Institute has stayed out of this flat-tax/sales-tax cat fight, and instead promoted our own plan, which we call the lower tax.)

A free-market voice on the wrong side can really skew the debate. We learned this during the battle over Nafta, which we fought because it was a regulatory trade bloc, not the international free market.

In promoting Nafta, the Clinton administration made effective use of free-market intellectuals willing to back the treaty. Assembled in a well-funded “Nafta Network,” they swayed the final debate. As a consequence, cross-border trade is now hampered with endless inspections, lines, labor and environmental restrictions, and regulations nobody seems to understand.

Let me give you another example. Robert Bork, for years a tough-edged critic of antitrust enforcement, recently signed up as a consultant with Netscape, the corporation that stands to benefit the most from an antitrust breakup of Microsoft.

He’s doing very well. He could probably rack up a hundred billable hours, at $400 each, just on the responses he’s written to Mises Institute editorials in the last month. No doubt his total take will be somewhat higher than if he had been just another pro-antitrust economist. But it illustrates a point: the personal advantages of compromise far outweigh those that come from sticking to principle. If your conscience can bear it, it’s a good career move.

Like all our scholars, Dominick Armentano, the Rothbardian antitrust economist with us this weekend, would be very valuable to the Justice Department if he were willing to make the switch.

The defense of freedom has got to be made of tougher stuff than Bork. In a line from Virgil, which Mises, as a young boy, chose as his lifetime motto, we are told: “Do not give in to evil, but proceed ever more boldly against it.” For Mises, this was not just an abstract tenet of personal morality. He thought this stance was essential to the preservation of civilization itself.

To understand why, we must know something about Mises’s own view of what constitutes society. He saw all human action as choices by which we seek to bring about what we perceive as improvement. Since society itself is nothing more than the coming together of millions upon millions of individual choices, we can say, from Mises’s perspective, that the kind of society we live in is a product of human choice.

Notice how different this is from the theory of society that sociology professors are always trying to drill into college students, and which we hear on radio and TV on a daily basis. In that view, our actions do not form society and our choices do not determine its shape; society somehow acts to form us and determine our choices for us. Thus no one can be held responsible for his actions—not criminals, not union workers, not failing entrepreneurs, not international bankers investing in foreign bubble-economies, and certainly not Bill Clinton.

This view of society also means that there is not much anyone can do to change the present structure of government.

But to Mises, this was a lie. Instead, he said, society is a product of conscious choices that we make, influenced by ideas we hold, and shaped by trends established and driven forward by human actions. This is how Mises understood the market. But it is also how he understood the crucial question of government.

Along with David Hume and Etienne de la Boétie, Mises saw that the State always rules with the tacit consent of the governed. That doesn’t mean that at every step, everyone in society must approve of what the State does. Instead, it means that a sizeable majority have invested the State with a sufficient degree of institutional legitimacy to keep the political system running. Otherwise, the State and its programs would fall.

As Mises wrote in Liberalism, government is by its nature always ruled by “a handful of people” compared to the general size of the population. This small group cannot impose its will by force alone. No regime in human history has been able to accomplish its goals through force alone.

All regimes depend on the consent of the governed, what Mises called the general “acceptance of the existing administration.” The people “may see it only as the lesser evil, or as an unavoidable evil, yet they must be of the opinion that a change in the existing situation” would make them worse off.

In Mises’s view, then, government is always in a vulnerable position. Its rule can be challenged and even overthrown in a heartbeat, if consent is withdrawn. We can think of the colonial government in America, British rule in India, and the Shah of Iran. There is the example of Indonesia. Before that, we can think of Poland, East Germany, Romania, and even Russia.

The history of politics is an endless struggle between the forces of liberty and the forces of power. States that announce themselves to be invulnerable and eternal—the Roman Empire, the Third Reich—in retrospect appear to be on the verge of collapse. It puts the Clinton administration’s announcement that it runs the “indispensable nation” in a new light.

What makes it possible for the largest government in human history—I’m speaking of the US government—to continue to rule in our own country? The answer is complex. But it involves an enormous apparatus of propaganda and legitimization by the media, the academic elite, bureaucrats on the payroll, and special interests anxious to provide a cover for their graft.

It also involves buying off potential critics and radical dissenters from the regime. And it involves the misuse of religion, whereby we are taught to treat national symbols as sacred, worship the presidency, and regard the political and bureaucratic class as some sort of exalted ecclesiocracy.

Mises proceeds to ask the profoundly important question of what happens when this system, designed to shore up confidence in the ruling regime, begins to weaken. His answer:

once the majority of the governed becomes convinced that it is necessary and possible to change the form of government and to replace the old regime and the old personnel with a new regime and new personnel, the days of the former are numbered. The majority will have the power to carry out its wishes ... even against the will of the old regime.

Now we gain insight into Mises’s determination to stick to principle no matter what the personal cost. He understood that the preservation of civilization depends on establishing and protecting cultural, social, and economic freedom. And he knew that the enemies of freedom exercise power only with trepidation.

Their rule could be overthrown in an instant. And the instrument of that overthrow is the body of ideas that convinces people they would be better off under a radically different system, one where the government did not lord it over them. But to understand that, people must be shown the failure of the present system.

If Mises was optimistic about the eventual prospects for freedom, how much easier it is for us. The public is far less convinced of the merits of the present system than it was 25 years ago. Not a day goes by when I don’t see some commentator, left or right, bemoan the dramatic decline in the public’s confidence in the system of government that has waged war on economic and social liberty for much of this century.

They say we are losing our civic culture, when we are only regaining our private lives. They say we are losing our patriotism, when we are only recalling our love of liberty. They say we are losing hope in our nation’s future, when we are only recapturing our hope in freedom’s future. They say we are losing our faith in politics, when we are only restoring our faith in our families, our neighborhoods, our companies, ourselves, and our Creator.

I urge you to see through to the real agenda of the people who would restore a ‘30s-style loyalty in the central State. What they want is not just our allegiance, but our property and businesses to control, our children to indoctrinate, our culture to distort, our towns and cities to break down, and our futures to steal—for their own benefit.

To them we must say: No, you may not have our first loyalties. Our first loyalties are to things we love. And no, Mr. Clinton, despite your injunctions, we do not love the government.

We are extremely fortunate to live at a time when the restoration of the classical-liberal society does not require a wholesale change of direction. In many ways, we are headed in the right direction now. Consider some old statist institutions, notions, and rules that have fallen into disrepute, are widely thwarted and ignored, or are in the process of crumbling before our eyes.

The monopoly of the media has crumbled. Even the highest rated shows on the networks would not have been in the top 25 two decades ago. Network news is vanishing from the radar screen. In the new world of the Web, Matt Drudge has more influence than Dan Rather. And the Mises Institute has as much influence over students all over the world as their own professors.

It’s astounding for us to receive messages and questions and requests from all over Europe, Latin America, and even China. The Web has allowed us to break through the old information barriers we used to confront.

As for academia, the professorial ranks are still filled with socialists of every stripe. But students know better than to take them seriously. Meanwhile, we have had remarkable success in making inroads into the faculties themselves. For many years, our Mises University and other programs have trained economists, philosophers, legal scholars, and historians for faculty positions.

At the founding of the Institute, I was told that to send young free-market scholars out into the world was cruel. I was told they would be chewed up and spit out by the academic mainstream. That was never entirely true, but things were very tough in the early days.

Today, however, there is a huge network of young professors, and even some department heads and deans, who actively seek people who have graduated from our programs. In particular, PhD economists with a Misesian bent are suddenly in high demand.

As an illustration of the current struggle, New York University Press just published a deluxe 100th anniversary edition of the Communist Manifesto, and it is the toast of the elite set. But we know that another book published this year by the same press will ultimately have a more profound impact on history: Murray N. Rothbard’s the Ethics of Liberty.

There are many other signs of the crumbling of power and the bankruptcy of politics in our time. Formerly sacrosanct institutions of left-liberal academia—like multiculturalism, bilingual education, the devaluing of talent, the social security system, the attack on the family, the planned economy, the year-by-year socialization of our bank accounts, the love of the executive State—increasingly appear as anachronisms. In the future, they will be history.

Let me state for the record that I am not among those pining for a return of the days when every child aspired to be president. Let our children aim to think great ideas, found great companies, create ingenious software, make great investments, build great fortunes, run excellent schools and charities, have large families, raise great children, become great religious and moral leaders. But may we not fritter away another generation in the bankrupt field of politics and public administration. A mind is a terrible thing to waste.

So, when people say, Clinton is disgracing the office of the presidency, let’s remember the upside. The desanctification of the executive is an important step in the depoliticization of society.

Mises never tired of telling his students and readers that trends can change. What makes them change are the choices we make, the values we hold, the ideas we advance, the institutions we support.

Unlike Mises, we do not face obstacles that appear hopelessly high. We owe it to his memory to throw ourselves completely into the intellectual struggle to make liberty not just a hope, but a reality in our times. As we do, let us all adopt as our motto the words Mises returned to again and again in his life. “Do not give in to evil, but proceed ever more boldly against it.”

ARE WE ALL HISTORIANS OF DECLINE?

[This speech was delivered at the Mises Institute’s “History of Liberty” Conference, Auburn, Alabama, January 29, 2000.]

The memoirs of the indefatigable economist Ludwig von Mises, written from his exile in Geneva, December 1940, contain this moving, even tragic, passage:

Occasionally I entertained the hope that my writings would bear practical fruit and show the way for policy. Constantly I have been looking for evidence of a change in ideology. But I have never allowed myself to be deceived. I have come to realize that my theories explain the degeneration of a great civilization; they do not prevent it. I set out to be a reformer, but only became the historian of decline.

Reading the whole of Mises’s works, it is clear what he means by decline: the deliberate wrecking of civilization itself, which occurs as a byproduct of the rise of the total State. In our own time, I believe, we are watching the opposite occur: the slow, systematic, intermittent, but relentless and glorious decline of the State, which is an essential condition for the restoration of civilization, the evidence of which can be read in the daily newspapers and seen all around us.

These trends, either in Mises’s time or our own, are not determined by historical forces beyond the control of the intellectuals and people who shape the social order. There is no such thing as historical inevitability. The direction history takes in the next hundred years will be decided—as it has always been—by the ideas people hold about themselves and the choices they make.

Mises knew this as much as any of his enemies. In 1940, he wrote these words conceding that he had been defeated in the first half of scholarly life. It was a period of grave uncertainty and doubt that might have led any other scholar to total despair and retreat.

His masterpiece Nationalökonomie had been printed in Geneva, but sank without a trace. It is not clear how many, if any, copies made it to America. Europe was already consumed by war. The so-called wise men from the US, Britain, and Russia—would-be world planners now in their element—would soon be at the height of their power. The political ideology and economic theory to which Mises had devoted his life were fast becoming the stuff of historical interest only.

As for his personal life, hear the words of his wife Margit:

The day we arrived in the United States was hot and humid. Behind us were four weeks of traveling, four weeks of anxiety, of heartache, and apprehension. We were admitted on a nonquota visa; but we had no home or family here to greet us. Like many other immigrants, we were to experience difficult times before we once against felt firm ground beneath our feet. Our belongings, among them his valuable library, had been packed and shipped before we left. Now they were lying somewhere en route, and we were not sure that we would ever see them again. Moving from one small hotel to another, with only savings to live on, and no teaching position offered that might interest him—such was the background when in the autumn of 1940 my husband sat down to write, as he originally planned, an autobiography.

Margit actually understates the problems Mises faced. He had already completed his masterworks—the Theory of Money and Credit; Nation, State, and Economy; Socialism; Epistemological Problems; Liberalism; and Nationalökonomie—but they were known mostly in a Europe that no longer existed in 1940. Two had been translated into English, but circulated mainly in British academic circles. Most tellingly, the intellectual tide had turned against him, with the rise of socialism in Europe and Keynesian-style New Deal planning in the US. To be a proponent of laissez-faire economics in 1940 was seen as a proponent of the telegraph would be today: a quaint position at best, and a nutty and ill-informed predilection at worst.

Mises’s realization that he had been a historian of decline comes two-thirds into his book, after telling of case after case of a danger that presented itself, his warning, and the final result, which was often contrary to his recommendation. Crucially, Mises recognized that he had played an important role in preventing the communization of Austria and in ending the Austrian inflation. But he had no illusions about the limits of his own power to change the direction of history.

No intellectual working alone can guarantee a future of a certain path. Ideas can sway history, but there is no certainty that good ideas will prevail over bad ones. No matter where you looked in 1940, bad ideas were triumphant, while good ones were seemingly discredited and crushed by the force of events.

Mises also understood that he was a member of the second generation of European liberals to be faced with events so ghastly that no 18th-century liberal would have ever predicted them. Boundless hope was integral to the classical-liberal worldview, and it was carried over in the mindset of the Vienna economists, including Carl Menger in his youth.

When the optimism of the classical liberals turned out to be unwarranted—the carnage and massacres of World War I were the most convincing evidence that it was not true—many despaired. Mises noted that pessimism had broken the strength of Menger, who retired very early, robbing us today of the further insights of the most brilliant economist of his age. Despair colored his last two decades and crippled him intellectually.

