The essential Ludwig von Mises

[Front Matter and Introduction by Douglas E. French]: This segment contains the title pages, copyright information, table of contents, and the introduction by Douglas E. French. French explains that the monograph consists of two essays by Murray Rothbard about his teacher Ludwig von Mises, providing an overview of Mises's thought and his status as an intellectual hero in the 20th century. [Part One: The Essential von Mises - Introduction and Chapter 1: The Austrian School]: Rothbard introduces Mises as the champion of the 'genuine free market' against the statist alternatives of the 20th century. He traces the origins of the Austrian School, explaining how Carl Menger and Eugen von Böhm-Bawerk solved the 'paradox of value' and the flaws of Ricardian classical economics through marginal utility and individualist analysis. The section details the Austrian theories of value, distribution, and the role of time preference in determining interest and profit. [Chapter 2: Mises and “Austrian Economics”: The Theory of Money and Credit]: Rothbard discusses Mises's 1912 work, 'The Theory of Money and Credit', which integrated monetary theory into general microeconomic analysis. Key concepts include the 'Regression Theorem' explaining the origin of money from a useful commodity, the critique of mechanistic quantity theories, and the demonstration that inflation is a process of wealth redistribution. Mises also argues for the separation of government from money and critiques the inflationary role of central banking. [Chapter 3: Mises on the Business Cycle]: This chapter outlines Mises's theory of the business cycle, which attributes economic booms and busts to bank credit expansion encouraged by government. By lowering interest rates below the 'natural' rate, banks trigger unsustainable over-investment in higher-order capital goods. The resulting recession is described as a necessary market adjustment to liquidate these distortions and return to a sustainable production structure. [Chapter 4: Mises in the Interwar Period]: Rothbard describes Mises's career in Vienna during the 1920s and 30s, where he served as an unpaid professor and an advisor to the Chamber of Commerce. Despite his brilliance, his work was often ignored in the English-speaking world due to translation delays and the rise of the Marshallian and Chicago schools. The section highlights Mises's personal integrity and 'intransigence' in the face of rising global statism. [Chapter 5: Mises on Economic Calculation and Socialism]: Mises's 1920 argument against the viability of socialism is detailed, focusing on the impossibility of rational economic calculation without a market price system. Rothbard notes that while socialists like Oskar Lange claimed to refute Mises, the failures of Soviet planning later validated Mises's insights. The chapter also covers Mises's critiques of interventionism and his defense of classical liberalism. [Chapter 6: Mises on the Methodology of Economics]: Rothbard explains Mises's development of 'praxeology'—the general theory of human action. Mises rejected the positivist attempt to apply the methods of physics to economics, arguing instead for a deductive system based on the axiom of human purpose and consciousness. The chapter also critiques Lionel Robbins's simplified version of Misesian methodology which failed to stem the tide of positivism in the West. [Chapter 7: Mises and Human Action]: This segment focuses on Mises's magnum opus, 'Human Action' (1949). Rothbard describes it as a complete, integrated system of economic thought. Mises critiques the use of mathematics and econometrics in economics, arguing they ignore human causality and the lack of quantitative constants in human behavior. The chapter concludes with the 'tragedy' of the Keynesian Revolution, which caused Mises's business cycle theory to be largely forgotten by the profession. [Chapter 8: Mises in America]: Rothbard recounts Mises's life in the United States after 1940. Despite his stature, Mises was denied a prestigious academic post and taught as a visiting professor at NYU. He continued to write influential works like 'Omnipotent Government' and 'Bureaucracy' and maintained a weekly seminar that became a focal point for the post-war libertarian movement. His influence is also traced to post-war economic shifts in Germany and Italy. [Chapter 9: The Way Out]: Rothbard argues that the failures of Keynesianism and the Welfare-Warfare State are leading to a rediscovery of Mises's ideas. He presents Mises's work as the coherent alternative to the 'statist miasma'. The segment concludes with a hopeful outlook on the resurrection of the spirit of freedom, citing Jacques Rueff's tribute to Mises's rational economic science. [Part Two: