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Great
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"Where
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His life and times |
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The
unprecedented slaughter of the 20th century was primarily
carried out in the name of socialism, the doctrine that government must
control everything. Socialism's
most outspoken adversary was the Austrian economist Ludwig von Mises. He
wrote 29 books in German and English, and they have been translated into
Chinese, Czech, Dutch, French, Greek, Italian, Japanese, Korean,
Lithuanian, Polish, Portugese, Russian, Spanish and Swedish.
Mises displayed extraordinary foresight.
He scoffed at Marxian claims that socialism was inevitable -- and
he was right. Way back in
1920, just three years after the socialist coup in Russia, he boldly
predicted that socialism would never deliver decent living standards --
and he was right again. He
declared that civil liberties were impossible under socialism, and he was
right yet again.
"In exclusively controlling all the factors of production," he
wrote, "the socialist regime controls also every individual's whole
life. The government assigns
to everybody a definite job. It
determines what books and papers ought to be printed and read, who should
enjoy the opportunity to embark on writing, who should be entitled to use
public assembly halls, to broadcast and to use all other communication
facilities. This means those
in charge of the supreme conduct of government affairs ultimately
determine which ideas, teachings, and doctrines can be propagated and
which not. Whatever a written
and promulgated constitution may say about the freedom of conscience,
thought, speech, and the press and about neutrality in religious matters
must in a socialist country remain a dead letter if the government does
not provide the material means for the exercise of these rights."
Socialist intellectuals around the world claimed that wonderful
things were happening in the Soviet Union, but Mises identified the regime
as a moral scourge: "Whoever does not unconditionally acknowledge all
their teachings as the only correct ones and stand by them through thick
and thin has, in their opinion, incurred the penalty of death; and they do
not hesitate to exterminate him and his whole family, infants included,
whenever and wherever it is physically possible."
Socialists were at pains to distinguish themselves from fascists
and Nazis, but Mises made clear they were all totalitarians.
He denounced fascism's "complete faith in the decisive power
of violence. In order to
assure success, one must be imbued with the will to victory and always
proceed violently. This is
its highest principle...its foreign policy, based as it is on the avowed
principle of force in international relations, cannot fail to give rise to
an endless series of wars..." Mises
warned that Hitler's National Socialism meant tyranny, and a year after
Hitler seized power, he left Austria for Switzerland and later came to
America.
As the English and French guarded their global empires, and the
Germans, Italians, Japanese and Russians contemplated new conquests, Mises
spoke out for peace: "No chapter of history is steeped further in
blood than the history of colonialism.
Blood was shed uselessly and senselessly.
Flourishing lands were laid waste; whole peoples destroyed and
exterminated. All this can in no way be extenuated or justified.
The dominion of Europeans in Africa and in important parts of Asia
is absolute. It stands in the
sharpest contrast to all the principles of liberalism and democracy, and
there can be no doubt that we must strive for its abolition...The most
simple and radical solution would be for the European governments to
withdraw their officials, soldiers, and police from these areas and to
leave the inhabitants to themselves."
In 1927, Mises issued a prophetic warning: "The program of
antiliberalism unleashed the forces that gave rise to the great World War
and, by virtue of import and export quotas, tariffs, migration barriers,
and similar measures, has brought the nations of the world to the point of
mutual isolation. Within each
nation it has led to socialist experiments whose result has been a
reduction in the productivity of labor and a concomitant increase in want
and misery. Whoever does not
deliberately close his eyes to the facts must recognize everywhere the
signs of an approaching catastrophe in world economy.
Antiliberalism is heading toward a general collapse of
civilization."
For decades, Mises identified key issues more clearly than anybody
else. Politically-connected
intellectuals clamored for central economic planning, but Mises retorted,
"The alternative is not plan or no plan.
The question is: whose planning?
Should each member of society plan for himself or should the
paternal government alone plan for all?
The issue is...spontaneous action of each individual versus the
exclusive action of the government. It
is freedom versus government omnipotence."
Mises
explained how only capitalism enabled human beings to arise from
barbarism: "In the precapitalistic ages the rich were the owners of
large landed estates. They or
their ancestors had acquired their property as gifts -- feuds or fiefs --
from the sovereign who -- with their aid -- had conquered the country and
subjugated its inhabitants. These
aristocratic landowners were real lords as they did not depend on the
patronage of buyers. But the
rich of a capitalistic industrial society are subject to the supremacy of
the market. They acquire
their wealth by serving the consumers better than other people do and they
forfeit their wealth when other people satisfy the wishes of the consumers
better or cheaper than they do."
Mises showed how, at a faster and faster pace, capitalism
transformed luxuries for an elite into pleasures for millions.
"Centuries passed before the fork turned from an implement of
effeminate weaklings into a utensil of all people. The evolution of the motor car from a plaything of wealthy
idlers into a universally used means of transportation required more than
twenty years. But nylon
stockings became, in this country, an article of every woman's wear within
hardly more than two or three years.
There was practically no period in which the enjoyment of such
innovations as television or the products of the frozen food industry was
restricted to a small minority."
