Ludwig von Mises

Ludwig Heinrich von Mises (; German: [ˈluːtvɪç fɔn ˈmiːzəs]; September 29, 1881 – October 10, 1973) was an Austrian and American political economist and philosopher of the Austrian school. Mises wrote and lectured extensively on the social contributions of classical liberalism and the central role of consumers in a market economy. He is best known for his work in praxeology, particularly for studies comparing communism and capitalism, as well as for being a defender of classical liberalism in the face of rising illiberalism and authoritarianism throughout much of Europe during the 20th century.

Since the mid-20th century, both libertarian and classical liberal movements, as well as the field of economics as a whole, have been strongly influenced by Mises's writings. Economist Tyler Cowen lists his writings as "the most important works of the 20th century" and as "among the most important economics articles, ever". Entire schools of thought trace their origins to Mises's early work, including the development of anarcho-capitalist philosophy through Murray Rothbard and the contemporary Austrian economics program led by scholars such as Peter Boettke at George Mason University.

Mises's most influential work, Human Action: A Treatise on Economics (1949), laid out his comprehensive theory of praxeology—a deductive, a priori method for understanding human decision-making and economic behavior. Rejecting empirical and mathematical modeling, Mises defended classical liberalism and market coordination as products of rational individual action. Beyond his published works, Mises shaped generations of economists through his longstanding private seminar in Vienna and later as a professor at New York University. His ideas deeply influenced students such as Friedrich Hayek, Murray Rothbard, and Israel Kirzner, all of whom helped inspire the rise of postwar libertarian institutions in the United States, including the Foundation for Economic Education and the Ludwig von Mises Institute.

Mises received many honors throughout the course of his lifetime—honorary doctorates from Grove City College (1957), New York University (1963), and the University of Freiburg (1964) in Germany. His accomplishments were recognized in 1956 by his alma mater, the University of Vienna, when his doctorate was memorialized on its 50th anniversary and "renewed", a European tradition, and in 1962 by the Austrian government. He was also cited in 1969 as "Distinguished Fellow" by the American Economic Association.

Ludwig Heinrich Edler von Mises was born on September 29, 1881, into an Austrian-Jewish family in Lemberg, then the capital of the Kingdom of Galicia and Lodomeria, Austro-Hungarian Empire, and now part of Ukraine. A few months prior, his paternal great-grandfather Mayer Rachmiel Mises had been ennobled, receiving the honorific Edler (indicating a non-landed noble family) and the right to add the nobiliary particle von to his name; the Mises family had been involved in financing and constructing railroads. Mises's mother, Adele (née Landau), was a niece of Joachim Landau, a Liberal Party deputy to the Imperial Council of Austria. His father, Arthur von Mises (died 1903), was stationed in Lemberg as a construction engineer with the Czernowitz Railway Company. Mises had a younger brother, Richard, a mathematician, probability theorist, and Vienna Circle member.

By the age of 12, Mises spoke fluent German, Polish, and French, read Latin, and could understand Ukrainian. From 1892 to 1900, he was educated at the Akademisches Gymnasium in Vienna. He then entered the University of Vienna to study law and the social sciences, initially in preparation for a career as a civil servant. There, Mises first encountered the works of Carl Menger, whose book Principles of Economics came to influence him significantly. In 1906, he was awarded his doctorate from the school of law. From 1913 to 1938, he was a professor at the university and mentored Friedrich Hayek.

Although Ludwig von Mises identified as Austrian, his upbringing in Lemberg (now Lviv), the capital of Austrian Galicia, deeply influenced his early intellectual development. The region was a cultural "melting pot" where the Polish landed gentry and intelligentsia held significant social influence. By the age of 12, Mises was fluent in Polish, which was the dominant language of the city's administration and high culture.

Mises's first major scholarly work, published in 1902, was an economic history of the region titled The Development of the Relation between Lord and Peasant in Galicia (1772–1848) (Die Entwicklung des gutsherrlich-bäuerlichen Verhältnisses in Galizien). In it, he analyzed the transition from feudalism to a liberal land-tenure system, showing an early interest in the mechanics of legal and economic freedom.

In the years from 1904 to 1914, Mises attended lectures given by Austrian economist Eugen von Böhm-Bawerk. He graduated in February 1906 (Juris Doctor) and started a career as a civil servant in Austria's financial administration.