One senses that Mises, in his youth, might have been troubled by the example of Menger. It might have been the case that nearly all was lost, Mises might have thought, but sitting and stewing about it accomplishes nothing. Engaging in the intellectual battle and fighting for truth comes with no guarantee that truth will triumph. But apart from such engagement, there is no hope at all. There is nothing an intellectual with principles can do when faced with a world in tatters but throw himself into the battle.

As Mises puts it in an inspiring paragraph:

It is a matter of temperament how we shape our lives in the knowledge of an inescapable catastrophe. In high school I had chosen a verse by Virgil as my motto: Tu ne cede malis sed contra audentior ito. [Do not give in to evil, but proceed ever more boldly against it.] In the darkest hours of the war, I recalled this dictum. Again and again I faced situations from which rational deliberations could find no escape. But then something unexpected occurred that brought deliverance. I would not lose courage even now. I would do everything an economist could do. I would not tire in professing what I knew to be right.

“It is a matter of temperament” was Mises’s theory on why some give up and others continue to fight. And truly we can only marvel at the fact that the second half of Mises’s life, even in the face of astonishing personal, intellectual, and political calamities, was as productive as the first half, if not more so. Had he given up, there would have been no Human Action, which appeared in print 10 years later, no Omnipotent Government, a critique of national socialism even more devastating than Hayek’s Road to Serfdom, and no Bureaucracy, books written during years when the State controlled all prices and production in most parts of the world, and killed some 56 million people in its bloodiest war. During that war, every day, another 30,000 died at the hands of the State, but Mises did not give in. He fought with the most powerful weapon of all.

Had he not done so, there would be no Austro-libertarian intellectual movement today, and—one cannot know for sure—there might not have been a pro-freedom movement at all in America today. He continued to fight until the end, even though nothing in particular happened between 1940 and 1973, the year of his death, to give him a secure hope that liberty would prevail in the end. In those years, the redistributive State in the US exploded, the gold standard was finally destroyed, the US became a world military empire, the regulatory State intruded into the lives of average people more than ever before in history, and the Soviet Union, which claimed to practice the socialism that Mises said was impossible, seemed to most naïve observers to be secure, stable, and statistically prosperous.

Why did Mises persevere? We might say that he knew the truth when others did not. Sadly, that may be a necessary reason, but it is not sufficient. The other ingredients, besides having a good education and knowing the truth, are courage and tenacity, qualities that are actually just as rare if not more so.

For as long as I can remember, I have had people explain to me why I really should support this politician, student, or faculty member based on the fact that he is secretly a Misesian even if he doesn’t announce it more broadly for strategic reasons. It was on these grounds that we kept being told we had to back Reagan’s spending increases or Bush’s tax increases: after all, he is really on our side.

Nonsense. For all I know, Janet Reno is a secret devotee of Lysander Spooner, and Hillary Clinton is still the Taft Republican of her youth. Maybe they are both just biding their time, working their way into the establishment until the time is right for them to act on their convictions. But, honestly, what does this matter? It wouldn’t matter if President Clinton’s economic adviser Sandy Berger revealed that he is actually a Rothbardian; in practice, he is the intellectual bodyguard of the House of Clinton.

A person must be judged by his actions and his willingness to face trials with courage. It is a great thing when a person holds the right views, when a politician favors freedom, and when academics have affection for truth. But it is only valuable to society when these same people are willing to follow through on their ideas with actions.

We’ve heard for years that ideas have consequences. But Richard Weaver did not mean that ideas have consequences whether or not they are acted upon. They must be advanced in public life, lived, and defended to make a difference in history, and even when there is no promise that doing so will make a difference, we must act anyway.

And here is where Mises excelled over all of his contemporaries, many of whom regretted the passing of freedom but were all too willing to ride the wave of statism to further their careers. Now, moral theology has never required heroism from anyone; but that doesn’t mean we shouldn’t recognize and praise heroism when it does occur. And Mises was a hero.

Rothbard himself puzzled over the question of what makes some men surrender and others fight when faced with near certainty of failure. Rothbard wrote,

In the ultimate sense, no outside person, no historian, no psychologist, can fully explain the mystery of each individual’s free choice of values and actions. There is no way that we can fully comprehend why one man trims his sails to the prevailing winds, why he “goes along to get along,” in the infamous phrase, while another will pursue and champion the truth regardless of cost. We can only regard the nobility of the life and actions of Ludwig von Mises as an exemplar, as an inspiration and a guide for us all.

It is all the more noteworthy that Mises persevered despite his realization that he had witnessed little but civilizational decline in his time. If we are to follow his example, it should not matter to us whether, in our own times, we see our world as still thundering down the statist path or whether we can find evidence that we are actually living in a new dawn of liberty. I will try to convince you of the latter, but bear in mind that the case for principled intellectual activism does not depend on having realistic hopes for victory in our lifetimes.

Despite all evidence, then, Mises had hope for the future of liberty, and it was this hope that kept him engaged in the battle. Consider the contrast with Joseph Schumpeter, a classical liberal who won the hearts of the Marxists at Harvard by forecasting the death of capitalism. In Schumpeter’s view, four things would lead to the permanent triumph of a fascistic-style of socialism in America.

First, he said, the business class would shrink with the rise of the heavily bureaucratized corporation. And yet, since his time, we have seen a virtual revolution occur in the Fortune 500, with old established firms being wiped out by younger, smaller, and more aggressive upstarts. The business class has swelled to become the more prestigious and most active sector of American society.

Second, Schumpeter predicted that a bureaucratized capitalism would lead to a loss of respect for private property. And while it is true that property in America is fully private in name only, and that Americans are far too lax in its defense, and that we live under the rule of the largest government in the history of man, dogged attachment to property has increased in recent years. For many in the former socialist world, the blessings of extensive property ownership are being discovered for the first time.

The tax revolt would not have become a permanent fixture of American politics, bureaucrats would not find themselves fearing for their lives when attempting to enforce wetlands regulations, and people’s attachment to their stock portfolios would not have recently driven them to turn to the business section before the sports section of the newspaper every day. If anything, attachment to private property, or what remains of it, is more intense than in any period since the war.

Third, Schumpeter predicted that the intellectual class would become fully socialist. But he didn’t predict that this intellectual class would undermine itself by burying its socialist moral system in deconstructivist relativism, thereby inadvertently encouraging students to be just as dismissive of socialist orthodoxy as any other. And neither did Schumpeter anticipate the rise of an alternative intellectual class that organizes itself around the principles of the Austrian and classical liberal tradition.

Schumpeter predicted that the American public would increasingly accommodate itself to a political environment that exalts social security, egalitarianism, and economic planning. What he underestimated was the propensity of so many to resent having their money stolen by equality-promoting racketeers with a social and economic record of unrelenting calamity. But Schumpeter’s greatest error was in having dismissed Ludwig von Mises’s argument that socialism is impossible.

Schumpeter opposed socialism but believed that with some effort, it could be made to work. Mises, in contrast, argued that socialism could never be realized economically, and that even halfway attempts could not achieve what it promised to achieve. This was one of the reasons that Mises had confidence and hope in the future of liberty. He didn’t live to see the Berlin Wall come down or the Soviet Union fall apart, or the Western regulatory and welfare states begin to crack, but we have been privileged to live in just such times.

Today, while Leviathan is on the march, it has been delivered a number of setbacks relative to both the ambitions of the ruling elites to devour private life entirely, and even the reach of the State in past decades. Murray Rothbard says this began in the early 1970s, with Watergate in particular. He wrote that the event signaled the downfall of the State because it exposed the reality of the central State to the American people who had been conditioned since World War I to believe their leaders were benevolent, public spirited, intellectually superior men of courage, men who embodied the general will in the Rousseauian tradition.

If Vietnam discredited US foreign policy, Watergate was a serious blow to the administrative State on a domestic level. In the 1950s, it was considered nearly scandalous when Bob Hope poked fun at Eisenhower’s golf game; now the jokes against the president are so ruthless (and deserved) that you have to ask the children to leave the room in advance.

I can well recall when it was not uncommon for American homes to sport a picture of the great leader. No longer. In wartime, support for the president can be high, but it does not last. Evidence that entrenched opposition to the State is vast and growing can be seen in the enormous spying apparatus that the White House believes is necessary to keep track of its enemies.

Rothbard saw that Watergate—however partisan and petty—represented a sea change in American politics. Instead of moral men looking out after the public, the political class was revealed as foul-mouthed, selfish, conniving, and ready to lie. From Watergate until the present, the trend has been relentlessly down. No president since JFK—the now-discredited JFK—has enjoyed immunity from widespread public antipathy. Even the great Reagan was caught in a scandal—now forgotten—that had him working with the CIA and supposed international terrorists in Iran to pay off would-be junta leaders in Latin America.

And yet the trend toward a decline in the moral, intellectual, and cultural credibility of government has dramatically accelerated since the end of the Cold War. Consider the long view of our century: As Robert Higgs has emphasized, it has been a period of crisis, from world wars to depressions to inflationary recessions, all of which conspired to instill a sense of dependency and loyalty to the central State.

For 40 years during the Cold War, the State kept us in constant fear of a nuclear holocaust. The only thing that stood between the people and total annihilation was the government and our political leaders. We were told that they were protecting us from Russia. Whatever you want to say about that assertion, it is undeniably the case that it benefited DC at the expense of our liberties. I recall noticing a distinct lack of jubilance on the part of the ruling class when it woke up one day and found its reliable enemy had ceased to exist.

Since then, the ruling class has engaged in a series of attempts to find some effective substitute for the Soviets, an enemy so formidable that it suppressed the libertarian impulse and inspired the old civic loyalties that the ruling class has come to know and love. But no matter what they have dreamed up—and how many Hitlers has Washington invented in the last 10 years?—nothing quite works like it used to.

Since the end of the Cold War, there is an emerging literature that addresses the astonishing decline of the State. Generally, it divides into two camps. The first is represented by those who cannot imagine social or international organization taking shape apart from some type of government, and thereby support the formation of ever more institutions of world government.

Among these thinkers, we can point to Stephen Krasner whose new book, Sovereignty: Organized Hypocrisy, takes the position that the future rests with agencies such as the IMF, the World Bank, the WTO, Nafta, the EC, and the like, which will come to replace the nation-State as the source of primary citizen allegiance. He is partially backed up in this by Henry Grunwald, whose article in the Millennium Edition of the Wall Street Journal forecast the wreckage of the State as we know it and its replacement by universal institutions, not excluding those of world government.

There are several reasons why these writers are not ultimately correct. First, the idea of world government is hardly new: it has been a dream of socialist writers and despotic rulers for centuries. It was never more close to becoming a reality than after World War II, when the Bretton Woods institutions were established with relatively little controversy. But today, every attempt to increase the power of the international bureaucracy is met with widespread hostility.

WTO meetings are routinely disrupted and wrecked, most conspicuously by the protesters outside, but more substantively by the delegates from developing nations who resent attempts by the US to impose a prosperity-crippling labor and environmental regulatory regime. Clinton has been constantly stymied in his attempt to bolster the power and authority of international institutions and his own personal power to represent the interests of the US to them. That, and not the fall of free trade, was the real story behind the defeat of fast-track trade authority. And whatever happened to the proposal to create a new world financial architecture, a global New Deal, an idea batted around by the Clinton administration? Does anyone in government really have the stomach or the energy for that type of world planning?

The power of the EC continues to be the most important political issue in Europe. Meanwhile, its North American counterpart in Nafta has been discredited throughout the hemisphere. When was the last time any politician in Canada, Mexico, or the US publicly claimed credit for Nafta? The silence is revealing.

There is another factor that suggests that world government institutions are not a viable replacement for the nation-State. The world government itself is a parasite on the nation-State: it has State-like qualities but is not itself a governing unit with autonomous power. For example, there is no sharp distinction between the power of the US government and the power of Nato or the World Bank. When you hear about threats to American sovereignty from the world government, remember that the US is the world government, the hidden hand in the glove of the global State. The good news about the prospect for world government is that when the host is wrecked, so is the parasite.

Far more compelling opponents of the nation-State, like Murray Rothbard, Hans Hoppe, Guido Hülsmann, and Martin van Creveld, argue that it needs no replacement. The international market economy is self-ordering, and political systems are best when they reflect the preferences and unique qualities of the people most affected by them. Combining the insights of the Austrian economists with the Catholic moral imperative of subsidiarity, you end up with Murray Roth-bard’s dictum: universal rights, locally enforced. This way, and not toward world government, is where we should be heading in this period of nation-State decay.

Just how intense is the present antigovernment feeling? It is interesting to note that not even at the height of the Cold War did Washington feel the need to become the complete fortress that it is today. We’re told that this is to protect our leaders from attacks by foreigners, but the truth is that the fortress is designed to protect the government from retaliation by the governed—a situation that the Scholastic political thinkers said was a priori evidence of tyrannical rule.