Nobody was more lyrical than Mises in celebrating the 18th and 19th
century eras of "freedom,
the rights of man, and self-determination.
This individualism resulted in the fall of autocratic government,
the establishment of democracy, the evolution of capitalism, technical
improvements, and an unprecedented rise in standards of living.
It substituted enlightenment for old superstitions, scientific
methods of research for inveterate prejudices.
It was an epoch of great artistic and literary achievements, the
age of immortal musicians, painters, writers, and philosophers.
"The age of capitalism," he continued, "has
abolished all vestiges of slavery and serfdom.
It has put an end to cruel punishments and has reduced the penalty
for crimes to the minimum indispensable for discouraging offenders.
It has done away with torture and other objectionable methods of
dealing with suspects and lawbreakers.
It has repealed all privileges and promulgated equality of all men
under the law. It has
transformed the subjects of tyranny into free citizens."
Mises did a more complete job than anyone else describing a vision
of liberty: "there is private property in the means of production.
The working of the market is not hampered by government
interference. There are no
trade barriers; men can live and work where they want.
Frontiers are drawn on the maps but they do not hinder the
migration of men and shipping of commodities.
Natives do not enjoy rights that are denied to aliens.
Governments and their servants restrict their activities to the
protection of life, health, and property against fraudulent or violent
aggression. They do not
discriminate against foreigners. The
courts are independent and effectively protect everybody against the
encroachments of officialdom. Everyone
is permitted to say, to write, and to print what he likes.
Education is not subject to government interference.
Governments are like night-watchmen whom the citizens have
entrusted with the task of handling the police power.
The men in office are regarded as mortal men, not as superhuman
beings or as paternal authorities who have the right and duty to hold the
people in tutelage. Governments
do not have the power to dictate to the citizens what language they must
use in their daily speech or in what language they must bring up and
educate their children."
Mises persisted in expressing these radical views even though it
meant being treated as an outcast. He
was a highly respected economist in Austria, but the University of Vienna
four times refused to make him a paid professor, and for 14 years he
conducted a prestigious Vienna seminar without a salary.
For most of the quarter-century that he conducted a seminar in New
York, his salary was paid by private individuals.
"Never would Mises compromise his principles," observed
economist Murray N. Rothbard, "never would he bow the knew to a quest
for respectability or social or political favor.
As a scholar, as an economist, and as a person, Ludwig von Mises
was a joy and an inspiration, an exemplar for us all."
Future Nobel Laureate F.A. Hayek told Mises: "You have shown
an undaunted courage even when you stood alone.
You have shown a relentless consistency and persistence in your
thought even when it led to unpopularity and isolation.
You have for long not found the recognition from the official
organization of science which was your due.
You have seen your pupils reap some of the rewards which were due
to you but which envy and prejudice have long withheld.
But you have even more fortunate than most other sponsors of
unpopular causes. You knew
before today that the ideas for which you had so long fought alone or with
little support would be victorious."
Mises was about five feet eight inches tall and had sparkling blue
eyes. "He held himself
straight and erect and walked with a firm step," recalled Bettina
Bien Greaves, the world's leading Mises scholar.
"He wore a suit, usually gray, and even in the hottest weather
he insisted on keeping his jacket on.
His grey hair and moustache were always neatly brushed.
He was serious, no frivolity.
Asked if he played tennis, he replied 'No, because I'm not
interested in the fate of the ball.'
But he loved to walk, and during his summers in Austria,
Switzerland and the United States, he went hiking through the mountains.
As a bachelor until the age of 57, he enjoyed giving tea parties. Later, he and his wife Margit often went to the theater, even
when their finances were tight. He
was a man of remarkable grace, charm and culture."
Mises put off many people, occasionally even friends, because he
refused to compromise. During
the early 1950s, journalist Henry Hazlitt wrote, Mises and
novelist/philosopher Ayn Rand were at his house for dinner.
Rand snapped at one of Mises' comments, saying "You seem to
regard me as just a little Jewish girl who doesn't know anything."
"Lu didn't mean it that way," Hazlitt said.
"I did mean it that way!" Mises replied.
Mises came to admire Rand, calling her "the most courageous
man in America." Hazlitt
told Rand about the remark, and she was delighted.
Reflecting on Mises, Ayn Rand biographer Barbara Branden noted that
"Along with a vast and searching intellect, he had a gentleness, a
warmth, and communicated a respect for whomever he talked with, that made
him beloved by his friends and his students."
Ludwig Edler von Mises was born on September 29, 1881 in Lemberg,
then part of the Austro-Hungarian Empire, about 350 miles east of Vienna.
It's now known as Lviv in the Ukraine.
He was the oldest of three boys of Adele Landau who was devoted to
her family and to charity work for a Jewish orphanage.
His father was Arthur Edler von Mises, a construction engineer for
the Austrian Railroad Ministry. His
brother Karl died from scarlet fever when he was 11; his other brother
Richard became a well-known mathematician and logical positivist
philosopher.
From 1892 to 1900, Mises studied at the
Akademische Gymnasium (high school) on Lothringer Strasse, Vienna.