After a few months, he left to take a trainee position in a Vienna law firm. During that time, Mises began lecturing on economics and in early 1909 joined the Austrian Chamber of Commerce and Industry, serving as economic advisor to the Austrian government until he left Austria in 1934. During World War I, Mises served as a front officer in the Austro-Hungarian artillery and as an economic advisor to the War Department.

Mises was chief economist for the Austrian Chamber of Commerce and was an economic advisor of Engelbert Dollfuss, the austrofascist Austrian Chancellor. Later, Mises was economic advisor to Otto von Habsburg, the Christian democratic politician and claimant to the throne of Austria (which had been legally abolished in 1918 following the Great War). In 1934, Mises left Austria for Geneva, Switzerland, where he was a professor at the Graduate Institute of International Studies until 1940. Mises was invited to the Colloque Walter Lippmann, organized in Paris in 1938, and was a founding member of the Mont Pelerin Society in 1947.

While in Switzerland, Mises married Margit Herzfeld Serény, a former actress and widow of Ferdinand Serény. She was the mother of Gitta Sereny.

During World War I, Ludwig von Mises was drafted by the Austrian government, despite being ideologically and morally opposed to the war. Like many who served in the front lines, he rarely spoke about his personal experiences, and even his Memoirs (1940) omits a detailed account of his time in the military. However, he briefly alluded to the harsh realities of war in his seminal work, Human Action (1949):

Nothing is fair in war. It is not just that God is for the big battalions and that those who are better equipped defeat poorly equipped adversaries. It is not just that those in the front line shed their life-blood in obscurity, while the commanders, comfortably located in headquarters hundreds of miles behind the trenches, gain glory and fame. It is not just that John is killed and Mark crippled for the rest of his life, while Paul returns home safe and sound and enjoys all the privileges accorded to veterans.

It may be admitted that it is not "fair" that war enhances the profits of those entrepreneurs who contribute best to the equipment of the fighting forces. But it would be foolish to deny that the profit system produces the best weapons.

In Memoirs (1940), the only thing he had to say about the war was how it affected his work:

By the end of 1917, I was no longer at the front, but worked in Vienna in the economics division of the Department of War. I wrote only two small essays during those years.

In 1927 Ludwig von Mises alongside fellow economist Friedrich August von Hayek established the Austrian Institute for Business-Cycle Research. The institute was modeled after Ernst Wagemann's Berlin-based Institute for Business-Cycle Research. After the war, the institute was revived by Franz Nemschak as the Austrian Institute of Economic Research.

In 1934, Mises fled from Austria to Switzerland to escape the Nazis, and in 1940 he emigrated from Switzerland to the United States. On the day German forces entered Vienna during the Anschluss, they raided his apartment, confiscating his papers and library. These were believed to be lost or destroyed until rediscovered decades later in the Soviet archives in Moscow by Richard Ebeling and his wife Anna. At that time, Mises was living in Geneva, Switzerland. However, with the imminent Nazi occupation of France threatening to isolate Switzerland within Axis-controlled territory, he and his wife fled through France and reached the United States via Spain and Portugal.

In 1940, Mises and his wife arrived in New York City. He had come to the United States under a grant by the Rockefeller Foundation. Like many other classical liberal scholars who fled to the United States, he received support from the William Volker Fund to obtain a position in American universities. Mises became a visiting professor at New York University and held this position from 1945 until his retirement in 1969, though he was not salaried by the university. Businessman and libertarian commentator Lawrence Fertig, a member of the New York University Board of Trustees, funded Mises and his work.

For part of this period, Mises studied currency issues for the Pan-Europa movement, which was led by Richard von Coudenhove-Kalergi, a fellow New York University faculty member and Austrian exile. In 1947, Mises became one of the founding members of the Mont Pelerin Society.

In 1962, Mises received the Austrian Decoration for Science and Art for political economy at the Austrian Embassy in Washington, D.C.

Mises retired from teaching at the age of 87 and died on October 10, 1973, at age 92. He is buried at Ferncliff Cemetery in Hartsdale, New York. Grove City College houses the 20,000-page archive of Mises papers and unpublished works. The personal library of Mises was given to Hillsdale College as bequeathed in his will.

At one time, Mises praised the work of writer Ayn Rand, and she generally looked on his work with favor, but the two had a volatile relationship, with strong disagreements for example over the moral basis of capitalism. The two thinkers' disagreement reached a critical point during a dinner conversation where Mises reportedly lost his temper and agreed that Rand was "a little Jewish girl who doesn’t know anything" during a heated argument, despite himself being Jewish. This was thought by the audience to be caused by impaired hearing on his part.

