Jorg Guido Hulsmann, professor of economics at the University of Angiers in France has written a magesterial biography of Ludwig von Mises, running over 1100 pages. This allows sufficient space to permit generous coverage of the historical and intellectual background with close attention to his major works and the salient features of his life and social relations.Mises (1881-1973) is one of the sleeping giants of the 20th century. For many decades he was the leader of the “Austrian school” of economics and social thought but he is scarcely a household name, even among economists and classical liberals where he should be well known and appreciated.
It is appropriate that he lived almost from the time that Carl Menger published the book that launched the Austrian school to the year before the conference at Royalton in the US that signaled the revival of the tradition.
The Austrians adopt an evolutionary or ecological approach to social and economic systems to emphasise the role of individual initiative and planning in a framework of traditions and institutions. They were virtually buried in professional circles by the rise of Keynes and mathematical economics. The Austrians are skeptical of mathematics and they tend to be robust free traders and so they were dismissed for many years as unscientific and reactionary. A head count in the professional association in the US indicated that they are out-numbered by other schools by 50 to 1, despite robust growth since the revival of the 1970s.
The first quarter of the book is Young Ludwig and The Austrian School. This sketches the social, political and intellectual context for his life and work, including an endearing portrait of Carl Menger, the founder of the school. The second quarter is Officer, Gentleman, Scholar, covering the start of this career, his first major scholarly works on monetary theory, socialism and the politics of nationalism, and his involvement with Max Weber in the politics of the social science society. The third is Mises in his Prime including the years he spent in Geneva with the opportunity to address intellectual issues without the distraction of public administration or teaching. The fourth is Mises in America, a time when the school was practically invisible. This includes some little-known insights on the internal strains of the Mont Pelerin Society and some gossip from the Ayn Rand circle in New York which for a time included libertarians like Murray Rothbard and von Mises himself.
When Mises was born the Austro-Hungarian empire encompassed Austria, Hungary, Slovakia, the Czech Republic, as well as parts of present-day Poland, Romania, Italy, Slovenia, Croatia, Bosnia and Herzegovina, and Serbia and Montenegro. In earlier times Austria was the centre of the Holy Roman Empire until defeat at the hands of the French and Germans at Austerlitz in 1806 precipitated a long period of decline. After World War I the empire was dismembered in the name of national self-determinism, and so the Balkans were Balkanised, laying the foundations for further conflagrations up to the present day. The glory of the empire at its height can be seen from the number and size of the public buildings, monuments and museums in Old Vienna today.
Writers, scholars, administrators, entrepreneurs and revolutionaries moved backwards and forwards between the major centres of the empire. They created a rich tradition of culture and learning that was multicultural in a way that is scarcely comprehensible to Anglo-Saxons. With at least ten languages in the empire, they fed on the thoughts of Russians, Poles and Germans with the same facility that they absorbed ideas from England and France, thought their accents betrayed them when they fled to safety in the west during the 1930s.
Some of the most important threads of modern thought passed through Vienna, not necessarily through the university but also through the coffee shops and private seminars. It is impossible to understand the intellectual life of Vienna between the wars without reference to the great private seminars. The best known were the circles of Schoenberg (progressive music) and the Vienna Circle of logical positivists. Others included a Freud group and seminars convened by Ludwig Mises, Karl Menger (son of the great economist) and Richard Mises (brother of Ludwig).
Mises was born of Jewish parents in Galica, now located in the Ukraine. His father was an engineer and his brother Richard was a physicist and mathematician. The family moved to the ancestral home in Vienna where he took a doctorate in law. In 1903 he read Carl Menger’s classic book and he recorded that this experience “made an economist of me”. In 1906 he took a doctorate in economics and from 1909 to 1934 he worked in the Austrian Chamber of Commerce , much of the time as the chief of the finance department, giving advice to the Government on monetary and financial policy. This was broken during the Great War when he served with the artillery in the Ukraine.
The first of his three major books was The Theory of Money and Credit (1912) which applied the concept of marginal utility to money and also set forth the first version of the Austrian theory of the trade cycle. In 1913 he was appointed as a Professor the the university, not a paid post but one that entitled him to give lectures if he could attract an audience. Due to Menger’s inactivity during the 25 years before he died in 1921 and Boehm-Bawerk’s early death in 1914 it was left to Mises to consolidate the Austrian program, not by teaching undergraduate students but through his writing and his seminar where the leading lights included Jayek, Haberler, Machlup, Morgenstern in economics as well as Alfred Schutz and Felix Kaufman in sociology and philosophy respectively.
He saw what was likely to happen when Hitler came to power and he moved from Vienna to Geneva in 1934. When Hitler swallowed Austria some Nazi agents raided his apartment and stole his library so he was lucky to escape alive. He no longer felt safe in Switzerland and he moved on to the US in 1940. His library ended up in Moscow, neatly catologued and filed, after the Russians captured a trainload of German booty late in the war.
Through the 1920s and 1930s he wrote a series of papers on philosophical and methodological issues that underpinned his approach to economics and the socal sciences at large. It is interesting to recall the time when Mises spent his days trying to steer the Austrian economy and the nights grappling with the fundamentals of economics (Grundprobleme der Nationalökonomie). Not far away in the same town Karl Popper taught high school maths and science, then went home to work on the fundamentals of scientifc method (Grundprobleme der Erkenntnistheorie). It seems that the two titans might have well have been on different planets because the twain never met in any satisfactory manner.
In Geneva he completed the German version of his third major work which the book that later appeared in English as his third major work Human Action (1949). There is an exciting section on his escape to the US through France as the Germans moved in.
There are some nice human touches. Like Popper, Mises learned to drive in middle age and enjoyed it so much that he took to long distance touring with his wife. At least twice he almost drove off the road in the Alps and there were two moderately serious accidents. Popper met me at High Wycombe Station and drove to his home a short distance away. I am pleased that it was a short distance and that we were not driving in the Alps. His reasearch assistant tactfully said that Popper had a “positive attitude” to driving!
The Mises Institute published the book after one academic press rejected the ms for its size and another wanted to price the book well over $100US. It is on sale from the Institute for less than $50. It is beautfully produced as well.