He went on to the University of Vienna.
"When I entered the university," Mises reflected,
"I, too, was a thorough statist.
But in contrast to my fellow students I was consciously
anti-Marxian." He added:
"I think in the second year of my university studies, there came the
very famous...socialist Adolf Wagner, professor in Berlin, who had been
professor in Vienna before. He
lectured on the tariff for cereals. A
wonderful speech, an excellent speaker.
Germany not self-sufficient. Tariff
to feed Germany. A student
two years ahead of me came and said that the tariff doesn't do away with
this. If Germany can't feed
itself now, it won't be able to with a tariff.
Wagner answered: 'I didn't say this was a remedy.
The remedy is a war, a great war, to annex other countries.
We need customs only in preparation for the war in order to have
enough for the beginning of the war.
Tariffs are necessary from the national, military point of
view."
Then Mises had a revelation: "Around Christmas, 1903, I read
Menger's Grundsatze der
Volkswirtschaftslehre [Principles
of Economics] for the first time.
It was the reading of this book that made an 'economist' of
me."
Menger cut quite a figure. F.A.
Hayek wrote that Menger's "massive, well-modelled head, with the
colossal forehead and the strong but clear lines there delineated are not
easily forgotten. Tall, with
a wealth of hair and full beard, in his prime Menger must have been a man
of extraordinarily impressive appearance."
Menger was born on February 28, 1840 in Neu-Sandec, Galicia, now
part of Poland. His father
was a lawyer. His mother's
father had earned a fortune as a merchant in Bohemia, and Menger grew up
on his estate. He attended
the University of Vienna (1859-1860) and the University of Prague
(1860-1863) before earning his doctorate degree at the University of
Cracow.
He became a journalist, covering economic issues.
He got a job in the press office of the Austrian government and
wrote about markets. Somewhere
along the line, he concluded that nobody had developed a good explanation
of what drives market prices. Certainly
John Stuart Mill, the best-known English classical economist, hadn't done
it.
Menger's great book, published in 1871, presented a case that
prices reflected the subjective values of customers in free markets. This was a radical departure from the English classical
economists who, since Adam Smith, had insisted the value of things was
rooted in the cost of labor required to produce them -- the labor theory
of value that Karl Marx made his battle cry.
Menger was attacked by Gustav Schmoller, influential leader of the
German Historical School, who belittled theory and promoted socialism.
Menger further resolved the question of value by what came to be
known as marginal utility analysis. For
example, why do people pay more per unit for diamonds than for water, even
though water is essential for life, and diamonds are a luxury?
The answer, Menger suggested, doesn't come from somehow estimating
the total satisfaction people get from water vs. diamonds.
Rather, one should inquire about how people value more water vs.
more diamonds, considering how much of each they already have.
Far more water is generally available than is needed for human
survival, so people are willing to pay less for it than for diamonds which
are comparatively scarce.
"In the years after his retirement," Hayek recalled,
"it became a tradition that young economists entering upon an
academic career undertook the pilgrimage to his home.
They would be genially received by Menger among his books and drawn
into conversation about the life which he had known so well, and from
which he had withdrawn after it had given him all he had wanted."
Mises: "Personally, I met Carl Menger only many years later.
He was then already more than seventy years old, hard of hearing,
and plagued by an eye disorder. But his mind was young and vigorous."
Menger died in 1921 at age 81.
None of Menger's writings had been translated into English, and his
major work was long out of print. As
intellectual historian George J. Stigler remarked in 1941, "the
barriers of inaccessibility and language have served effectively to hide
all but the barest outlines of his work from the bulk of English-speaking
students of economics." The
first English edition of his
Principles of Economics didn't appear until 1976.
Meanwhile, on February 20, 1906, Mises earned a degree as Doctor of
Laws and Social Sciences. The
following year, Mises began working for the Vienna Chamber of Commerce. It was run by representatives elected from trade and
industry. Its main function
was to advise on laws affecting business.
Mises was the expert on finance.
The person who most directly influenced Mises was the economist
Eugen von Bohm-Bawerk. Born
in Brunn, Austria, February 12, 1851, he studied law at the University of
Vienna. Political science, at
Heidelberg, Leipzig and Jena. He
was named professor of economics at the University of Innsbruck, 1881.
During the eight years he taught there, Bohm-Bawerk became the
greatest champion of Menger's ideas, and he wrote his masterwork,
Kapital und Kapitalzins [Capital
and Interest] which was published in 1884.
Economist Joseph A. Schumpeter called Bohm-Bawerk "one of the
great architects of economic science."
Bohm-Bawerk had more influence outside Austria than Menger because
his major works were translated much more quickly -- the English edition
of Kalipital
und Kapitalzins began appearing in 1890.
Bohm-Bawerk accepted a post in the Austrian Finance Department, and
he served as vice-chairman of a commission which recommended that Austria
go on the gold standard (it was done).
As Minister of Finance in 1895, 1897 and 1900 to 1904, he achieved
balanced budgets and stable money. After
1904, he returned to teaching economics at the University of Vienna.