As a result of the economic works of Ludwig Von Mises, the Mises Institute was founded in 1982 by Lew Rockwell, Burton Blumert, and Murray Rothbard, following a split between the Cato Institute and Rothbard, who had been one of the founders of the Cato Institute. It was funded by Ron Paul.

The Mises Institute offers thousands of free books written by Ludwig Von Mises, Murray Rothbard, Hans-Hermann Hoppe, and other prominent economists in e-book and audiobook format. The Mises Institute also offers a series of summer seminars.

Ludwig von Mises made significant contributions to the field of economics initially by seeking to integrate the teachings of Carl Menger and Eugen von Böhm-Bawerk into the classical economic framework of his time. He recognized the need to reformulate economic epistemology, particularly in response to the challenges introduced by the subjective value theory and the subjectivity of individual agents. Later, Mises made groundbreaking contributions to economic theory, particularly in advancing the Austrian School of Economics by developing his own transformative ideas, including praxeology—a systematic framework for understanding human action—and the economic calculation problem, which challenged the feasibility of socialism. Mises was also a forerunner in the movement to unite microeconomics and macroeconomics, arguing that macroeconomic phenomena have microeconomic foundations—nearly 50 years before this perspective was widely adopted by mainstream economics.

Ludwig von Mises acknowledged that, by the time of his writing, many core concepts from the Austrian school of economics had been integrated into mainstream economic thought. He noted that the distinctions between the Austrian school and other economic traditions had blurred, making the label "Austrian" more of a historical reference than a marker of a distinct, contemporary doctrine. This integration occurred as concepts like marginal utility, opportunity cost, and the importance of subjective value became widely accepted among economists.

In 1920, Mises introduced the economic calculation problem as a critique of socialist states which are based on planned economies and renunciations of the price mechanism.

In his first article "Economic Calculation in the Socialist Commonwealth", Mises describes the nature of the price system under capitalism and describes how individual subjective values are translated into the objective information necessary for rational allocation of resources in society. This reframed socialism as a technical problem rather than a moral or political one. Mises argued the absence of market pricing results in inefficiencies within the economic system because central planners are deprived of the crucial information regarding opportunity costs needed to make informed decisions about resource allocation. He wrote that "rational economic activity is impossible in a socialist commonwealth". While this essay did not receive much attention at the time, it would go on to serve as the backbone of many of the works of F. A. Hayek, and debate surrounding it would be pivotal in the Austrian revival that surrounded Hayek's 1974 Nobel Prize.

Mises developed his critique of socialism more completely in his 1922 book Socialism: An Economic and Sociological Analysis, arguing that the market price system is an expression of praxeology and cannot be replicated by any form of bureaucracy.

Mises used the term "catallactics", which originally came from the Greek word katallasso, meaning 'to exchange' or 'to reconcile', to describe the theory of market exchange in economics.

Mises emphasized that catallactics explains prices as they are, rather than as they "should" be. By adopting a value-neutral stance, it does not judge whether a price is "too high" or "too low", or "fair" or "unfair"; instead, it seeks to explain why a price exists at a particular level based on the interplay of supply and demand.

By focusing on prices as they are, catallactics aimed to avoid the pitfalls of culturally or ideologically biased assumptions, where economic policies are designed around idealized notions of what "ought" to happen, (i.e. some works that aim to prescribe the economy, not just describe it) which Mises argued carried them outside of the realm of the descriptive (or wertfrei) sciences. For Mises, introducing normative judgments transforms economics from a descriptive science into an ideological discourse.

In his magnum opus Human Action (1949), Mises established praxeology as the foundational methodology for the social sciences, offering a systematic approach to understanding human behavior and decision-making. This work laid the groundwork for a comprehensive economic theory that accounted for the subjective nature of value and the complexity of individual choices, marking a significant departure from the objective models of classical economics.

Mises used praxeology to further critique socialism, arguing that it is fundamentally flawed because it treats economics as a solvable, static problem akin to mathematical or engineering challenges. Instead, he argued, economics involves an open-ended coordination process that aims to align the diverse and equally valid subjective appraisals of millions of individuals.