Before he retired, Senator Daniel Patrick Moynihan was asked what can be done to restore the people’s faith in government. He responded, “I’ve given up trying to restore faith in government. I’m just trying to get through the day.”

Indeed, not since the Whisky Rebellion has the political class been so paranoid and fearful of the public. During the Clinton scandals, people on the right expressed astonishment that Clinton did not suffer at the hands of public opinion more than he did. But this observation assumes a preexisting public expectation that the presidency should be free of scandal and corruption. If expectations are rock bottom to begin with, revelations about corruption in the White House do not cause shifts in public opinion so much as confirm people’s already low opinion of the ruling elite.

“Where’s the outrage?” the neoconservatives kept asking. But they didn’t mean where is the outrage against government itself; in fact, it is they who have been most vocal in condemning the persistent outrage against government in our time, which they decry as dangerous antigovernment cynicism. What they desired was outrage against Clinton personally, and there seems to be fully a third of the public that truly hates the man. But far more important than this is that two-thirds or more expect politicians to act exactly as Clinton acts. This isn’t antigovernment cynicism; it is simple realism.

This goes a long way toward explaining other events that have shocked mavens of the political system. Voting is down to historic lows, not because of indifference, but because of the perception that the system is wholly owned by the power elite, designed and constructed to keep the current regime in charge. The New Left used to fulminate against the illusion of democracy, but hardly anyone believed that this critique would become mainstream in the next century.

In the current system, not voting is a form of protest, using the freedom not to vote to express disapproval of the current system. Already we are seeing public interest groups demand that the government institute an incentive system to increase voting, or even require voting as many other governments do. Never underestimate the desire of the State for symbolic evidence of citizen support. Never forget the insight of Thomas Hobbes, Etienne de la Boétie, Hume, Mises, Roth-bard, and others that government ultimately rules not by force but by achieving something of a public consensus. Voting totals are one way to browbeat people into granting consent.

Neither is the perception that politics is one big racket restricted to the US. Even in Germany, where libertarian ideas have had a very difficult time gaining a foothold, public respect for the State is at a postwar low. Helmut Kohl stands discredited, but so do most other potential leaders of the German State. Commentators at the New York Times are already warning that the present political climate could end up uprooting an entire generation of German political leaders. The same is true in Britain, where Tony Blair gave up socialist ideology, not because he wanted to, but because the prospects of nationalized industry no longer inspired voter interest.

We see the decline of the State reflected in a hilarious turn of events in the polling industry. I have seen only a few articles on this subject—the polling industry understandably wants to keep it under wraps—but it turns out that pollsters are able to gain the cooperation of only one out of three people they talk to. Most people approached for their political opinions simply refuse to participate—a fact which makes a mockery out of their pseudo-scientific so-called margin of error. So taboo have some political opinions become that even those who answer the polls do not always tell the truth. Only this explains why every election season of the last three has featured huge political upsets.

Lying to the pollsters is one form of rebellion, but we are surrounded by many others. When the State says it is going to impose new restrictions on gun ownership, sales boom. When the State says we shouldn’t smoke, especially not teens, smoking soars among teens. When the State says we shouldn’t eat fast food, the stocks of Burger King and McDonald’s take off. When the State says to vote, people stay home. We can only hope that the government never undertakes an advertising campaign on behalf of Austrian economics.

The prevalence of antigovernment cynicism is fast becoming like the weather: everyone complains about it, but no one does anything about it, because no one can. Government is having serious trouble recruiting people into its ranks. As van Creveld has pointed out, the rise of the State was in part dependent on the perception that the State offered its employees the greatest financial prospects of any industry and offered a secure path to social advancement. This is no longer true. Even with the government’s inflated salaries, it cannot compete with the private sector. The word bureaucrat, originating as a term of prestige, is now a swear word. The bureaucracy is no longer what Hegel praised as the “objective class” or what Max Weber said was the embodiment of “goaloriented rationality.”

When Clinton bragged that he has reduced the government to the smallest size in 30 years, he was referring to the number of people on the government’s civilian payroll. But it was a trick. He came up with these numbers by deleting the numbers of unfilled positions from the payroll. What his statistic meant, then, is that the government is having a hard time recruiting and retaining employees—not exactly a flattering statistic when presented in that light.

A recent study of graduates from the Kennedy School at Harvard, set up to promote so-called public service, showed that only a third of its graduates enter the public sector. And no wonder. Parents used to want their kids to grow up to become president, but the wish now seems like the closest thing to psychological abuse I can imagine.

What about taxes? Yes, they are higher than ever and tax collection the most intrusive in history. But the technological revolution has raised the possibility of increased competition between tax jurisdictions. We don’t have to go as far as David Laband of Auburn to predict that Web commerce will drive sales taxes to zero, but the possibilities are there that increased competition between political units impose serious downward pressure. And I think it is clear—and it has been true for some time—that while the public’s appetite for freebies is high, its tolerance of tax increases stands at exactly zero. Liberal media commentators like to point out that politicians promising to cut taxes experience no great boost as a result. But this isn’t because the public demand isn’t there; it is because, more radically, no one believes them anymore.

The tax State will be dealt a mortal blow if the time ever comes when money and banking are taken out of the hands of the State and become the exclusive domain of market economies. Certainly, the prospects for genuine tax reduction coming via legislation seem low indeed. The best case scenario for tax reduction involves an increase in the present practice pioneered by the very rich: they shelter their money in financial forms that avoid extreme tax penalties, or even bank in places that guarantee privacy.

Richard Rahn, in his book the End of Money, has argued that the demand for bank privacy is far more widespread than is traditionally known—a case in point being the public outrage over Clinton’s proposed and defeated “know your customer” regulations. In Rahn’s view, online technologies will eventually come to meet the demand for bank privacy, making it very difficult for the nation-State to collect what it believes it is owed. Certainly, the tax State, like the antique Post Office, is closely tied to brick and mortar, and could eventually find itself outrun by digital means of avoidance.

The gold standard represents the ideal monetary arrangement, and the only one that erects a wall of separation between the means of exchange and the nation-State. Guido Hülsmann has argued that a truly free monetary arrangement—one free of legal-tender laws, taxes on gold, and free entry and exit—would result in a de facto gold standard. Further, Joseph Salerno has made the argument that the rise of nonbank banks represents a viable replacement for traditional banking services, ones which are far more sound because they keep 100-percent reserves and are therefore relatively more immune from panics or the contagion effect.

The unexpected change in monetary affairs in the last decade has been the startling effect that financial deregulation and internationalization have had on the ability of the Federal Reserve to monitor and control money. The Fed is no longer sure which monetary aggregate to watch, and it cannot be sure of the market’s response to its actions, in either the value of the dollar on international exchange or on the shape of the yield curve. The Fed is flying blind—exactly the opposite of the all-knowing, all-seeing central bank it has pretended to be.

The problem of money and banking may be the most intractable problem we face in the future, and in this area, we can chronicle nothing but decline, and will probably continue to do so for some time, barring some amazing digital breakthrough. This is not so with Social Security, FDR’s tax racket that hooked generations into dependence on Leviathan. The liabilities of the system are huge and growing—far too vast to allow some easy Chilean-style privatization to cure all woes. Fortunately, the unexpected has happened with the rise of 401(k)s and other forms of retirement accounts, created by Congress as a concessionary measure in the wake of relentless tax increases.

Young people today do not believe they will see a dime in Social Security, a perception which has caused tens of millions to mentally secede from the system. Today, people are socking away money in these private accounts on the expectation that the government will never give them a dime. Social Security is not an investment program, as is obvious from the abysmal returns the system pays. But the fact that the government continues to advertise it as an investment program only serves to discredit the State as a pension fund manager. Whereas people once were grateful to FDR for caring for them in their old age, young people today are wildly angry at Social Security for looting their earnings, and this growing anger explains why some in Congress are actually beginning to openly discuss this previously taboo topic.

Secession is taking a variety of forms, not just financial. Nation-States have multiplied since 1900, and secession remains an important political force in almost every one of the 200 nations in the world, even the US which sports active secession movements in every region. We should realize the implications of this. The more States there are, the more difficult they are to manage, which is why the establishment is always sounding the alarm that it is a dangerous world. It is indeed dangerous for those who believe the world economy and political structure need top-down control.

In the old days, people knew why they wanted to be connected to the central State. It gave us security. It delivered the mail. It protected us from foreign invaders. It provided courts of law. First, what has become of the State’s security? As Bruce Benson has pointed out, the drop in crime in recent years coincides with proliferation of gated communities, huge expenditures on home security systems, a boom in private security guards, and the vast increase in individual gun ownership.

Contra Hobbes, our security is due to our own efforts, not those of the State. And it is not only personal security at issue, but also financial security, which the State also purported to provide. But in the present economic environment, it is the State, with its constantly shifting rules on welfare provision and regulatory arbitrariness in general, which has become the major source of insecurity.

As for the government’s mails, is there anything the feds do that is more laughably anachronistic? AOL’s Instant Messaging program delivers twice as many communications today as the Post Office, and with online banking becoming easier, bill paying will no longer be a Post Office monopoly. In the end, the Post Office may find itself in business only to deliver Christmas cards.

What about defense? Just as the US government has failed to protect its own borders from relentless invasion, its foreign military adventures constitute defense in name only. I’ll leave aside the crazy and murderous crusades from the 19th century through the end of the Cold War—so thoroughly chronicled in John Denson’s book, the Costs of War—and only cite a few outrageous recent cases.

It turns out that US soldiers are being investigated for raping Serbian women during the Kosovo war—the exact charge the US made against Serbian soldiers in their dealings with Kosovars. As the news continues to trickle out about, for example, the US soldier who sexually assaulted and then killed an 11-year-old child, we can only expect the outrage to continue. This is to say nothing about the war crimes that continue to be committed against the Iraqi and Serbian people, not least by the so-called depleted uranium shells that spawn leukemia for decades afterward, the terror bombing of a pharmaceutical factory in the Sudan, the killing of 20 skiers in the Italian alps, and the spreading of debauchery and prostitution anywhere in the world that is unlucky enough to host a US military base.

The US military has been devastated by drastic changes in its management over the last 10 years. Inside reports indicate that it is now organizationally far more concerned with affirmative action, speech codes, and political correctness in general than military expertise. Promotions take place according to political standards having less and less to do with merit. This has demoralized the officer corps, which finds itself in entrenched opposition to the politics and priorities of its civilian masters.

Clinton had an idea in 1993 that he would institute an embryonic national service program to replenish the ranks of the volunteer military. But the program has been a bust, not because Congress has slashed its budget, but because of a lack of public interest, bureaucratic screw ups, and the usual looting by special interests. National service has not come back, and there no imminent danger of a reinstitution of the draft. Public resistance to a reimposition of the draft today would be extraordinarily high.

As for courts of law, the boon in private arbitration tells us something about the efficiency and efficacy of government courts. US corporations are loathe to even enter them for fear that they will get a judge like Thomas Penfield Jackson, a man who had never used a personal computer but who nonetheless presided over the most important software trial of our times. He is an incompetent and a malcontent lording it over a brilliant, productive company at the behest of less successful companies. And he is typical of the judges within the federal judiciary, almost none of whom inspire any respect.

What about schools? Here we have a hopeless case in which the level of government spending is directly correlated with declining scores and knowledge. The public schools have become such a disgrace that school districts are having to beg people to take positions like superintendent, which used to be considered high status. In the wake of Columbine, and all the other school shootings, parents are increasingly concerned for their children’s safety. Even if irresponsible parents send their children to public schools and pay no attention to their academic decline, the prospect that their child might be gunned down by a drugged-up maniac tends to focus the mind.

And hardly anyone wants to talk about the real deadly effect of the public schools: what they have done and continue to do the students’ character. Cramming thousands of kids in a prison-like environment saps their intellectual energy and puts the strongest in charge by default, exactly as in a prison. But the encouraging sign is the growth in alternatives, whether private schools or homeschools, which are increasingly being used by the most astute people. It’s no wonder some members of the power elite have pushed the idea of government vouchers to hook these islands of genuine learning into the State nexus before the government loses control altogether.

In the business world, too, we are seeing the wonderful results of what happens when the entrepreneurial class circulates and rotates from one generation to the next. The entrenched, State-connected elites end up being replaced by new ones. The new class of technological elites is the least connected to government of any in our century. In their very work, they breath and thrive on the relative freedom of the technological sector, and are being shaped by a business setting the State neither understands nor can come close to competing with.

An article in Vanity Fair last month quotes a member of the Rockefeller family at their panic that the new millionaire class is richer and more culturally powerful than what remains of America’s old families, which too often secured their social and political status by close proximity to the State. By the way, what a wonderful thing that the business school myth—the idea that only academic professionals can teach market success—is at last being demolished.

The thriving market for employment has devastated the ranks of the professional political activists. Thomas Sowell points out that any black with intelligence and drive is in school or in business, which leaves the ranks of the race hustlers seriously thinned of bandwidth. The quality of the people on the political front lines has been drastically diminished in the past 30 years. They may be more belligerent than ever, but they will be ever easier to outsmart in the years to come.