"When Bohm-Bawerk opened his seminar," Mises wrote,
"it was a great day in the history of the University and the
development of economics. As
the subject matter of the first seminar, Bohm-Bawerk chose the
fundamentals of the theory of value...I attended Bohm-Bawerk's seminar
regularly until I qualified for lecturing in 1913...Bohm-Bawerk was a
brilliant seminar leader. He did not think of himself as a teacher, but as a chairman
who occasionally also participated in the discussion."
Schumpeter added that by the 1920s, "it was an almost general
opinion that Bohm-Bawerk's theory was just a curious error -- and not to
be discussed seriously any more. And
yet his ideas keep on turning up and teaching people, critics included,
their business. This, in
fact, his ideas had done from the first: though Bohm-Bawerk got few
compliments, and acquired few disciples, he was and still is one of the
profession's greatest teachers."
Mises began writing about money.
"Karl Helfferich," he explained, "in his book, Das Geld, published in 1903, asserted that the marginal utility
theory of the Austrians had failed to solve the problem of money value.
Therefore, I intended to investigate the validity of this charge
and beginning in 1906 devoted a great deal of fervent effort to the
problems of money and banking. I
studied the great theoretical works as well as the history of currencies
of the European countries, the United States, British India, and, in
general, sought to find my way through the wealth of literature."
Other thinkers, including Menger and Bohm-Bawerk, considered money
to be apart of economic theory, came to believe that subjective value and
marginal utility analysis could help explain monetary phenomena, too. So Mises started his first book, Theorie des Geldes und der Umlaufsmittel
[The Theory of Money and Credit].
The first edition came out in 1912, and he revised it in 1924.
He attacked the popular view that government officials could
dictate the value of money, promoted by Georg Friedrich Knapp in
Staatliche Theorie des Geldes [State
Theory of Money, 1905]. He
maintained that, on the contrary, markets determined the value of money.
For this, he was denounced by Rudolf Hilferding, later Finance
Minister during Germany's 1923 runaway inflation: "the book's
complete futility is most effective proof of the utter fruitlessness of
the marginal utility theory." The English economist John Maynard Keynes panned
The Theory of Money and Credit, although in 1930 he confessed his
German was "so poor" and "in German I can only clearly
understand what I know already!"
Mises insisted that inflating the money supply is futile, because
people will bid up prices. The
beneficiaries are those who, starting with government itself, spend new
issues of currency before prices go up.
The losers are the last ones to get the new money, after prices
have prices have risen and the money has depreciated in the
marketplace.?
Mises explained that inflating the money supply artificially
stimulates economic expansion that wouldn't otherwise have occurred. Stopping inflation must trigger the collapse of businesses
and investments dependent on it, and people are thrown out of work.
The solution, Mises insisted, is to bring wages in line with market
conditions. "If a man
cannot sell his labour at the price he would like to get for it,"
Mises wrote, "he must lower the price he is asking for it or else he
remains unemployed. If the
government or labour unions fix wage rates at a higher point than the
potential rate of the unhampered labour market and if they enforce their
minimum price degree by compulsion and coercion, a part of those who want
to find jobs remain unemployed...There is only one efficacious way towards
a rise in real wage rates and an improvement of the standard of living of
the wage earners: to increase the per-head quota of capital
invested."
Mises presented a strong defense of a gold standard: "The
excellence of the gold standard is to be seen in the fact that it renders
the determination of the monetary unit's purchasing power independent of
the policies of governments and political parties.
Furthermore, it prevents rulers from eluding the financial and
budgetary prerogatives of the representative assemblies.
Parliamentary control of finances works only if the government is
not in a position to provide for unauthorized expenditures by increasing
the circulating amount of fiat money.
Viewed in this light, the gold standard appears as an indispensable
implement of the body of constitutional guarantees that make the system of
representative government function."
During World War I, Mises served for three years in the army, rose
to the rank of artillery captain, spent time on the Russian front and got
shot in the hip. He figured
that at least he had benefited from the physical exercise.
He was subsequently transferred to the Ministry of War where he
worked as an economic analyst.
In 1919, England and France wanted to avenge war losses which they
blamed on their adversaries, especially Germany.
They became more adamant when the United States demanded that they
pay their war debts. Germany
lost an eighth of its territory, 10% of its industry and 15.5% of its farm
land. Before the war,
Austria-Hungary controlled over 250,000 square miles of territory and had
a population of 51 million. Afterwards,
the Allied Powers broke up the empire, created new nations and left
Austria with 32,000 square miles. Austria
had about 6.5 million people, almost a third living in Vienna. .
War cost Austria-Hungary some $20 billion and 1.1 million lives.
Moreover, Germany and Austria had to pay the Allied Powers for
"war damages." As
further compensation, both losers had to give the Allied Powers
substantial amounts of building materials, railroad equipment, cattle and
coal.
All this put pressure on Germany and Austria to inflate their
currencies. Pressure
intensified when the governments caved in to socialist demands for welfare
and subsidized housing. Germany
plunged into a horrifying runaway inflation -- average prices up over 300%
a month -- which climaxed in 1923 when one U.S. dollar could be exchanged
for 4.2 million marks. During
this runaway inflation, the 24-year-old agitator Adolph Hitler appealed
for political support to "starving billionaires" whose savings
were wiped out by the inflation.