However, while praxeology has been influential within the Austrian school of economics, it is not widely adopted in contemporary economic practice, which predominantly relies on empirical and mathematical methods to analyze and predict economic phenomena. Most mainstream economists view praxeology as lacking empirical validation and testability, thereby limiting its acceptance as a scientific approach within the broader discipline.

Friends and students of Mises in Europe included Wilhelm Röpke and Alfred Müller-Armack (advisors to German chancellor Ludwig Erhard), Jacques Rueff (monetary advisor to Charles de Gaulle), Gottfried Haberler (later a professor at Harvard), Lionel, Lord Robbins (of the London School of Economics), Italian President Luigi Einaudi, and Leonid Hurwicz, recipient of the 2007 Nobel Memorial Prize in Economic Sciences.

Economist and political theorist Friedrich Hayek first came to know Mises while working as his subordinate at a government office dealing with Austria's post-World War I debt. While toasting Mises at a party in 1956, Hayek said: "I came to know him as one of the best educated and informed men I have ever known".

In his economic studies, Mises concerned himself with the persons making decisions. He maintained that organizations such as the government, class, and association did not perform any action since only persons could perform actions. Group action depended upon the perception of the people forming the group. Mises stated that there had to be different approaches for social science than those used in natural sciences due to the purposeful nature of the actions of human beings. As reported by Reinhard Neck, Mises has gone to extremes in methodological individualism, which was inspired by Max Weber.

In the theory of Mises, "action" denotes a situation where a person engages in an act intentionally to achieve an objective. When Mises refers to actions as being "rational," it does not imply that all actions undertaken by individuals are necessarily intelligent, informed, and effective. What he means is that individuals apply some mechanism in an attempt to realize their objectives.

"Mises coined the word 'praxeology' for the investigation of all human action." He considered economics as the highest developed branch of praxeology. The starting point of his approach was a single self-evident proposition that men act purposefully. Then he logically deduced from this what consequences follow from human actions and decisions. Mises held that the basic propositions of praxeology are known prior to any experience and thus cannot be discovered through observations. This is why he regarded such conclusions as infallible as those of mathematics. Cardwell says Mises used an apriorist method — the core ideas and the conclusions drawn from them were based on logic, not on testing with real-world data.

Various scholars offer their views on Mises’ apriorism differently. While some refer to it as an extreme form of rationalism, others regard it as a milder one, which is either fallibilist, pragmatic, or conventionalist. As noted by Scott Scheall, “these interpretations do not readily fit together,” and he goes on to warn that “no one interpretation does full justice to what Mises had in mind or to the general methodology of the Austrians.” Cardwell points out that Austrian economists have not all used the same method. Many of them did not follow Mises's apriorism.

Mises never rejected the empirical or historical approach to inquiry. His position was that considering historical facts or statistics cannot confirm or refute the universal principles of praxeology. The reason was that human actions do not generate constants which can be measured experimentally; economics generally lacks such controlled experiments with only one variable being altered. This approach he labeled "methodological dualism" in his book "Theory and History" since the study of human thought and action requires a separate approach than the study of natural phenomena.

Ludwig von Mises was a steadfast advocate of liberalism, particularly classical liberalism. He believed that while Marx provided a powerful critique of capitalism, he failed to offer a constructive vision of a socialist society that could be practically implemented. To learn from this mistake, after publishing his lengthy critique of socialism, Theory and History: An Interpretation of Social and Economic Evolution, in his next book, Liberalism (1927), Mises articulated a positive vision of free society rooted in individual liberty, private property, free markets, and limited government coercion. He argued that these principles are essential for creating a peaceful and prosperous society.

Throughout his life Mises argued that only a free market system, where individuals are free to pursue their own interests, can efficiently allocate resources and maximize social welfare. He was critical of central planning, in particular due to the Economic calculation problem.

In his 1956 book The Anti-Capitalistic Mentality, Mises explored the psychological roots of intellectual opposition to the free market; in his view, this opposition comes from an unwarranted resentment toward the necessity of obeying mass demand, which is the basis of prosperity in big business.

Mises advocated for economic non-interventionism and was a staunch anti-imperialist. He viewed the Great War as a watershed moment in human history, arguing that it marked a significant departure from previous conflicts due to the advanced technology employed. His experience in the First World War led to a lifelong obsession of finding a workable doctrine of peace among nations, which at the same time would not ask any individual nation to give up their own self interest. Regarding the birth of total war, Mises wrote:

War has become more fearful and destructive than ever before because it is now waged with all the means of the highly developed technique that the free economy has created. Bourgeois civilization has built railroads and electric power plants, has invented explosives and airplanes, in order to create wealth. Imperialism has placed the tools of peace in the service of destruction. With modern means, it would be easy to wipe out humanity at one blow.