Ludwig von Mises: Scholar, Creator, Hero - Chapter 1: The Young Scholar]: The second part of the monograph begins with a more biographical focus. Rothbard describes Mises's early interest in history and his reaction against the 'German Historical School' and its state-oriented methodology. It details Mises's early academic work on serfdom and factory legislation, his discovery of Menger's Austrian economics in 1903, and his career at the Vienna Chamber of Commerce where he became a key economic advisor. [Chapter 2: The Theory of Money and Credit - Integrating Micro and Macroeconomics]: Mises addresses Karl Helfferich's challenge to the Austrian School by extending marginal utility theory to money. He critiques the existing 'macro' approach to money that relied on aggregates like price levels and velocities, aiming instead to ground monetary value in individual action and microeconomic analysis. [The Problem of the Austrian Circle and Mises's Early Monetary Research]: This section defines the 'problem of the Austrian circle'—the logical circularity where the demand for money presupposes its value. It details Mises's early research into foreign exchange and the gold standard, including his discovery of corruption within the Austro-Hungarian Bank and his decision to focus on doctrinal refutation rather than exposing personal scandals. [The Theory of Money and Credit: Integration and the Quantity Theory]: Mises's 1912 work healed the micro/macro split by integrating money into the analysis of individual action. He refuted the mechanistic quantity theory, arguing that money supply increases do not affect all prices equally but redistribute wealth toward early receivers of new money (government and banks) at the expense of others. [Ordinal Utility and the Correction of Austrian Value Theory]: Building on Franz Cuhel's insights, Mises corrected a flaw in Menger and Böhm-Bawerk's work by demonstrating that utility is purely ordinal and cannot be measured or added. He argued that 'total utility' is a meaningless concept and that economics must focus on the marginal utility of specific units of goods. [The Regression Theorem: Solving the Circularity of Money's Value]: Mises solves the 'Austrian circle' using the Regression Theorem, which traces the value of money back through time to its origin as a useful non-monetary commodity in a barter system. This theorem proves that money must emerge organically from the market and cannot be created out of thin air by social contract or government decree. [Banking Theory and the Origins of Business Cycle Theory]: Mises distinguishes between legitimate commodity credit and inflationary fiduciary credit, advocating for 100 percent reserves. He identifies the central bank as the primary driver of credit expansion and develops the foundations of his business cycle theory, linking inflationary bank credit to malinvestments and subsequent recessions. [The Market Process of Recession and the Grand Reconstruction]: Mises explains that a recession is a necessary market process to liquidate unsound investments from an inflationary boom. He argues for a hands-off government approach to allow for recovery. Mises notes that the outbreak of World War I forced him to publish his monetary theory before he could complete a full reconstruction of economic theory, which he eventually achieved in 'Human Action'. [Chapter 3: The Reception of Mises and the Academic Environment in Vienna]: Despite the brilliance of 'The Theory of Money and Credit', it was rejected by both the German Historical School and Mises's own mentor, Böhm-Bawerk, who dismissed Mises's insights as mere 'friction'. Mises was denied a paid professorship at the University of Vienna, serving only as an unpaid privatdozent while working for the Chamber of Commerce. [Academic Vacancies and the Zoo of Vienna University]: Mises was repeatedly passed over for paid professorships in favor of less qualified or politically opportunistic figures like Othmar Spann and Hans Mayer. The academic environment was characterized by personal intrigue, anti-Semitism, and discrimination against Mises's students, who were often forced to audit his seminars unofficially. [Reasons for Mises's Academic Exclusion and Keynes's Review]: Mises's exclusion from academia is attributed to his uncompromising liberalism, his Jewish heritage, and a lack of strategic promotion by his mentors Menger and Böhm-Bawerk. Additionally, John Maynard Keynes's dismissive and uncomprehending review of 'The Theory of Money and Credit'—written despite Keynes's admitted inability to understand new ideas in German—hindered Mises's influence in the English-speaking world. [Chapter 4: Mises as Economic Adviser and the Prevention of Bolshevism]: Mises served as a highly efficient