The Austrian inflation was severe -- average prices up almost 50% a
month. Mises' future wife
Margit recalled: "I carried a suitcase with me, containing money for
one day. Every evening my
[first] husband had to cable fresh money, for the value of the krone
decreased daily." Amidst
the inflation, he died from cancer, and she reported that "Inflation
had consumed the value of all savings.
I remember how I found, some months after Feri's death, a wallet of
his containing large sums of Austrian kronen...The value of the money was
totally lost..." Another
who suffered from the inflation was 41-year-old Joseph A. Schumpeter,
President of the Biedermann Bank which became insolvent in 1924, leaving
him out of work with a pile of debts.
While walking home with some friends, Mises recalled hearing
"in the Herrengasse [a main street in Vienna] the heavy drone of the
Austrian Bank's printing presses which were running incessantly day and night
to produce new banknotes. Throughout
the land, a large part of the industrial enterprises were idle.
Others were working part-time.
Only the printing presses stamping out notes were operating at full
speed."
Mises did much to help avoid a catastrophe like Germany's. At the Chamber of Commerce, he was Secretary of the Banking
and Finance Department, and he gained influence as an articulate champion
of laissez faire and sound money. He
was also apparently quite an organizer, helping to start the Committee of
Bankers and Industrialists, the Fiscal Policy Committee and the Office of
Accounts (where Mises hired 22-year-old Hayek to help resolve pre-war
debts). All this brought
Mises in contact with a lot of people.
Mises' influence went all the way to the top.
"In 1922," reported intellectual historian Bettina Bien
Greaves, "Ignaz Seipel became Chancellor of Austria.
Dr. Seipel, a Roman Catholic priest, honest and conscientious but
naive about finance, was not the usual politician.
Mises helped convince Seipel that inflation had to be stopped.
Mises made clear that many companies which had speculated on
inflationary gains could go out of business, but overall improvement would
come. Seipel emphasized that
if stopping inflation was the moral thing to do, he would do it regardless
of the short-term effects. He did it and was re-elected in 1923."
According to Dr. Alfred Schutz, a sociologist who knew Mises in
Vienna, "Mises played a very important role in drafting the statutes
and by-laws" of the Austrian National Bank.
Mises scholar and economics professor Richard M. Ebeling at
Hillsdale College, Michigan, added: "Another of Mises' friends was
Richard Reisch who became President of the Austrian National Bank.
I studied the charter which restructured the Austrian National
Bank, limiting its ability to inflate the currency again.
I believe the suggestive evidence is strong that Mises worked
behind the scenes to draft that charter.
He couldn't publicly take credit for it because of his position at
the Chamber which included many opponents of laissez faire and because he
was Jewish in a city with a lot of anti-Semitism.
Linking Mises' name to monetary reform would have given many people
reason to oppose it." In
1923, the Austrian National Bank introduced a new currency, the schilling,
equal to 10,000 of the depreciated kronen.
Officially, the League of Nations supervised Austria's monetary
reform, but as Hayek explained, Mises "had a considerable hand in the
League of Nations commission...He was the only person in Vienna capable to
do that."
Mises represented Austria in negotiations with the Allied Powers
about war reparations. He
negotiated with other countries in an effort to liberalize trade
restrictions which limited Austria's postwar recovery.
"This does not mean that my recommendations were followed or
that my warnings were heeded," he acknowledged.
"Supported only by a few friends I waged a hopeless fight.
All I achieved was to delay the catastrophe."
Until World War I, socialism was little more than a utopian dream.
Karl Marx never spelled out how he thought government ownership of
the means of production would work. Socialism
came into its own for the first time as wartime governments in England,
France, the United States, Austria and especially Germany gained total
power over their economies. Governments
dramatically expanded their bureaucracies, enacted confiscatory taxes,
seized private businesses, conscripted labor, dictated what people would
produce and suppressed dissent.
Socialists urged that governments control everything all the time.
For example, the English Fabian socialists Sidney and Beatrice Webb
proposed in their Constitution for
the Socialist Commonwealth of Great Britain (1920): "In the first
place, the Socialist Commonwealth will put in force the principle of
Freedom of Socialized Enterprise...It will 'expropriate' without remorse
individual owners from their lands, their house property, their factories
and their enterprises, whenever this course seems to promote the general
well-being?it may be necessary to prohibit the publication of newspapers
with the object of private profit, or under individual ownership, as
positively dangerous to the community."
Although the socialist vision didn't come to pass right away,
except in the Soviet Union, it captured the imagination of intellectuals
everywhere. Socialism seemed
to be the wave of the future, and to oppose it was to defy history itself.
Yet Mises bristled with defiance.
In 1919, he wrote Nation,
Staat und Wirtschaft [Nation,
State, and Economy] which, among other things, made clear that war
socialism was chaotic rather than well-planned as its promoters claimed.