Marxists Herbert Marcuse and Perry Anderson as well as German writer Claus-Dieter Krohn accused Mises of writing approvingly of Italian fascism, especially for its suppression of leftist elements, in his 1927 book Liberalism. In 2009, economist J. Bradford DeLong and sociologist Richard Seymour repeated the accusation. In the book, Mises writes:

It cannot be denied that Fascism and similar movements aiming at the establishment of dictatorships are full of the best intentions and that their intervention has, for the moment, saved European civilization. The merit that Fascism has thereby won for itself will live on eternally in history.

Mises biographer Jörg Guido Hülsmann says that critics who suggest that Mises supported fascism are "absurd" as he notes that the full quote describes fascism as dangerous. He notes that Mises said it was a "fatal error" to think that it was more than an "emergency makeshift" against up-and-coming communism and socialism as exemplified by the Bolsheviks in Russia and the surging communists of Germany. Hülsmann writes in Mises: The Last Knight of Liberalism that Mises had been a card-carrying member of the Fatherland Front party and that this was "probably mandatory for all employees of public and semi-public organizations".

In his earlier work, Socialism (1922), Mises remarked that Mussolini did his best to prop up Austria-Hungary as a means of protecting Italian-speaking minorities, but regardless concludes that he was one the most wretched figures in history.

In regards to Nazism, Mises called on the Allies in his 1944 book Omnipotent Government to "smash Nazism" and to "fight desperately until the Nazi power is completely broken". In his Notes and recollections, Mises wrote of his experience being personally persecuted by the Nazis for his attacks on the Italian Fascist and German Nazi Parties.

Mises was strongly opposed to central banking, instead preferring either a free banking or gold standard system. He also believed that fiat money and the military industrial complex were interdependent of one another. In 1919, Mises wrote, "one can say without exaggeration that inflation is an indispensable means of militarism. Without it, the repercussions of war on welfare become obvious more quickly and penetratingly; war weariness would set in much earlier."

Economic historian Bruce Caldwell wrote that in the mid-20th century, with the ascendance of positivism and Keynesianism, Mises came to be regarded by many as the "archetypal 'unscientific' economist". In a 1957 review of his book The Anti-Capitalistic Mentality, The Economist said of Mises: "Professor von Mises has a splendid analytical mind and an admirable passion for liberty; but as a student of human nature he is worse than null and as a debater he is of Hyde Park standard". Conservative commentator Whittaker Chambers published a similarly negative review of that book in the National Review, stating that Mises's thesis that anti-capitalist sentiment was rooted in "envy" epitomized "know-nothing conservatism" at its "know-nothingest". More recent commenters, such as Tyler Cowen of George Mason University, have listed it alongside Socialism (1922), and Liberalism (1927) as one of the most important books of the 20th century, despite describing Human Action (1949) as "cranky and dogmatic". In the same blog post, Cowen states that:

Socialism is still the best and also historically most important critique of socialism, ever. His earlier articles about the impossibility of economic calculation under socialism are among the most important economics articles, ever.

Scholar Scott Scheall called economist Terence Hutchison "the most persistent critic of Mises's apriorism", starting in Hutchison's 1938 book The Significance and Basic Postulates of Economic Theory and in later publications such as his 1981 book The Politics and Philosophy of Economics: Marxians, Keynesians, and Austrians. Scheall noted that Friedrich Hayek, later in his life (after Mises died), also expressed reservations about Mises's apriorism, such as in a 1978 interview where Hayek said that he "never could accept the ... almost eighteenth-century rationalism in his [Mises's] argument".

In a 1978 interview, Hayek said about Mises's book Socialism:

At first we all felt he was frightfully exaggerating and even offensive in tone. You see, he hurt all our deepest feelings, but gradually he won us around, although for a long time I had to – I just learned he was usually right in his conclusions, but I was not completely satisfied with his argument.

The Theory of Money and Credit (1912, enlarged US edition 1953)

Economic Calculation in the Socialist Commonwealth (1920) (long-form essay)

Socialism: An Economic and Sociological Analysis (1922, 1932, 1951)

Liberalism: In the Classical Tradition (1927, 1962)

A Critique of Interventionism (1929) (collection of essays)