I’ve chronicled a whole range of areas in which the State is in decline, and have done so without excessive focus on the effects of the information revolution. Even though it has become a cliché, we shouldn’t underestimate the effect of the Web in advancing the revolution. Murray Rothbard, in his famous essay on the nature of the State, pointed out that the thriving State must monopolize the command posts of society. Primary among them is the communications network. It is no accident that the government has always worked to build public-private partnerships in telegraphs, telephones, and the airwaves. The State is inherently pro-censorship, viewing its best interest as bound up with suppressing excessively critical judgments against it.

This has all come to an end, much to the shock of the power elite. You will notice that discussion of the information revolution, and the political issues it raises, has been largely missing from the campaign trail this year. The reason is that the political class is hopelessly behind. Each member steers discussion away from the topic for fear of making a brazen mistake.

Recall that a few years ago George Bush senior was skewered for not knowing that prices in grocery stores are usually read by bar codes. Today’s politicians are terrified that they will be asked a question that mentions URLs, ISPs, bandwidth, or packet switching. Their advisers would like to help, but the political class is generally out of touch. For example, I know a major campaign manager who still refuses to get email in hopes that the whole thing will go away.

All of these factors combine to paint a fascinating picture of the State in decline. We would be foolish not to take heart in the denunciations of this trend printed in the daily newspapers. Everyone from Mario Cuomo to Bill Bennett to Garry Wills decries these trends and promises to reverse them with a newly invigorated public sector. Every national politician promises to restore the American people’s faith in government. May they all fail, and miserably.

On the other side of the ledger, the list is just as daunting: government spending is at an all-time high, regulations are ever more intrusive, the middle class is ever more lackadaisical and nonchalant intellectually, the new generation of teens is lacking in moral character, and public schooling continues to drain people’s brain cases. Democracy itself still remains what it has been since the turn of the century: a degenerate system whereby organized groups of special interests are able to exploit the majority of taxpayers for their own purposes. And no trend can more quickly inspire exasperation and pessimism than the overwhelming success of some lawyers in using the government’s laws and courts to their own benefit.

The single most important factor of uncertainty is the business cycle. Some of these trends owe themselves to the economic growth of recent years, which is causing private markets to continually outrun the ability of governments to keep up. It provides no comfort to observe the Fed’s loose credit policies that began in the first quarter of 1995, so that rates of growth in 1998 and 1999 have averaged 7 percent, with periodic spikes as high as 15 percent.

What will happen if the business cycle turns and we enter into another inflationary recession, one caused by the Fed’s reckless monetary and banking policies? Some of these glorious trends will be reversed, while others will not. The State will attempt to use the crisis to bolster its own power, but it will confront a public that is socialized in a pattern of resistance, and it will be in a much weaker starting position than it has been in any previous economic crisis since the New Deal.

The habit of resistance recalls our forebears, whose history before the US Constitution was one long period of resistance to the central State. This is what the best part of American history is all about, and it is what is distinct about American culture. Recall too that history can turn on a dime, just as it did in the Soviet Union and all over Eastern Europe. Despotisms can be here today and gone tomorrow.

We must prepare in every way. We must ourselves become historians of decline: historians of the decline of the State, historians even of its fall, along with the fall of all its apologists, dependents, and sycophants. Until they become the mere stuff of history, we must fight in every way we know how to secure liberty with the strongest possible intellectual foundation, among this generation of faculty and students and every one that follows.

To the supporting Members of the Mises Institute, I pass on the warm thanks and appreciation of the thousands who have been educated in our seminars and the millions who use Mises Institute publications to inoculate themselves against error in political and economic theory.

We must prevail because the future of civilization itself depends on the triumph of the ideas of liberty. This is what Mises believed, and it is what kept him going even in our century’s darkest hours. Nine years after Mises declared himself a historian of decline, Human Action appeared like a bright light on the intellectual horizon, and 50 years later, that light grows brighter every day.

There can be no way that Mises could have anticipated what the future held for that masterpiece. The pace of sales of our Scholar’s Edition, produced on the 50th anniversary of its original publication, comes close to matching the startling sales rates of the first edition. And this is for a book that has never gone out of print.

But here is something else. Mises.org has put Human Action online, which permits anyone anywhere in the world, at all hours, day or night, to have access to a fully searchable and printable version of this 900-page book. In these two weeks, nearly 7,000 students and others from around the world have spent time reading the book or downloading it, and these are people who would not otherwise have access to such a book. Moreover, the online version has not hurt the sales of the hardback but rather the opposite: it has made it more popular.

Mises would be thrilled. Rothbard would be overjoyed. So would all our forebears who understood the meaning of freedom. We should be too. They would be happy to see you here today and they would remind us all of the extraordinary privileges that come with doing the work of liberty.

THE PROMISE OF HUMAN ACTION

[This speech was delivered at the Mises Institute, September 14, 1999, the 50th anniversary of the publication of Human Action.]

In a 1949 memo circulated within Yale University Press, the publicity department expressed astonishment at the rapid sales of Ludwig von Mises’s Human Action. How could such a dense tome, expensive by the standards of the day, written by an economist without a prestigious teaching position or any notable reputation at all in the US, published against the advice of many on Yale’s academic advisory board, sell so quickly that a second and third printing would be necessary in only a matter of months?

Imagine how shocked these same people would be to find that the first edition, reissued 50 years later as the Scholar’s Edition of Human Action, would sell so quickly again.

How can we account for the continuing interest in this book? It is unquestionably the single most important scientific treatise on human affairs to appear in the 20th century. But given the state of the social sciences, and the timelessness of Mises’s approach to economics, I believe it will have an even greater impact on the 21st century. Indeed, it is increasingly clear that this is a book for the ages.

Human Action appeared in the midst of ideological and political turmoil. The world war had only recently ended, and the US was attempting to reshape the politics of Europe with a new experiment in global foreign aid. The Cold War was just beginning.

Virtually overnight, Russia went from ally to enemy—a shocking transition, considering that nothing much had changed in Russia. It had been a prison camp since 1918, and its largest imperial advances in Europe had taken place with the full complicity of FDR. But in order to sustain wartime economic planning in the US, and all the spending that entailed, it became necessary for the US to find another foreign foe. By 1949, the US began to fight socialism abroad by imposing it at home.

Indeed, on this day 50 years ago, the old idea of the liberal society was gone, seemingly forever. It was a relic of a distant age, and certainly not a model for a modern industrial society. The future was clear: the world would move toward government planning in all aspects of life, and away from the anarchy of markets. As for the economic profession, the Keynesian School had not yet reached its height, but that was soon to come.

Socialist theory enthralled the profession to the extent that Mises and Hayek were thought to have lost the debate over whether socialism was economically possible. Labor unions had been delivered a setback with the Taft-Hartley Act, but it would be many years before the dramatic declines in membership would take place. In academia, a new generation was being raised to believe that FDR and World War II saved us from the Depression, and that there were no limits to what the State could do. Ruling the land was a regime characterized by regimentation in intellectual, social, and political life.

Human Action appeared in this setting not as a polite suggestion that the world take another look at the merits of free enterprise. No, it was a seamless and uncompromising statement of theoretical purity that was completely at odds with the prevailing view. Even more than that, Mises dared to do what was completely unfashionable then and now, which is to build a complete system of thought from the ground up. Even his former students were taken aback by the enormity of argument and the purity of his stand. As Hans-Hermann Hoppe has explained, some of the shock that greeted the book was due to its integration of the full range of philosophy, economic theory, and political analysis.

When you read Human Action, what you get is not a running commentary on the turmoil of the time, but rather a pristine theoretical argument that seems to rise above it all. To be sure, Mises addresses the enemies of freedom in these pages—and they happen to be the same enemies of freedom that surround us today. But much more remarkable is the way he was able to detach himself from the rough and tumble of daily events, and write a book restating and advancing a pure science of economic logic, from the first page to the last. It contains not a word or phrase designed to appeal to the biases of the world around him. Instead, he sought to make a case that would transcend his generation.

To appreciate how difficult this is to do as a writer, it is useful to look back at essays we may have written last year or 10 years ago. Quite often, they have all the feel of their time. If any of us have written anything that can hold up 5 years later, much less 50, we should feel extremely happy at our accomplishment. And yet Mises sustained a 1,000-page book on politics and economics that doesn’t feel dated in the least—or at least that was the consensus of the students we recently had in our offices to reread the entire work.

Consider Samuelson’s Economics, which made its first appearance in 1948. It’s no accident that it’s in its 16th edition. It had to be continually updated to fix the theories and models that events rendered anachronistic in only a few years. Even as late as 1989, the book was predicting that the Soviets would surpass the US in production in a few years. Needless to say, that had to go. Last year, a publisher brought out the first edition—as a kind of museum piece, the way you might reproduce a 78-RPM phonograph record. In any case, it did not sell well.

Incidentally, when John Kenneth Galbraith reviewed Human Action in the New York Times, he called it a nice piece of intellectual nostalgia. Interesting. Does anyone read any of Galbraith’s books today for any other reason? Our purpose in reissuing the first edition, on the other hand, was not nostalgia: it was to introduce a new generation to what it means to think clearly about the problems of social order. We still have so much to learn from Mises.

We need to reflect on what it required of Mises personally to write the book. He had been uprooted from his homeland, and much of his beloved Europe was in tatters. Well past midlife, Mises had to start over, with a new language and a new setting. It would have been so easy for him to look around at the world and conclude that freedom was doomed and that his life had been a waste.

Try to imagine the intellectual courage it required for him to sit down and write, as he did, an all-encompassing apologia for the old liberal cause, giving it a scientific foundation, battling it out with every enemy of freedom, and ending this huge treatise with a call for the entire world to change direction from its present course onto an entirely new one.

I’m sometimes accused of having an excessively pious devotion to the man Mises, but it is impossible not to notice, in the thicket of his dense argument, that he was also a singular character in the history of ideas, a man of uncommon vision and courage.

When we honor Human Action on this great anniversary of the book’s publication, we must also honor the fighting spirit that led him to write it in the first place, and to see it through to its miraculous publication.

What are the political and economic trends that have come to pass in the last 50 years? The rise of new technologies, whose existence are best explained through a Misesian theory. The collapse of the Soviet Union and its client states, for the reasons explained in this book. The failure of the welfare state, again foretold in these pages. The widespread disappointment at the results of positivist methods in the social sciences, also addressed here.

Indeed, if we look at the failure of the welfare state, the persistence of the business cycle, the hyperinflation in Asia, the collapse of currencies in South America, the benefits we’ve derived from deregulation in our own country, and the meltdown of social insurance schemes, we’ll see that each is addressed and predicted in Human Action. Again, each is discussed in terms of timeless principles.

But none of these issues touch on what I find to be the most encouraging trend of our time: the decline in the moral and institutional status of the central State itself. Quite often in the press these days, pundits decry the rise of cynicism and antigovernment feeling among the public. But what does this really mean? Surely not that Misesian theory has come to capture the imagination of the masses. We are a long way from that. What they are decrying is the end of the old intellectual and political regime that was just coming into its own when Mises’s book appeared in 1949, and has been breaking apart since at least 1989.

The same level of respect is not shown to leaders in Washington as it was in those years. Involvement in politics or the civil service is not valued as highly. In those days, the State got the best and brightest. These days, it gets those who have no other job prospects. The public sector is not the place to look for bandwidth. Moreover, hardly anyone believes that central planners are capable of miracles anymore, and the public tends to distrust those who claim otherwise. The political rhetoric of our time must account for the rise of markets and private initiative, and acknowledge the failure of the State.

Now, there are exceptions. There is the Bill Bradley campaign, which, as far as I can tell, is driven by the idea that Clinton has cut the government too much! And then there are the conservatives at the Weekly Standard. Last week’s issue called for something new: what they have dubbed “One-Nation Conservatism.” The idea is to combine the conservative domestic statism of George W. Bush with the conservative foreign-policy statism of John McCain. This is what might be called the politics of the worst of all worlds.

The entire approach fails to come to terms with a central insight of Mises’s treatise: namely, that reality imposes limits on how expansive our vision of government can be. You can dream about the glories of a society without freedom all you want, but no matter how impressive the plans look on paper, they may not be achieved in the real world because economizing behavior requires, most fundamentally, private property, which is the institutional basis of civilization.

Government is the enemy of private property, and for that reason becomes the enemy of civilization when it attempts to perform anything but the most minimal functions. And even here, Mises says, if it were possible to permit individuals freedom from the State altogether, it should be done.

People were not ready for that message then, but they are more ready for it now, because we live in times when government routinely confiscates one-half or more of the profits associated with entrepreneurship and labor. Politics consists of 100,000 pressure groups trying to get their hands on the loot. Why would anyone believe that it would be a good idea to expand this system?

Let me read you the rationale for this One-Nation Conservatism. It will inspire people to throw themselves into what they call public service. Public service has four main merits in their view: it “forces people to develop broader judgment, sacrifice for the greater good, hear the call of duty, and stand up for their beliefs.”

These are all desirable traits. But I fail to see how they have anything to do with politics. Rather, a politicized society tends to produce the opposite: narrow judgment, selfishness, petty graft, and compromise. And that’s putting the best possible spin on it.