He cited "the stupidities of the economic policy of the
Central Powers during the war. At
one time, for example, the word was given to reduce the livestock by
increased slaughtering because of a shortage of fodder; then prohibitions
of slaughtering were issued and measures taken to promote the raising of
livestock. Similar
planlessness reigned in all sectors.
Measures and countermeasures crossed each other until the whole
structure of economic activity was in ruins.?
Mises gained an epic insight and delivered a paper about it, "Wirtschaftsrechnung
im sozialistischen Gemeinwesen" ["Economic Calculation in the
Socialist Commonwealth"], before the Economic Society.
The paper was subsequently published
in Archiv fur Sozialwisenschaft und Sozialpolitik (1920).
"Picture the building of a new railroad," Mises
explained. "Should it be
built at all, and if so, which out of number of conceivable roads should
be built? In a competitive
and monetary economy, this question would be answered by monetary
calculation. The new road
will render less expensive the transport of some goods, and it may be
possible to calculate whether this reduction of expense transcends that
involved in the building and upkeep of the next line.
That can only be calculated in money.
It is not possible to attain the desired end merely by
counterbalancing the various physical expenses and physical savings.
Where one cannot express hours of labour, iron, coal, all kinds of
building material, machines and other things necessary for the
construction and upkeep of the railroad in a common unit is not possible
to make calculations at all. The
drawing up of bills on an economic basis is only possible where all the
goods concerned can be referred back to money."
"Thus in the socialist commonwealth," Mises continued,
"every economic change becomes an undertaking whose success can be
neither appraised in advance nor later retrospectively determined.
There is only groping in the dark.
Socialism is the abolition of rational economy...Where there is no
free market, there is no pricing mechanism; without a pricing mechanism,
there is no economic calculation."
Mises decided to write a book on socialism.
F.A. Hayek -- whom one associate described as "a tall,
powerful, reserved figure" -- got a job at the Chamber of Commerce in
1921 and had this to say: "As a boss, Mises was absolutely ideal,
considerate and always ready to talk about economics except the work he
was doing himself at the moment. Of
that we heard only when it was finished.
All the time I was working for him, he was writing
Gemeinwirtschaft (Socialism).
Yet I first heard about it when the printed book was on his
desk."
The book was an overwhelming attack on socialism.
"If history could prove and teach us anything," Mises
wrote, "it would be that private ownership of the means of production
is a necessary requisite of civilization and material well-being.
All civilizations have up to now been based on private property.
Only nations committed to the principle of private property have
risen above penury and produced science, art and literature.
There is no experience to show that any other social system could
provide mankind with any of the achievements of civilization."
"Everyone carries a part of society on his shoulders," he
declared, "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 toward 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 on 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."
Hayek remembered, "When
Socialism first appeared in 1922, its impact was profound. It gradually but fundamentally altered the outlook of many of
the young idealists returning to their university studies after World War
I. I know, for I was one of
them.
"We felt that the civilization in which we had grown up had
collapsed. We were determined
to build a better world, and it was this desire to reconstruct society
that led many of us to the study of economics.
Socialism promised to fulfill our hopes for a more rational, more
just world. And then came
this book. Our hopes were
dashed. Socialism told us
that we had been looking for improvement in the wrong direction."
Converting Hayek into a champion of liberty was among Mises' most
momentous achievements.
When the English language edition of
Socialism came out in 1936, socialists expressed their outrage. G.D.H. Cole fumed in
New Statesman and Nation: "His book was perhaps worth translating
as a supreme example of academic absurdity."
H.G. Hayes in American
Economic Review: "diatribes against socialism do not help."
Harold J. Laski called Socialism an "extravagant and often ignorant diatribe."
An unsigned reviewer for the
New Leader wrote that Socialism
"contains more nonsense in 500 pages than any other I have recently
read." Jay Douglas,
writing in The Spectator, derided Socialism
as "hilarious
unreality." The
Economist, whose editors had drifted from the magazine's original
commitment to laissez faire,
thought Mises had gone too far, disparaging its "extreme and
uncompromising character seldom encountered in English controversy."
But there was some acknowledgement that Mises had scored important
points against socialism. In Economica, J.C. Stamp wrote that Mises had "lifted the ban, so
skillfully laid by Marx, upon the examination of his scheme by the tests
of scientific economic analysis."
Mises' challenge to socialism sparked a debate that raged for
years. In 1935, Hayek edited Collectivist Economic Planning, five forceful essays including
Mises' original paper about the impossibility of rational decision-making
without free market prices. The
American professor Fred M. Taylor gave a lecture on "The Guidance of
Production in Socialist State" which helped inspire the Polish
socialist Oskar Lange. . Taylor's
lecture was reprinted in the book On
the Economic Theory of Socialism (1938) which became gospel.
In 1936, Lange proposed a theoretical model for "market
socialism" which purported to overcome Mises' objections.
Ironically, Lange's theoretical model was never tried anywhere.
