The Economics of Ludwig von Mises: Toward a Critical Reappraisal
By Laurence S. Moss
In March 1974 I got in touch with Professor Leland Yeager, who was then president-elect of the southern Economics Association, and told him that I wanted to organize a symposium on the economic thought of Ludwig von Mises for the November 1974 meeting of our association in Atlanta, Georgia. Mises had died in October 1973, and we would be meeting on nearly the first anniversary of his death. Yeager agreed that, although Mises had been named a “Distinguished Fellow” of the American Economics Association in September 1969, many economists were not well acquainted with either the content of his thought or the enormous range of subjects to which he had devoted more than seventy years range of subjects to which he had devoted more than seventy years of active scholarship. At a time when the cherished “idols” of the intellectual marketplace were being regarded with suspicion, and economists were becoming critical of their basic assumptions and methods, it seemed appropriate to devote an entire session to someone whose lifework had been on the foundations of the science. Thus, we had every reason to believe that a panel on Mises would be well attended and set to work deciding whom to invite and what aspects of Mises’ contribution could be most profitably discussed in the short space of two hours…. [From the Preface by Laurence S. Moss]
First Pub. Date
Kansas City: Sheed and Ward, Inc.
Symposium held before the 44th Meeting of the Southern Economics Association, Atlanta, Georgia, 15 November 1974. Collected essays, various authors. 1974 conference proceedings. Includes essays by Fritz Machlup, Israel M. Kirzner, Murray N. Rothbard, and more.
The text of this edition is copyright ©1977, The Institute for Humane Studies.
One day, many years ago, I received a visit from a Japanese professor, who introduced himself with these strange words: “You are my grand-teacher!” I had not met him before and therefore looked a bit puzzled; he continued, “You see, Professor M. at Kobe University was my teacher, and inasmuch as you were his teacher, you are my grand-teacher.” Well, I could have told him that, since Ludwig von Mises was my teacher, Mises was his grand-grand-teacher!
Right now in this meeting room, I suppose there are some grand-grand-students of Ludwig von Mises, several grand-students, and even a few students. I know that, besides myself, Professor Kirzner, Professor rothbard, and, for some time, Professor Moss were directly taught by Mises. Without making any further search for direct and indirect students of Mises at this gathering, allow me a few observations on intellectual connections between the writings of Mises and those of another great figure in our discipline.
For more than thirty years economists have been under the spell of John Maynard Keynes. Some became violent Keynesians and others violent anti-Keynesians, but, as Milton Friedman has said, in some sense everybody became a Keynesian, even if he rejected some of Keynes’ concepts and all of his precepts. You may be in-
terested in finding out what Keynes himself wrote about Mises. To what extent, if any, was Keynes a Misesian?
Let me take as my first bit of evidence Keynes’ remarks about Mises that appear in the
Treatise on Money. Keynes wrote as follows:
The notion of the distinction which I have made between savings and Investment has been gradually creeping into economic literature in quite recent years. The first author to introduce it was, according to the German authorities [and Keynes cited Albert Hahn and Joseph Schumpeter], Ludwig Mises in his
theorie des Geldes und der Umlaufsmittel…published in 1912.
Later on in his
Treatise Keynes made the following statement:
More recently a school of thought has been developing in Germany and Austria under the influence of these ideas, which one might call the neo-Wicksell school, whose theory of bank-rate in relation to the equilibrium of Savings and Investment, and the importance of the latter to the Credit Cycle, is fairly close to the theory in thise Treatise. I would mention particularly Ludwig Mises’s
Geldwertstabilisierung und Konjunkturpolitik (1928).
In addition, Keynes cited Hans Neisser’s
Der Tauschwert des Geldes (1928) and Friedrich Hayek’s
Geldtheorie und Konjunkturtheorie (1929).
*15 Following these citations Keynes added a footnote that is of interest because, although Keynes had already attributed to Mises the novel and original idea of the relationship between saving and investment and had credited him with having discussed its importance to monetary theory, Keynes confessed:
I should have made more references to the work of these writers if their books, which have only come into my hands as these pages are being passed through the press, had appeared when my own thought was at an earlier stage of development, and if my knowledge of the German language was not so poor (in German I can only clearly understand what I know already!—so that
new ideas are apt to be veiled from me by difficulties of language).
Apparently John Maynard Keynes had forgotten that in 1914, sixteen years earlier, he had reviewed the first German edition of
Theory of Money and Credit. Let me read to you from Keynes’ review, which appeared in the
Dr. von Mises’ treatise is the work of an acute and cultivated mind. But it is critical rather than constructive, dialectical and not original….Dr. Mises strikes an outside reader as being the very highly educated pupil of a school, once of great eminence, but now losing its vitality…. One closes the book…with a feeling of disappointment that an author so intelligent, so candid, and so widely read should, after all, help one so little to a clear and constructive understanding of the fundamentals of his subject…. When this much has been said, the book is not to be denied considerable merits. Its lucid common sense has the quality, to be found so much more often in Austrian that in German authors, of the best French writing. The treatment throughout is primarily theoretical, and quite without striving after
actualité. The book is “enlightened” in the highest degree possible.
So you can see how difficult it is to recognize originality when one cannot read the language in which it is expressed!
We shall now be treated to five scholarly discussions of Mises’ contributions to economic science and social philosophy. The organizers of this session have done a thoughtful job of dividing the territory—though without any unlawful restraint of trade. We shall first have Professor Laurence Moss appraise Mises’ monetary theory. Then Professor Israel Kirzner will present Mises’ monetary theory. Then Professor Israel Kirzner will present Mises’ views on capital theory. They will be followed by Professor Murray Rothbard, talking on Mises’ thoughts on economic calculation under socialism, and by Professor William Baumgarth, analyzing Mises’ justification of a liberal order of society. These four papers will be subjected to a comprehensive critical scrutiny by Professor Karen Vaughn. I am fortunate in being allowed to preside over such a sympathetic symposium in the memory of our master.
a Treatise on Money (London: Macmillan & Co., 1930) 1: 171n, in the royal Economic Society,
The Collected Writings of John Maynard Keynes (Cambridge: Macmillan & Co.; New York: St. Martin’s Press, 1971) 5: 154n. The work by Mises to which Keynes referred was translated in its second edition and published under the title
The Theory of Money and Credit. [See Appendix B for complete citation.—Ed.]
A Treatise (1930, p. 199; (1971), p. 178.
Monetary theory and the Trade Cycle (London: Alden Press, 1933).
A Treatise(1930), p. 199n; (1971), p. 178n.
Theorie des Geldes und der Umlaufsmittel be Ludwig von Mises and of
Geld und Kapital by Friedrich Bendixen,”
Economic Journal, 24 (September 1914): 417.
The Monetary Economics of Ludwig von Mises, by Laurence S. Moss