Who are the real visionaries today? They are software developers, communications entrepreneurs, freedom-minded intellectuals, home schoolers, publishers who take risks, and businessmen of every variety who have mastered the art of serving the public through excellence, and doing it despite every obstacle that the State places in their way.

The real visionaries today are the people who continue to struggle to live normal lives—raising children, getting a good education, building healthy neighborhoods, producing beautiful art and music, innovating in the world of business—despite the attempt by the State to distort and destroy most of what is great and good in our world today.

One of the great rhetorical errors of Mises’s time and ours has been to reverse the meaning of public and private service. As Murray Rothbard pointed out, private service implies that your behavior and your motivation is about helping no one but yourself. If you want an example, tour the halls of a random bureaucratic palace in DC.

Public service, on the other hand, implies a voluntary sacrifice of our own interests for the sake of others, and I suggest to you that this is the most overlooked feature of a free society. Whether it is entrepreneurs serving their customers, parents serving their children, teachers serving their students, pastors serving the faithful, or intellectuals serving the cause of truth and wisdom, we find an authentic public ethic and a real broadness of judgment; it is in the voluntary nexus of Human Action where we find the call of duty being acted on. It is here we find people standing up for their beliefs. It is here we find true idealism.

It was Mises’s firm conviction that ideas, and ideas alone, can bring about a change in the course of history. It is for this reason that he was able to complete his great book and live a heroic life despite every attempt to silence him.

The scholarly followers of Mises in our own time exhibit these traits, and inspire us every day with their innovative, principled, and radical approach to remaking the world of ideas. In their work for the Quarterly Journal of Austrian Economics, in their books, and in their teaching we see the ideals of Mises being fulfilled.

At a low point in his life, Mises wondered if he had become nothing but a historian of decline. But he quickly recalled his motto from Virgil: “Do not give in to evil, but proceed ever more boldly against it.” With Human Action, Mises did just that. He was to die around the time that Nixon went off the gold standard and imposed wage and price controls, to Republican cheers. He didn’t live to see what we see today—nothing short of the systematic unraveling of the statist enterprise of our century—but he did foresee that hope was not lost for the flourishing of human liberty. For that great virtue of hope, we must all be very grateful.

Let me also say how grateful I am to everyone involved in the production of the Scholar’s Edition on this 50th anniversary, from our Members to our faculty to our staff. Mises smiles today.

HUMAN ACTION AND THE POLITICS OF FREEDOM

[This speech was delivered at the Mises Institute’s Human Action Conference, Auburn, Alabama, February 6, 1999.]

The head of state makes a speech to a packed house of legislators, and is cheered to the rafters for his flurry of visionary policy ideas. He calls for the restoration of cities and towns, and the revival of the nation’s industrial base through new spending programs. He makes more housing a national priority. He promises more education spending, new resources for the armed forces, a secure system of old-age pensions, and more equitable healthcare delivery. He takes the credit for a purported economic boom, and further promises to surpass all previous records in national productivity.

No, this isn’t Clinton’s state-of-the-union address. It was Stalin’s 1946 speech, which concluded as follows: “The Soviet people are ready for it! Under the leadership of the Soviet government, with Stalin at its head, the Soviet people will transform the law on the new Five Year Plan into life.”

If anyone still took Clinton seriously, this could be a chilling comparison. After all, there was a time when the state-of-the-union speech set the agenda for the nation. Now it is seen as little more than theater. Even the news media treated it like a movie premier, evaluating the script, the acting, and the emotional impact, but never confusing it with real life.

In Washington now, they only pretend to make grand new policy. In fact, as New York Senator Pat Moynihan pointed out last year, they’re just trying to get through the day.

If we look at the present state of the war between government and the economy, it is clear that the economy is winning. Technological developments far outpace the ability of government to control them. The public is participating as never before in capital markets. Private arbitration is steadily replacing government courts. The sheer power of market forces overwhelms government power on an almost daily basis.

Books on freedom and against the corruptions of government are more available than ever before, even if today’s professors are loath to see their students get their hands on them.

Through the Internet, the Mises Institute reaches a world-wide audience on a minute-by-minute basis. Journal articles that were once inaccessible are available at no charge to students and faculty around the clock. We hear from everywhere, from the University of California to the University of Beijing. The Austrian School has sympathizers in nearly every economics department in the country, and in such departments as history and philosophy as well.

Meanwhile, the moral legitimacy of government, its officials, and its policies has been on the wane for some time. Show me a student who aspires to enter the civil service these days, and I’ll show you a failure.

Politicians as a group, and not just one party, are deeply distrusted and even detested. At all levels of government, the competent are leaving for the private sector. The military cannot retain pilots, the IRS cannot retain accountants, and the labor department cannot retain economists.

Politicians are dropping like flies, and the two parties are having trouble recruiting anyone respectable to put his name on the ballot. The Clinton administration cannot even retain cabinet members.

As for voting, few bother to do it any more. But far from being a sad commentary on the present state of the civic culture, nonvoting is actually a form of secession from a fraudulent system that offers the illusion of democratic participation but not its reality.

Nobody in Washington really believes in Keynesian fiscal planning anymore. Sure, they pay lip service to the idea, because it provides a rationale for their jobs. But the last hint that government spending should be used to boost macroeconomic aggregate demand came in 1993, just after Clinton was elected.

In the meantime, the growth in government spending has slowed dramatically since the 1980s, a decade in which a 163-percent increase in government spending was accompanied by daily talk of budget cuts.

A new high-tech corporate power elite is being raised up, disconnected from government. They make their fortunes by virtue of their terrific innovations and their extreme attentiveness to the needs of the consumer, and through a competitive struggle with others who are constantly attempting to do the same.

The members of this new corporate elite are far less connected to the idea and regulatory apparatus of the nation-State than any of their predecessors. They have witnessed firsthand the remarkable power of the market economy to transform society and individual lives, and have seen nothing but failure from government programs and consortiums.

Now, we must remember that we are in the midst of an economic boom. I would feel a lot more like celebrating the soaring stock market, and the rock-bottom unemployment rate, if the Fed hadn’t been boosting the money supply, a fact which is already showing up in the declining value of the dollar on the international exchange.

In time, the boom will turn to bust, and market traders will receive a new lesson in what that old-fashioned word “recession” means. But the question we have to ask ourselves is this: in the next recession, will the forces of government be able to impose the kind of fiscal and regulatory planning that they once enacted as a matter of course?

I don’t think so. To impose a dramatic step-up in government power requires a public consensus in favor of government “solutions” that simply no longer exists.

What we are witnessing is the continuation of a process that began to be revealed in the late 1980s, when socialist regimes crumbled despite every prediction that they would be permanent. The same forces are working themselves out in different and unpredictable ways right here at home. The ideological foundations of all-round statism are beginning to collapse. It has never been more likely that we will see a reflowering of classical freedom in our time.

What a distance we have traveled since 1949. In the year Mises’s Human Action was published, capitalism had no future. The Great Depression was widely attributed to the failure of the free market, despite the valiant efforts of Henry Hazlitt to convince the world otherwise. The New Deal combined with wartime economic planning was said to have saved us from further ruin. The ideology of socialism was all the rage in intellectual circles—as it had been for decades.

The old idea of the liberal society was gone, seemingly forever. It was a relic of a distant age, and certainly not a model for a modern industrial society. The future was clear: the world would move toward government planning in all aspects of life, and away from the anarchy of markets.

The US had fought and won a European war against National Socialism, and an Asian war against a regional empire. The ideological lesson of this experience was not that the free society is superior. Recall that the US had been closely allied with Stalin’s Soviet Union, a regime even more deadly and totalitarian than the foes the US had battled.

The experience reinforced New Deal statism. When the US government is given total power, the lesson ran, it can get the job done, so long as the government is granted discretion to choose its friends and enemies along pragmatic lines.

Moreover, the government must be allowed to make decisions over issues of life and death. It must be allowed to conscript, as the US did. It must be allowed to take innocent life with deliberate intent, as the US did in mass bombings of whole cities.

In terms of the ideological superstructure, this was the era of the total State. People the world over had been shaken to their souls at the awesome display of nuclear weapons at Hiroshima and Nagasaki, at the ability of three heads of state to meet and carve up Europe into spheres of influence, at the apparent central role that governments played as a force of history, and at the awful and undeniable reality that individuals appeared to be merely pawns in the new superpower-driven drama of world affairs.

In 1949, the State Department and the Defense Department drafted a document called “National Security Council Finding 68.” NSC 68 was a blueprint for global US hegemony. It asserted that only the US government could muster the moral, political, and ideological resources to reestablish and maintain world order, which in turn required a massive munitions and covert-action buildup, and a permanent global military and CIA presence. It would be a new empire, and even more ambitious than the former British empire.

We had come a long way from the original American vision of a country uniquely situated to avoid international political conflicts. In 1949, the major concern of the US power elite was to cement its position by establishing global institutions of unprecedented power, such as a world court, a world central bank, a world economic planner, and a world police force. The only critics deemed respectable were Marxists, who said this planning apparatus was entirely too enthralled with capitalist ideals.

Meanwhile, the real resistance movements in the US, including the Southern Agrarians and the America First Committee, had been smashed and discredited, their leaders branded as reactionaries and Axis sympathizers. The election of 1948 seemed to confirm this, as the Dixiecrats were crushed and Truman reelected in an election that represented the highwater mark of voter participation.

What was left of the antisocialist element in American life was distracted into ignoring US socialism and focusing on the Soviets, a sentiment that was denounced and simultaneously used by the Truman administration to bring about a huge military buildup.

Anyone who doubted the glories of the escalating welfare-warfare national-security State was accused of having an “authoritarian personality,” in Theodor Adorno’s phrase that still has a prominent place in undergraduate abnormal psychology textbooks.

Freedom-minded intellectuals were dying off, and the few remaining ones had virtually no publishing outlets. Most of the dissident publications that survived the Depression had been killed off during wartime censorship. And shaped by years of war propaganda and fireside chats before that, radio networks and newspapers chose their programming based on nationalistic concerns.

Love of the nation-State had even come to displace traditional religion. The flag became an object of worship for the second time in American history (the first being during Wilson’s invasion of Europe). Religious sentiments were added to the national pledge and to depreciating coinage, in acts that our forebears might have regarded as blasphemous.

The middle class was roped into a growing welfare State by virtue of expanding Social Security, school loans and grants from government, and the cult of the civil service.

In 1949, freedom seemed to have no future. The only serious dispute was over the degree to which choice and autonomy should be limited in government’s pursuit of the planned world economy.

The State and the intellectual classes were one. The prophet of this new order was Keynes himself, who achieved an intellectual revolution of unprecedented completeness. As one writer said at the time without irony, “Keynes indeed had the Revelation. His disciples are now dividing into groups, each taking sustenance from the Keynesian larder. The struggle for the Apostolic Succession is on.”

Seymour Harris, an economics professor at Harvard, whose 1949 book Economic Planning had a huge impact, sums up what was considered the empirical reality of Soviet socialism. “Twenty years ago,” he wrote, “Russia presented her first five-year plan. Her phenomenally rapid rate of industrialization and economic growth in the years 1928–40 attracted the attention of all the major nations of the world.” As tens of millions were shot or starved to death in the charnel house of socialism, Harris wrote that the

numerous advantages of the socialist state can not be denied. For example, it can achieve a distribution between production of essential and nonessentials apparently impossible for the capitalist state.... In its concentration on essentials prior to producing nonessentials, the economy of the USSR has much to recommend it.

Among the advantages that Harris lists is this: “The USSR is not troubled by excessive salesmen and advertisers.”

And what of Hayek’s 1944 criticism that planned economies and loss of freedom are all of a piece? Harris claims to show that Hayek has fallen victim to an elementary fallacy. “The fact of concomitant variations (e.g., planning and fascism in Germany),” writes Harris, “does not prove that the planning brought fascism any more than the concomitance of marriages and the appearance of ants in June suggests a causal relation.”

That this flippant dismissal of any connection between big government and loss of freedom was considered persuasive is a measure of the ideological climate of the time.

As for the efficiency of the planned economy, there was no need to fear. Exhibit A in the intellectual arsenal of the pro-planning economists was World War II. In the US, production was planned, prices controlled, labor conscripted, and consumption regulated. And didn’t we win the war? Even more impressively, didn’t the war itself bring the gruesome realities of the Great Depression to a close?

The Supreme Court was busy shredding the Constitution and centralizing power in the executive State. In 1949, the court held in Wolf v. Colorado that the search and seizure provisions of the Bill of Rights applied to the states, and that the central government should be charged with protecting people from their respective state governments.

Of course, in the original design of the Constitution, the Bill of Rights was to protect the people of the states from the central government, an intention that was turned on its head with the doctrine of incorporation. But even aside from constitutional law, how absurd it is for the feds to claim to be the guardians of freedom. The centralization of power is one of the greatest threats to liberty ever known.