Intellectual historian David Ramsay Steele noted that "Lange's
was widely viewed as the standard work on the economics of
socialism...something that socialists could point to as a theoretical
demonstration that socialism was in principle economically feasible, and
then ignore. Lange is widely
thought to have made a decisive contribution to the debate, yet it is
difficult to find anyone who will specify what that contribution
is...Lange's scheme is not a model of 'socialism' in Soviet Russia or
other purportedly socialist countries.
Amid all the increasingly urgent calls, from 1953 until 1990, for
reform of Soviet-bloc economies, no one -- including Lange -- seems to
have thought that Lange was of any relevance."
Yet even Mises' fellow Austrian, Joseph A. Schumpeter, caved to the
socialists. In his book
Capitalism, Socialism and Democracy (1942), Schumpeter wrote:
"Can socialism work? Of course, it can...the answer...is clearly Yes...The answer
is in the affirmative. There
is nothing wrong with the pure logic of socialism."
In Europe, all the universities were government-owned, and only
those who belonged to one of the favored political parties could become a
professor. Mises was passed
over for more politically-connected candidates.
Mises was bitter about being denied a professorship.
"These three reasons contributed," Hayek explained,
"he was a Jew, he was known to be aggressive, and he was an
anti-socialist...On two or three occasions he was willing to go to small
universities where he had friends...a violent campaign developed against
him." Hayek continued:
"for a Jew to get a professorship he had to have the support of his
Jewish fellows...But the Jews who were teaching were all socialists, and
Mises was an anti-socialist, so he could not get the support of his own
fellows...the Vienna of the 1920s and 1930s is not intelligible without
the Jewish problem." In
retrospect, the world is surely better because Mises was denied.
"I am afraid," reflected Hayek, "that if he had been
a full professor in the University of Vienna he would probably not have
left Vienna in time, and it is difficult to say what would have
happened."
There was, however, still the possibility of becoming a Privatdozent. This
meant an individual had permission to teach and be called a professor, but
the university with which he was affiliated wouldn't pay a salary.
Sigmund Freud was a Privatdozent. In 1913,
after The Theory of Money and Credit
was published, Mises was appointed a
Privatdozent at the University of Vienna.
"Beginning in 1920, during the months of October to June,?
he explained, ?a number of young people gathered around me once every
two weeks. My office in the Chamber of Commerce was spacious enough to
accommodate twenty to twenty-five persons.
We usually met at seven in the evening and adjourned at ten-thirty.
In these meetings we informally discussed all important problems of
economics, social philosophy, sociology, logic, and the epistemology of
the sciences of human action. In this circle the younger Austrian School of Economics lived
on; in this circle the Viennese culture produced one of its last blossoms.
Here I was neither teacher nor director of seminar.
I was merely primus inter
pares (first among peers) who himself benefited more than he gave.
All who belonged to this circle came voluntarily, guided only by
their thirst for knowledge. They
came as pupils, but over the years became my friends."
After each session, participants adjourned for dinner at the Ankara
Verde Italian restaurant and later to a coffee house, usually Kunstsler
Kaffee. Best-known
participants: economists Hayek, Gottfried Haberler, Fritz Machlup and John
Van Sickle, philosopher Felix Kaufmann, game theorist Oskar Morgenstern
and political scientist Eric Voegelin.
There were women, too, including Helene Lieser, Ilse Mintz and
Martha Stephanie Braun. Nobody
received academic credit. Hayek
described the seminar as "purely a discussion club...the most
important center of economic discussion in Vienna..."
Recalled Fritz Machlup: "To this
Privatseminar, you could be admitted only after you had received your
doctor's degree. So I had to
earn my degree first and then, at the end of 1923, I was admitted to this
very illustrious circle...there were between fifteen and twenty regular
members, and for special subjects Mises invited some who were not
permanent members. For one
full year, for example, we discussed topics in philosophy of science.
There were several among us who later made their reputation in that
branch of philosophy. But
whether philosophers or economists, it is remarkable how many of these
large handfuls of scholars have made their careers in academic life.
Their works...are well known all over the world..."
Mises tried to persuade the Chamber of Commerce to hire Hayek as
his researcher, but after that effort failed, Mises established the
Austrian Institute for Business Cycle Research in January 1927.
Hayek served as the first director until he went to London five
years later, and the Institute sponsored lectures and published a series
of books. In 1930, the
Institute received generous funding from the Laura Spellman Rockefeller
Foundation where Mises' seminar participant John Van Sickle had found a
job. Laura Spellman
Rockefeller was the wife of John D. Rockefeller Jr., and her aim was to
help improve American social science teaching by tapping European talent.
"Mises had a foresight of the general decline of Europe in the
1930s, of the economic decline, and of the imminent crises and ultimately
of war," Hayek remembered. "He was very long-sighted, and what
he forecast ultimately came true although he was more pessimistic than was
justified. He was
extraordinarily well informed politically and always insisted that one
need have no special source of information.
Every time when I was surprised at his knowledge, he showed me that
he knew it all from the newspapers...His knowledge of recent Austrian
history, he told us, came from the obituaries...The first thing every day
in the office was to study the newspapers of the day and the second time
after his nap in the afternoon he visited the coffee house and again
studied the newspapers...He never kept files of newspaper clippings."