economic executive and adviser in postwar Austria. He famously persuaded the Austro-Marxist leader Otto Bauer against a Bolshevik takeover by demonstrating that the resulting Allied food blockade would lead to immediate starvation. This action saved Austria from Bolshevism but earned Mises the lifelong enmity of the Bauers. [The Struggle Against Inflation and the Banking Crisis]: Mises and Wilhelm Rosenberg fought a losing battle against postwar bank credit inflation, managing only to delay the inevitable catastrophe. Despite stabilizing the crown in 1922, continued inflationary policies and capital consumption led to the 1931 banking collapse. Mises reflects on his time as an adviser, regretting his occasional willingness to compromise for the sake of political expediency. [Chapter 5: The Impossibility of Economic Calculation Under Socialism]: Mises's 1920 paper demonstrated that socialism is impossible because, without private property and a market price system for the means of production, central planners cannot calculate costs or allocate resources rationally. This argument demolished socialism on its own terms and sparked a decades-long debate that Mises is now widely recognized as having won. [Interventionism, Liberalism, and the Division of Labor]: Mises argued that government intervention is inherently unstable, leading either back to laissez-faire or toward socialism. He championed classical liberalism and the division of labor as the foundations of civilization. Rothbard contrasts Mises's 'extreme rationalism'—the view that social cooperation is a product of conscious human reason—with Hayek's emphasis on spontaneous order and instinct. [The Epistemology of Praxeology and the Critique of Positivism]: Mises defended the deductive method of economics against the Historical School and the rising Vienna Circle of logical positivists. He established 'praxeology'—the logic of human action—based on the self-evident axiom that humans act consciously toward goals. He argued that applying the methods of physical sciences to humans leads to the dangerous view of people as objects for social engineering. [Chapter 6: The Mises Privatseminar and the Next Generation of Economists]: Mises's greatest influence as a teacher came from his private seminar at the Chamber of Commerce, which became the premier forum for social science in Europe. The seminar produced a staggering list of eminent scholars, including Hayek, Machlup, and Robbins. Mises also revived the Economic Society and founded the Institute for Business Cycle Research, installing Hayek as its first director. [The Spread of Austrian Economics and the Keynesian Revolution]: Austrian economics briefly gained dominance in England through Hayek and Robbins at the LSE in the early 1930s. However, the publication of Keynes's 'General Theory' led to a rapid mass conversion of economists to Keynesianism, leaving Hayek as one of the few remaining Austrian stalwarts. The section concludes by listing numerous European economists influenced by Mises's work. [Chapter 7: Exile and the New World]: This section details Mises's move to Geneva in 1934 to escape the Nazi threat, his productive years at the Graduate Institute of International Studies, and the publication of his German masterpiece Nationalökonomie. It describes the harrowing escape from Europe to the United States in 1940 following the fall of France and the initial period of despair in New York, which led to the writing of his intellectual memoir, Notes and Recollections. [Mises in America: Academic Struggles and Intellectual Triumphs]: Rothbard recounts Mises's career in the United States, highlighting the shameful lack of a full-time academic post despite his brilliance. Supported by the Volker Fund and friends like Lawrence Fertig, Mises established a famous seminar at NYU. The section focuses on the publication of Human Action (1949), his definitive treatise on praxeology, and subsequent works like Theory and History. It concludes with Mises's death in 1973 and the subsequent revival of Austrian economics sparked by Hayek's Nobel Prize. [Chapter 8: Coda: Mises the Man]: The final chapter offers a personal portrait of Mises, refuting claims that he was personally difficult or obnoxious. Rothbard and other students describe him as a man of great kindness, wit, and 'clouds of glory' from pre-WWI Vienna. Ralph Raico provides a moving assessment of Mises's uncompromising character and his role as the ideal intellectual who waged contention with his time's decay. [Index and Back Matter]: Comprehensive index of names, titles, and subjects covered in the work, ranging from 'Adonais' to 'Zur Lehre von den Bedürfnissen'. Includes a concluding quote from Douglas E. French regarding Mises's status as an intellectual hero.