In these years, the State and the corporate classes were one as well. Every major company was now beholden to the planning State, having been shaped by FDR’s Blue Eagle program, wartime price controls, and all-round unionization. The captains of industry were joined at the hip with the regulatory apparatus. The American worker was terrified for his family’s livelihood, and in no mood to rock the boat.

Such traditional institutions as advertising and individual initiative were declared dead in plays such as Death of a Salesman and books like the Organization Man.

In retrospect, it is clear that the foundations for the massive step-up in State power of the 1960s, and the war on such countervailing institutions as private property, the family, and federalism, were laid in the late 1940s and early 1950s.

The Depression and the war had demolished traditional loyalties and demonstrated the massive power of government, and the 1950s effort to globalize and universalize the planning State set the stage for the continued socialization of society that followed.

Mises, who lived through it all, was singular because he had both the intellectual apparatus to fight what appeared to be an invincible foe, and the moral stamina to do so though he knew he would doom any future he had in academia. And yet he saw what needed to be done, and did it. The very basis of the market economy and the free society needed to be presented anew, and reestablished on a solid intellectual foundation for a new generation.

In the midst of the war, he had already written that the most important postwar priority was to fight the forces of statism on the battlefield of ideas. With Human Action, he would engage in that battle nearly alone. And yet one reason the book stands out is that it is not about politics as such. Rarely does he directly address the burning political issues of the day, and then only in a timeless way. Two-thirds of the book is a painstaking reconstruction of the theoretical foundations and applications of economic science.

Mises’s intention was nothing short of magnificent. He had concluded from his study of history that the classical economists were the real heroes in the march of freedom. It was they who explained the workings of the free economy and the rationale for eliminating statist restrictions on trade and labor.

In Mises’s words, they “reduced the prestige of conquerors and expropriators and demonstrated the social benefits derived from business activity.”

While others attributed the rise of the glorious Industrial Revolution to mysterious forces or accidents of history, Mises said it was the economists who exploded mercantilism and made it possible for society to adopt the ideals of freedom.

The history of the American Revolution would seem to bear him out. We hear often about the political education of the founders. But just as powerful were their economic ideals. For example, Jefferson studied the economics of Turgot, whom Rothbard has identified as a founder of the Austrian School.

As Mises looked at the ideological landscape of 1949, he saw the philosophical foundations of freedom being destroyed. Austria had been engulfed in statist ideology, America too, and he was shocked and dismayed at the status accorded to totalitarian regimes like the Soviet Union.

But he also saw that the difference between the New Deal and Stalin’s Five Year Plan was not one of kind but of degree, and he set out to do everything in his power to stop the encroaching darkness, and relight the flame of liberty.

In placing blame for the destruction, he again sought an explanation in the intellectual realm. In Germany, it began with fallacies concerning money creation and the supposed benefits of protectionist policies. In the US, it was the ideological baggage of Progressivist ideology working hand-in-glove with Keynesian economics, an import from Britain that had socialized much of the birthplace of the Industrial Revolution.

All around him, Mises saw assaults on the basic tenets of sound economics. It was said that the price system does not work, that property rights are a hindrance rather than the path to economic progress, that business does not serve society but exploits it, that laborers have a friend and not an enemy in government, that government can innovate better than the market, that the freedom of contract is a source of waste rather than the embodiment of efficiency.

Mises predicted that civilization “will and must perish if nations continue to pursue the course which they entered upon under the spell of doctrines rejecting economic thinking.”

So strong was his faith in ideas that he dared begin at the very beginning, with the general science of human action, with the nature of man as a choosing agent, with the foundation of economic knowledge itself.

People who pick up Human Action for the very first time are perhaps startled to discover that the first 200 pages consist of a closely argued treatment of such foundational issues. It is not until page 201 that we find a discussion of market institutions like prices and money. And it is not until very late in the book that we find the ways in which government policy wrecks the operation of the market.

Clearly, Mises had tremendous confidence in his readership, a confidence that was confirmed when his massive treatise was made a selection of the Book of the Month Club, and became an academic bestseller nearly overnight.

More importantly, he believed that it was only through a painstaking reconstruction of economic science that the tide of history could be turned.

Mises lived to see the free-market movement reborn as a consequence of this book. He died knowing that he had given the Austrian School a new birth, and he was thrilled to see brilliant young students, especially Rothbard, picking up the torch. But he did not live to see how his ideas would have a broader impact in world affairs.

Human Action almost did not see the light of day. Only kind benefactors such as Lawrence Fertig, a friendly director of the Yale University Press, and good colleagues such as Fritz Machlup and Henry Hazlitt made it all possible. Mankind is very much in their debt.

But as we explore the political message of Human Action, I would first like to focus on an issue that was most pressing in Mises’s time, and continues to affect our present dilemma. This concerns a section of Human Action that is not often discussed, Chapter 34, on “The Economics of War.” He begins with this startling statement: “The market economy involves peaceful cooperation. It bursts asunder when the citizens turn into warriors and, instead of exchanging commodities and services, fight one another.”

Now, in 1949, this statement flew in the face of conventional wisdom. It was widely believed that World War II, far from being contrary to economic efficiency, was the means by which the US and its allies had pulled out of the Depression.

Government had funded a massive amount of capital expenditure, boosted aggregate demand, provided work to millions, and eliminated idle industrial capacity. War was not economically destructive, it was said, but constructive and productive.

Mises argued that war and the market economy, war and high civilization, are incompatible. To be sure, he said, sometimes people must fight wars. But if it is necessary, only the classical form of warfare is acceptable.

International law still applies. Civilians must be left out of the battle. Neither must the civilian economy be touched. Prices are not to be fixed and production is not to be planned. Wars should be defensive and limited in duration and scope, and conscription is out of the question.

Today, he says, the ideology of the total State has given us total war as well. It involves the whole of the civilian population and the whole economy. As Mises writes,

modern war is merciless, it does not spare pregnant women or infants; it is indiscriminate killing and destroying. It does not respect the rights of neutrals. Millions are killed, enslaved, or expelled from the dwelling places in which their ancestors lived for centuries.

Mises says this is a direct result of the ideology that makes the State the center of a nation’s life and worship. Indeed, when you consider the US’s aggressive war against Iraq, and the millions of lives that its bombs and embargo have cost, you gain a glimpse of what Mises was referring to.

This is why it is utterly preposterous for modern conservatives to pretend to combine love of the free society with love of the culture of warfare and military might. What too many conservatives mean when they invoke a strong national defense is not defense at all, but the preservation and expansion of empire.

But if we follow Mises, we see that if we want freedom, we must embrace a foreign policy that rose up with the advance of freedom in the 18th and 19th centuries. That is to say, we must reject militarism, imperialism, and foreign entanglements, and embrace trade instead of conflict as the basis of international relations.

The immediate retort from today’s pundits is that the US cannot afford to withdraw from a dangerous world. People are dying in Kosovo, Somalia, Haiti, Liberia, Rwanda, Sudan, Angola, Nigeria, Congo, and everywhere else, and the US, as the world’s indispensable nation, has a responsibility for doing something about it.

Left unexamined is the assumption that the US should destroy regimes that US political leaders dislike. Whence this impulse to free the world of State Department-defined sin, regardless of the cost in lives and freedom? Mises traces it to Wilson. “Under laissez-faire,” he says, “peaceful coexistence of a multitude of sovereign nations is possible.... The tragic error of President Wilson was that he ignored this essential point.”

Recall too that Wilson was no advocate of free markets. He was a progressivist academic and early socialist, as Roth-bard argued so persuasively. It should not surprise us that the president who gave us the income tax, the Federal Reserve, and the direct election of senators would also be the first president to believe that the US government has a holy mission to rid the world of all heads of state whose values are different from those celebrated in the District of Columbia.

It is long past time for us to come to terms with the fact that our country is host to an imperial power. We are loved the world over for our people and commerce, just as our government is loathed and despised.

If you believe in the old ideal of America upholding the light of freedom for the whole world to see, this is an uncomfortable truth. But nonetheless it is a priority for us to come to terms with the deadly damage that the US government has inflicted throughout the world, and to oppose it with all our might.

Mises also addressed another crucial issue of our time, namely poverty. As he points out, there was no question about poverty or riches in the precapitalistic era. For the huge majority of the population, there was only poverty.

Capitalism made possible continuously rising living standards for the masses. As a result, the only people who are poor by any historical standard are those unable to care for themselves, or who refuse to do so.

Contrary to the stereotype, Mises was a strong advocate of private charity. He celebrated both religious and secular groups that care for those who cannot care for themselves, as well as the families that provide care in times of need. He praises them for accomplishing marvels. And he also points out that private charity is dependent on the flourishing of a market economy, since the more capitalism increases wealth, the more is available for giving.

But Mises refuses to take at face value the claims of politicians who say they want to abolish poverty, since they also desire equality. The goal of equality, Mises says, poses a huge danger to the market economy. If pursued far enough, it is capable of destroying the market, which depends on inequality. That is to say, it is the radical inequality of individuals, the fact that people are unique, that brings about the desire to exchange goods and services to the mutual betterment of everyone involved.

It is no coincidence, Mises says, that the “most despotic system of government that history has ever known, Bolshevism, parades as the very incarnation of the principle of equality.”

In a similar vein, he writes that egalitarianism

is very clear in its abomination of large fortunes. It objects to big business and great riches. It advocates various measures to stunt the growth of individual enterprises and to bring about more equality by confiscatory taxation of incomes and estates. And it appeals to the envy of the injudicious masses.

The result, says Mises, is an accumulation of power in the hands of a political elite, the destruction of private savings, and the dramatic curtailing of private initiative. Until we learn to celebrate natural inequality, we cannot appreciate the greatest virtue of the market economy: its ability to coordinate the needs and desires of all individuals through peaceful exchange.

In Mises’s section on interventionism, he advances a theory concerning the inevitable exhaustion of the reserve fund, his phrase for the capital stock built up under capitalism. He predicts that as the reserve fund is increasingly looted by government, society will grow poorer and more stagnant and eventually the system will fail.

The market economy will then be reestablished only if the right intellectual conditions are in place. He confidently predicts in 1949 that we will exhaust the reserve fund in the United States, just as Britain had. And yet it does not appear that the interventionist State has exhausted itself. Government spending is at an all-time high and tax revenues are as well. Was Mises wrong?

Well, let’s look at the sectors of the economy that are most unworkable, most dilapidated, and most stagnant. We can start with the public schools, the postal service, the government transit system, the military, the courts, and the inner cities that have received so much attention from government over the last few decades.

In every case we see stagnation, waste, vast bureaucracy, and lack of innovation, that is, we see the hand of the State. These institutions are incapable of rational economic calculation, and they look increasingly ridiculous and broken-down when compared to the market-driven sectors.

So Mises was right: these institutions have largely exhausted themselves. In the coming decade, and possibly sooner, they will crumble. Meanwhile, the sectors governed by market forces and voluntary choices, which thus enjoy the fruits of innovative human energy, will continue to thrive and grow and eventually displace the old, creaking interventionist apparatus. Mises was right: interventionism is not a permanent system of social organization.

If we set out to list all the areas in which Mises was prescient, we would be here all afternoon. Just for starters, he demonstrated the economic impossibility of the socialist economy and foretold its collapse. He saw early on in his career that central banking would lead to inflation and business cycles. He predicted that social welfarism would lead to social disintegration. He saw that socialized medicine would produce the ironic result of declining health. He foresaw that interventionism would lead to the opposite results of those promised by its proponents.

I would like to draw your attention to a paragraph on page 859. Here Mises talks about the role of public opinion, a subject much in the news today. He writes that one of the great benefits of the market economy is that members of the public can benefit from technical expertise that they themselves do not possess.

You do not have to know how to build a website to order a book from Amazon.com. You do not need to know how to pilot a 747 to fly coast to coast.

But matters are different regarding economic policies. The practical use of the teachings of economics presupposes their endorsement by public opinion, Mises writes. He is very emphatic on this point.

[T]he best theories are useless if not supported by public opinion.... They cannot work if not accepted by a majority of the people. Whatever the system of government may be, there cannot be any question of ruling a nation lastingly on the ground of doctrines at variance with public opinion.

Because Mises held this view, he devoted enormous personal resources to teaching average people about the benefits of economic freedom. Here Mises was basing his practice on the theory of de la Boétie and Hume: that all governments—no matter how powerful they seem—are fundamentally fragile, and cannot rule solely by fear and coercion because the enforcers are always in the minority. They depend on some measure of public willingness to be ruled.

Thus all governments pursue policies that are in some measure—at least tacitly—supported by the people. Hence, the New Deal was only made possible by the dying public consensus in favor of the market economy. And hence, the always economically disastrous Soviet Union finally collapsed when the public turned against socialist theories and those who used them as a cover for their power.

But what can we say about our own time? What does public opinion support today? In the media, we hear that the public is very happy with the rule of Clinton. The polls seem to indicate support for his policies, a factoid which has caused supporters of the market much despair.

In an effort to sort out this mysterious subject, I would like to distinguish three methods of discerning public opinion. The first is that which Mises identified: the practical workings of the market economy. If we seek a society in which the desires of the public are manifest in the use of social resources, the market economy provides it. Only here do we have the means of discovering the values of the masses and signaling businessmen what to produce and in what quality and quantity.

The failure to understand this leads the likes of Janet Reno to complain that the wrong firm has temporarily won the software war, or that a toy retailer is too large. Others complain that the wrong products are chosen by the people. For example, cigarettes are more valued than copies of the state-of-the-union address.

But the truth is that the market is a daily and hourly plebiscite over who or what will be the winners and losers. The market has proven itself capable of serving a vast range of interests. Classical music afficionados are served as efficiently as those who prefer country music. Moreover, we can have some confidence in the outcome of this vote, because people are laying their own personal property on the line, and putting their money where their values are.

In all of human history, philosophers have sought to find a system of social organization that truly embodies the will of the people. With the market economy, we have that system.

How disgraceful that week after week on Sunday talk shows, we hear politicians explaining to us that the American people want this and the American people want that. How can they know? The polls they cite represent nothing but words in the air. Just once I would like one of these politicians to tell the truth: we know what the American people want based on which entrepreneurs and companies make the most money.

We cannot know whether the American people truly want national education standards, but we can know, because we have eyes to see, that they want imported cars that work, books delivered to their doorsteps overnight, and lots of do-it-yourself home improvement products. We know this because the companies that effectively deliver them are prospering.

Well, what about those public opinion polls? Their dirty secret is that they nearly always consist of random calls to people’s homes, and two-thirds of the people who pick up the phone hang up without answering the questions. If you’ve received a call from a polling firm, you know why people are reluctant. There is nothing in it for you. It feels like an invasion of privacy. You have no way of judging the veracity of the caller.

If your political opinions are politically incorrect—that is, if you disagree with respectable media opinion—you are far less likely to talk. An official pollster might as well be from the Justice Department, for all the citizen knows. Hence, participants tend to have conventional opinions they feel safe in spouting off to a perfect stranger on the phone. Most people are unwilling to express an un-PC opinion at a cocktail party, much less to a pushy character interrupting their dinner.

The question of whether a president ought to be removed from office falls into the potentially dangerous category. If the person agreeing to the poll senses that he will be regarded as a kook for saying the president ought to be tried and convicted, on the margin he will say what he is supposed to say and not say what he is not supposed to say.

The most absurd public opinion polls are those on taxes. Now, if there is one thing we know about taxes, it is that people do not want to pay them. If they wanted to pay them, there would be no need for taxes. People would gladly figure out how much of their money that the government deserves and send it in.

And yet we routinely hear about opinion polls that reveal that the public likes the tax level as it is and might even like it higher. Next they will tell us that the public thinks the crime rate is too low, or that the American people would really like to be in more auto accidents.

When Mises writes of public support for market economics, he is speaking on a different level. He is addressing the most basic ideological preferences of the public. What kind of society do we want to live in? One planned by government or one in which free individuals have control over the means of production and can accumulate wealth through serving the consuming public? A society in which the government confiscates income or one in which wealth can be passed to new generations? These are fundamental questions, and the ways they are answered really do determine, in the long run, how a political system is organized.

The public’s passion for a free society was destroyed by the intellectual class of the Progressive era, and this culminated in a dramatic shift in public opinion during the 1930s, away from market economics and toward a planning mentality. The years between 1930 and the mid-1970s were characterized by a notable lack of support for freedom among the intellectual classes.

The glorious news that I can report to you today is that this has begun to change. When the Mises Institute was founded in 1982, I was thrilled to find even one student interested in the thought of Mises and Hayek and Rothbard. Today, we are overwhelmed, and even lack the resources to serve them all as we would like. And these are not marginal students but rather the best, the ones so smart that even their left-wing professors dare not dismiss them.

Since 1982, we have developed a massive network of dissident intellectuals to fight the socialistic status quo on campus. And what thrills me most is not the numbers—after all, more will attend this year’s Socialist Scholars Conference than our own Austrian Scholars Conference—but rather the trend.

The energy, the excitement, the new ideas, and the genuine scholarship are all working in our direction. Meanwhile, the left is tired, spent, and increasingly desperate.

The obvious objection to my thesis is that the government is not getting any smaller. The regulators are on the march, and the judges are monsters. Never before in American history, outside of world war, has the government controlled so much of our lives and taken so much of our property.

All true: but let me tell you about an insight passed on to me by Yuri N. Maltsev, who worked as a Soviet economist during the Gorbachev era. Contrary to what the US press said at the time, the sheer viciousness of the State was more on display in the 1980s than under Brezhnev.

Gorbachev’s antidrinking campaign alone led to mass spying, mass arrests, and mass confiscation of income. Huge vineyards were plowed under. Distilleries were destroyed. People were frogmarched through the streets and dragged into jail in public humiliation. Moreover, Gorbachev raised instead of lowered taxes. Managers were granted less, not more, autonomy.

Yuri says that it was precisely this step-up in enforcement that led to the downfall of the Soviet system. The public consensus for Soviet statism was no more, and in a few years the apparatus of socialism came tumbling down.

His point is that at the end times for a regime, we can expect it to behave like a wounded rat, more vicious in its death throes than in full health.

Does that consensus against government really exist today? The seeds are planted and growing, but we have much work to do. At the Mises Institute, we are convinced, as was Mises, that it is far more important to raise up a new class of intellectuals than it is to get the right people elected to office.

It is also important to teach businessmen that what they do as a matter of course is extremely beneficial to their fellow man. As Mises says,

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.

And it is the natural commercial and professional elites of society, working with a liberty-minded class of intellectuals, that will ultimately tip the balance in favor of freedom, and bring about the end of the interventionist State.

It was the genius of Mises that he could even imagine this possibility in the dark days in which he wrote his treatise. But he knew that society was the product of a body of ideas, and to his mind, it was an unfortunate but reversible reality of 1949 that the wrong intellectuals and the wrong ideas had triumphed.

From time to time, I hear freedom lovers despair over our supposed lack of progress and the unlikelihood of victory. But the evidence of our eventual triumph is all around us. Mises, the master economist who showed us the way, did not have the benefit of seeing what we see, and yet he never gave up hope and he never stopped working for freedom.

The members and faculty of the Mises Institute have a special understanding of what it will take to succeed, and what it will require to defend the basis of civilization against those who would destroy it. Therefore it is our moral obligation, it is our intellectual duty, it is our profound privilege, to carry on the work of Mises, and to make proper use of the rich treasury of knowledge he left us, for the advancement of human liberty.

AGAINST DESTRUCTIONISM

[The following speech was delivered on the Mises Institute’s 20th anniversary celebration in Auburn, Alabama, October 19, 2002.]

How wonderful to be here with so many Members and supporters, scholars in our academic community, students whom the Mises Institute has backed now teaching yet another generation, so many friends of our work. It offers us all a chance to step back and observe what can be done for an ideal even now. And of course we recall those who gave so much but have since died, including Murray N. Rothbard, and, of course, Ludwig von Mises himself.

Mises ended his great book on Socialism, a scientific treatise on economics published in 1922, with a call for a moral crusade against what he decried as the ideology of destructionism. This was the theory of politics that claims to favor a better world, but is in fact the spoiler of what our forebears worked so long to create. Destructionism disparages commerce and bourgeois life, exalts the State, and rejects the proposition that the blessings of civilization have come from one source, and one source only: human freedom, with its inseparable twin, peace.

In the place of freedom and peace, destructionism gives us institutions that consume wealth, consume human energy, consume capital, consume lives, and drain away civilization.

Destructionism can take many forms, from terrorism to the construction of imperial States to taxation to the fomenting of war, for all these acts represent attacks on wealth, property, and life itself.

In light of the intellectual and political threat of destructionism, which Mises saw gathering momentum in the early 1920s, he wrote of our moral obligations:

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 out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang in 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.

Five years ago, at our 15th anniversary, I would not have begun a talk with that quotation, because much seemed to be heading in the right direction. We were in the upswing of the business cycle, the president was a laughingstock—always a good sign for human freedom—and the forces of liberty were racing ahead of the forces of tyranny. Free enterprise was making great strides in Russia and China. Public pressure was mounting for an end to the permanence of the welfare-warfare state. There were political controversies and movements calling for expansion of government power, but they were struggling more than they had in decades.

But here we are today, two decades after the founding of the Mises Institute, and many of the externals have dramatically changed. The recession continues a full 18 months after the experts said it was over. Government spending is increasing at a rate not seen since the days of LBJ, and deficits are back. The forces of mercantilism and socio-economic regimentation are experiencing political success.

The attacks on commercial enterprise as a profession rival the anticapitalist hysteria of the 1930s. Since 9-11, the march toward government control in every area of life has continued steadily, and the pace is quickening. The world is on the brink of war that is guaranteed to not bring peace but only more conflict, domination, and hatred. Most alarmingly, public attitudes appear to trope less toward love of liberty and more toward fear, nationalism, and deference to the State. If you are not inclined to defer, you risk being called a traitor.

Indeed, for many of us, these are hard times, times that tempt us to despair. Is there still cause for hope? Yes, I believe so. I’ve lived long enough to see dramatic political changes appear seemingly out of nowhere. How great it was when the expectations of nearly all political thinkers and commentators—not to speak of economists like Paul Samuelson—were thwarted by the sudden and thrilling collapse of the seemingly impenetrable structure of the Soviet government and all its international holdings.

In our own country, we have seen a loss of faith in the ability of the government to manage our economy. Daily we watch the forces of economic law beat back the central planners. As Mises demonstrated, statism of all varieties is unstable because it wars against human choice, and, moreover, contains within itself the seeds of its own destruction. All of this points to the truth that it is always a great mistake to despair for human freedom, even at the darkest hour. Mises did not, and neither should we.

Yet we must be realistic. The long-term changes required to preserve and further release the blessings of liberty require massive amounts of work, not so much in politics but in the world of ideas. This work must be both broad and specific, academic and popular, scientific and rhetorical. We must work with students, faculty, pastors, businessmen, and citizens. The target audience for education must not be artificially limited but all-embracing.

I am fortunate to live and work in a sector of our world that does just that and thereby provides great hope for liberty and learning in our time. I speak of course of the Mises Institute, which—thanks to men and women like you—has made immense strides in two decades, and, along with the Institute, the intellectual framework that we have daily worked to help grow and thrive.

The Mises Institute was founded to correct one of the great oversights in the history of the 20th century: the neglect of the ideas of Ludwig von Mises, those of his followers, and the Austrian School tradition that they represent. This neglect was mainly the consequence of a political-ideological turn that began before Wilson’s war and was sealed in the 1930s. The classical-liberal tradition in intellectual life had been in decline for decades, despite Mises’s attempt to give it a more rigorous foundation, and with the Great Depression, an ancient and yet new ideology arose to fill the vacuum.

It was the ideology of statism, and it was born in opposition to the market economy and with a political agenda that targeted private property, freedom in commerce, and decentralized political institutions. It flourished in what is wrongly called the Progressive Era, and its proudest achievement was World War I, which destabilized the old order that had helped protect society from the wiles of political fanaticism. The war also showcased a model of central planning that would inspire generations of would-be despots.

The new ideology was not called statism. In each country in which the revolt against freedom took root, the ideology took on a different permutation. In Germany, it was National Socialism, which sold itself as the only viable alternative to Communism. Russian Communism itself enjoyed a new vogue, as Stalin discovered the political benefit of uniting Marxism with an old form of Russian nationalism and diplomatic overtures. In Italy, the new creed was nicely summed up by Mussolini: “everything within the State, nothing outside the State, nothing against the State.”

The links among socialism, fascism, and political developments in the United States were not lost on the intelligentsia. In 1933, the same year that Franklin Delano Roosevelt abolished the gold standard, created the Tennessee Valley Authority, established the Civil Conservation Corp, and regimented industry under the National Industrial Recovery Act, the New York Times Magazine published glowing reports on the brilliance and vision of Professor Mussolini, even as academic treatises heralded the advances made by the central planning movement from Moscow, to Berlin, to Washington.

We must not flatter ourselves into thinking that the poison of totalitarian ideology infected only Russia and European states. What has happened in the United States differs in degree, not in kind. New Deal planners looked to Russia as a model for organizing the agricultural sector, and were inspired by an Italian fascist theoretician in imposing the NIRA and its Blue Eagle. And by way of further illustration, consider that in 1936, the economic treatise by English economist John Maynard Keynes that provided the economic rationale for the New Deal, appeared in Nazi Germany, with a preface by Keynes himself, in which he wrote:

The theory of aggregate production, which is the point of the following book, nevertheless can be much easier adapted to the conditions of a totalitarian state than ... conditions of free competition and a large degree of laissez-faire. This is one of the reasons that justifies the fact that I call my theory a general theory.

No matter what name it happened to be called in any particular country, statism was indeed the new “general theory” of world politics. The justifications and details matter far less than this general theme. It was the first time in history that the West had come to believe that the State and the State alone should be charged with complete control over society, economy, property, culture, family, and faith. The degree to which the full program of totalitarianism was to be put into effect was to be left to the discretion of political leadership, determined according to the circumstances of time and place.

Evaporating from view was another general theory, one that had developed over millennia and which achieved its scientific apogee in the work of Mises: I speak of the general theory of freedom. Seeing the likely absorption of his beloved home into the imperial Third Reich in 1934, he fled Austria for a safer academic position in Geneva and then, in 1940, racing with his wife Margit across France just in front of the advancing Nazi armies, escaped to Lisbon, and then the United States.

He had completed the great book that would later appear in English as Human Action. It is a brilliant work, perhaps the most important book written in the history of the social sciences. It would deserve to be studied and celebrated had it been written in any epoch, war or peace, freedom or tyranny.

But what is not often appreciated is that Mises wrote this treatise in a strange land at a time when the world he knew was falling apart, in the midst of the consuming fires of war, at a time when all the world agreed on little else but that freedom was a relic and the future belonged to the State.

The core thesis of his book was that government planning is a destructive force, and that civilization needs liberty from the State—any State, all States—to thrive. This argument ran contrary to all conventional wisdom, contrary to the approved doctrine of the smart set in Russia, England, France, Spain, Germany, Italy, and the United States.

Complicating matters, Mises had no assurance that his 1940 book would ever receive a wide circulation. There was no guarantee that the publisher could print enough copies to get it into academic libraries, or that the libraries would even be interested.

All of us are accustomed to looking for signs of hope in the political world, so that we might believe we have a prospect for success in our efforts, but there were few, if any, signs of hope for Mises, as he wrote those six long years in Geneva, among many signs of impending doom. Why did he continue? Because he believed it was the right thing to do, and because he knew that if he did not do it, it might not be done. He carried an immense weight on his shoulders because he believed that this was his calling as a scholar and a man.

Having completed his masterwork, and awaiting its publication, he began an aggressively political book designed for a larger audience, and it was completed in 1938. Its original title was, In the Name of the State. It summed up all political trends of the time. It was this work, written six years before Hayek’s Road to Serfdom, that identified the essentially shared ideological traits of the nationalist socialism of the Nazi variety and international socialism of the Communist variety. The book would later appear in English as Omnipotent Government: The Rise of the Total State and Total War.

Setting sail for the United States in 1940, with no assurance of a teaching position, very little money, and facing a career in another land where statism had also clearly taken hold, any other intellectual might have despaired or even cracked under the pressure. Mises, instead, continued to work and write. He wrote an autobiography of his European years and essays on economics and politics, both popular and scientific. And when an opening appeared in the United States, he published in rapid succession Omnipotent Government, Planned Chaos, Bureaucracy, and, in 1949, Human Action.

Bureaucracy in particular is an interesting case because it was clearly designed, not just as an attack on European bureaucracy, but also on the US bureaucracy that was then exercising astonishing control over all aspects of American life for purposes of the war. Clearly, Mises’s ideas were destined to be no more popular with the US regime than they were in Austria during the vogue of Communism and the rise of the Nazis.

Mises never stopped working and teaching, even after his ideas stopped reaching a large audience, even after it appeared that old-style liberalism had no future, even after he had been declared to be wrong about socialism, even after he was refused the academic status that he deserved. In the course of two decades, he had vastly expanded his range of academic work, established economics on a sounder scientific foundation than it had ever had been, and stood up courageously to the most evil political trends of his time, perhaps all time.

He had done amazing and heroic things, accomplishments that made him worthy to be included among the great intellectuals in the history of ideas. And yet look what it got him: in those same two decades, he had gone from being a celebrated intellectual force on the Continent to becoming almost an invisible person in the world of ideas, without even a university-paid teaching post.

When his manuscript for Human Action was sent out for review from Yale University Press, the publisher received highly skeptical comments, even from Mises’s own former students. Why would they fail to help him? Well, many of them had moved on to high academic posts after making their peace with Keynesianism. Mises’s vision of a society and economy that organizes itself without the guidance of omnipotent government seemed hopelessly out of date, and an unwelcome reminder of the gullibility of a previous generation of social scientists. Mises was not on the cutting edge, they believed, and in a world of ideas driven more by politics than by the demands of truth, this was the worst thing one could say about him.

Recently an economist who works for a federal agency commented that when you look at Mises’s career, and the nosedive it took after the Second World War, it is clear that Mises was his own worst enemy. This economist suggested that if Mises had played his cards right, not been so dogmatic about his principles, had been more sensitive to the ideological constraints of his time, and had been less aggressively critical of the planning State, he would have done better in his career.

In one sense, this critic is right: Mises was surely aware that he was not advancing himself, and that every manuscript he produced, every book that came to print, was harming his career ever more. But he didn’t back off. Instead he chose to do the rarest thing of all in academia: he chose to tell the truth regardless of the cost, regardless of the trends, regardless of how it would play with the powers that be.

Mises might have been his own worst enemy in terms of his professional career, that’s true, but he was the friend of truth, of morality, of intellectual integrity, of principled attachments to certain fixed ideals. It seems to me that if we are going to place blame for the awful reality that one of the century’s greatest intellectuals received such shabby treatment, it should not be with the man who dared to tell the truth, but with those who tried to make him go away precisely because they did not want to hear the truth or did not understand it.

Did Mises feel remorse about the manner in which he managed his career? In a posthumously published memoir, he repented only of one thing: what he thought of as his willingness to compromise! Never did he regret his intransigence.

The traits that led Mises to do what he did are so rare in academia that they cry out for an explanation. Murray Rothbard once wrote an essay in which he grappled with the issue of why some academics ride with the tide of politics or just keep their heads down during a storm, and why others stand up against trends, take political and personal risks, and fight. In this essay, Rothbard concludes that we cannot fully explain it:

In the ultimate sense ... no outside person, no historian, no psychologist, can fully explain the mystery of each individual’s free choice of values and actions. There is no way that we can fully comprehend why one man trims his sails to the prevailing winds, why he “goes along to get along” in the infamous phrase, while another will pursue and champion the truth regardless of cost....

Economic science may be value-free, but men can never be, and Ludwig von Mises never shirked the responsibilities of being human.

As for Mises and his school of old-style liberalism, they did begin a long period of decline after World War II. But in considering the intellectual history of the last 50 years, I’ve long been struck by the place of Murray Rothbard in the constellation of events. Along with a handful of other academics during the late 1950s and early 1960s, he chose an intellectual path very different from his contemporaries. Rather than go along with the prevailing trends, he charted a different course, one that followed in the tradition of Mises, knowing full well that the choice was an enormously costly one.

When I think of Murray before his much-welcomed appointment to a named chair at the University of Nevada, Las Vegas, I think of him at Brooklyn Polytechnic, in an office smaller than the sound booth at the back of this room, trying to support a wife in Manhattan on a salary of $26,000 per year. With degrees in mathematics and economics from Columbia, and a vita that included a major economic treatise written before the age of 35, he was not lacking in academic credentials or accomplishments. What he lacked was a willingness to go along. Once having charted an independent course, with full knowledge of where it would land him, he never complained and never looked back.

From his tiny office, he reconstructed the historiography of the American Colonial experience, rewrote American banking history, founded modern libertarianism, extended the theoretical dimensions of the Misesian paradigm, wrote the first general treatise on economics since Human Action, pioneered a new typology of interventionism, pushed out the boundaries of the theory of the free society, corresponded with hundreds of intellectuals around the world, and spread his effective help and good cheer and optimistic outlook as widely as he could. Though he was never in a position where he could direct PhD dissertations, he had wide influence through his books and his personal friendships.

Rothbard faced dangerous trends in public life and battled them heroically. In his youth, he saw positivism and Keynesianism become the dominant paradigms in economic theory, and he set out to combat them. At the same time, the intellectual basis of American conservatism underwent a shift from a love of American liberty to an embrace of the warfare state and even the welfare state. He eventually became known as the State’s greatest living enemy. And we know the fate of such people in all times.

But he never gave up. In fact, anyone who knew Murray will tell you that his life was filled with joy, in public and private. Always optimistic about the prospects for liberty, he relished every intellectual battle and inspired every student with whom he came in contact to take up the cause, and become an enthusiastic and relentless scholar for liberty.

Later, he helped the Mises Institute get its start, founded a new journal, wrote a massive history of economic thought, and dedicated himself to securing a place for the Austro-libertarian and Misesian schools in academia. We might ask what would have happened to the Misesian legacy—indeed the cause of liberty itself—had he not dedicated himself so completely to the task.

Conjectural history is always risky business, but I think we can say for sure that the Austrian School, not to speak of the Mises Institute, would not be what they are today, and a hope for the future of freedom would not be so much in evidence.

I single out these two men, not because they are the only ones, but because they are exemplars in how to conduct one’s life in the face of adversity and very long odds. We gather here tonight facing similarly long odds, and we are all too aware of this fact.

I am often asked what the Mises Institute hopes to accomplish. Both Mises and Rothbard were undoubtedly asked the same question. I think their answer would have been very simple: they hoped to write what is true and do what is right, and to do it with enthusiasm and vigor. As an Institute, we have hoped to create opportunities for other intellectuals in this tradition to do the same. If we do nothing else, that is enough. And yet, it is everything.

It is often said of the Mises Institute what was said of Mises: we are our own worst enemy. We don’t have many friends among the powerful. We do not court the media. We do not bend the knee to the political class. We refuse to buy into the political choices the regime presents us. Our intellectual ambitions are deeply contrary to the current trends.

We can plead guilty on every point. The Mises Institute was founded to carry out his vision of an independent source of intellectual support for young minds that have academic vocations. I think of the institute in Geneva that took in Mises during those hard times, when academia was so politicized that an entire generation had to find somewhere to practice the vocations of research and writing. In Geneva, there was sanctuary. In some ways today, the Mises Institute serves a similar role, and that role as a sanctuary could become more important in the days ahead.

As for our teaching programs, the goal has never been to indoctrinate anyone, but rather to make sure that young freedom-minded intellectuals receive the backing, encouragement, and teaching they need to pursue a rich life of writing and research. Their influence works toward overturning the reigning intellectual paradigm.

The Mises Institute has worked to bring this about, and today, the Institute is a life-support system for the worldwide libertarian movement, the top source for scholarship in the tradition of the Austrian School, the leading publisher of free-market materials, and a promoter of the best new books on history, economics, and philosophy.

Have we made a difference? There can be no doubt. Working one-on-one for two decades, the influence of the Institute has been growing exponentially. Whereas we were once grateful to place one new faculty member per year, such placements are now so common that we can barely track them all. Whereas we once took a leap of faith with every teaching conference we scheduled, we now enjoy the luxury of selecting from the piles of applications for every program we offer. And many of our best applicants are students of our former students, now teaching.

Our journals and books achieve a wider circulation than ever before. Mises.org is indisputably the most highly-trafficked, market-oriented research site on the Web, easily beating any comparable organization in the world and crushing even mainstream professional associations. Academic honors granted by our faculty are highly regarded the world over. And most incredibly of all, association with the Mises Institute has become an asset even in job searches.

We couldn’t be more pleased about the progress so far, and it inspires us to look to the next 20 years, which are crucial. Many of the most hard-core socialists now teaching will be retiring. Many others will just lose faith in their ideals. The question is: what worldview, what theory of economics, what political ideal, will replace what the left once held out as a model? The Austrian School, in the tradition of Mises and Rothbard, offers precisely the radical and attractive alternative.

Every day we see minds being changed. Three years ago, it was hard to find economists at major investment houses who even noticed Austrian business cycle theory. Today, many of the top ones are busy educating themselves. So too in departments of finance, economics, philosophy, history, and political theory. In the marketplace of ideas, our ideas are on the march. The journals, the books, the students, the daily hard work of our faculty and staff, all add up to create something much larger than the sum of its parts, and much larger than we ever dreamed all those years ago.

Anyone who works with or for the Mises Institute can confirm that our goal was never growth alone, never attention alone, never public relations alone, never large conferences alone. We never set out to build a great institution as an end in itself. The goal, the driving passion, of the Mises Institute has been to create the conditions for truth to be told, to make available a setting where freedom is valued and practiced.

If there is anything to be said for the difficult times in which we live, it is that they are a reminder that our mission is far from complete. The forces of destructionism are always waiting for an opportunity to rob us of the blessings of civilization. They do not always hail from far-flung terror groups. Many are tenured in American universities. Many work as editors and producers in our nation’s media. Many hold high positions in government. Mises believed that the best way to defeat them was to say what is true. Against the idea of liberty, he said, the fiercest sword of the despot is finally powerless.

The many supporters of the Mises Institute are what make it possible. How grateful we are to them, and to all of you here tonight, and to the thousands of others, from around the country and the world, who are with us in spirit.

All have dedicated themselves to achieving what may appear improbable. To seek such a thing requires a leap of faith. But it is precisely those who take that leap who represent the best hope for the future of the world. As we look to the next 20 years, thanks to the Mises Institute and those who support her, we need not despair, but rather look to a future in which liberty and learning triumph against all odds.

Your faith is evidence of freedom unseen, but, God willing, our children, their children, and every generation after, will live and breathe it. May they never take it for granted.