In 1927, Mises wrote one of his most accessible and appealing
works, Liberalismus, presenting
his utilitarian case for liberty. For
example: "We attack involuntary servitude, not in spite of the fact
that it is advantageous to the 'masters,' but because we are convinced
that, in the last analysis, it hurts the interests of all members of human
society, including the 'masters.' If
mankind had adhered to the practice of keeping the whole or even a part of
the labor force in bondage, the magnificent economic developments of the
last hundred and fifty years would not have been possible...The European
worker today lives under more favorable and more agreeable outward
circumstances than the pharaoh of Egypt once did, in spite of the fact
that the pharaoh commanded thousands of slaves, while the worker has
nothing to depend on but the strength and skill of his hands."
Similarly, Mises made a case for peace: "What alone enables
mankind to advance and distinguishes man from the animals is social
cooperation. It is labor
alone that is productive: it creates wealth and therewith lays the outward
foundations for the inward flowering of man.
War only destroys; it cannot create.
War, carnage, destruction, and devastation we have in common with
the predatory beasts of the jungle; constructive labor is our
distinctively human characteristic. The
liberal abhors war, not, like the humanitarian, in spite of the fact that
it has beneficial consequences, but because it has only harmful
ones."
Mises continued, "The German socialist, Ferdinand Lassalle,
tried to make the conception of a government limited exclusively to this
sphere [protecting liberty, property and peace] appear ridiculous by
calling the state constituted on this basis of liberal principles the
'night-watchman state.' But
it is difficult to see why the night-watchman state should be any more
ridiculous or worse than the state that concerns itself with the
preparation of sauerkraut, with the manufacture of trouser buttons, or
with the publication of newspapers."
Everywhere the Great Depression was blamed on capitalism, but Mises
countered with Die Ursachen der
Wirtschaftskrise: Ein Vortrag [The
Causes of the Economic Crisis, 1931].
He made a case that central bank policies were responsible for the
Great Depression. Namely,
artificially stimulating the economy by holding interest rates below
market levels and inflating the money supply.
When this process slows down, businesses which had become dependent
on it face a financial squeeze, and they begin laying people off.
Monetary contraction would bring on a severe crisis.
It could end quickly if people were permitted to negotiate wages
which reflected monetary contraction, but during the 1930s compulsory
unionism prevented this in many industries.
Hence, chronic high unemployment.
Mises' recommendation: "Forego every attempt to prevent the
impact of market prices on production.
Give up the pursuit of policies which seek to establish interest
rates, wage rates and commodity prices different from those the free
market indicates."
The German free market economist Wilhelm Ropke hailed Mises' book:
"With refreshing clarity and convincing arguments, Mises shows that
the very popular charges levied against capitalism today are directed at
the wrong target -- we are not suffering a capitalistic crisis but an
interventionist crisis."
Nonetheless,
this Austrian interpretation of the Great Depression was the last thing anyone
wanted to hear. Everybody was
looking for a quick fix. In
1936, John Maynard Keynes' General
Theory of Employment, Interest and Money (1936) seemed to promise it. Keynes told ambitious politicians and desperate people that
government should stimulate demand by inflating the money supply.
Keynesian ideas swept the world and dominated economic thinking for
the next 30 years. Mises was viewed as a has-been, and even some of those who
had attended his Vienna seminar, like the influential London School of
Economics professor Lionel Robbins, threw their lot with Keynes.
The intellectual tide was overwhelming.
Yet already some evidence suggested Mises was right. Back in 1920, the United States had suffered a severe postwar
depression; President Warren Harding cut the federal budget about 40%,
refrained from interfering in the economy, and that depression was over in
about a year. By contrast, in
1932, the year Franklin Delano Roosevelt was elected President, 11.5
million were unemployed, but after all his New Deal interventionist
policies and the dramatic expansion of compulsory unionism, there were
still 11.3 million unemployed in 1939; in 1932, households with 16.6
million people were on relief, but there were households with 16.9 million
people on relief in 1939. The
New Deal failed to get America out of the Great Depression.
Mises was invited by William E. Rappard to join the Graduate
Institute of International Studies, University of Geneva.
Mises departed for Geneva on October 3, 1934, but he left a lot of
personal possessions, including thousands of books he didn't need for his
current work, in the Vienna apartment where he had lived with his mother
since 1911. He remained in
Geneva for six years, conducting a seminar in French on Saturday mornings.
Mises, Rappard remembered, "is not only one of the keenest
analytical minds among contemporary economists, but...he also has at his
disposal a store of historical culture, the treasures of which are
animated and illuminated by...humanity and Austrian wit rarely to be found
today..."
Mises scholar Bettina Bien Greaves noted that "One by one, his
students also left Austria as Hitler's armies started rolling across
Europe. Friedrich A. Hayek
migrated to England; Fritz Machlup, Gottfried Haberler, Oskar Morgenstern,
Felix Kaufmann, Alfred Schutz, Erich Vogelin, and others, came to the
United States." While
Mises was at the Graduate Institute, Hayek came there to deliver five
lectures which were published as
Monetary Nationalism and International Stability (1937).
About a year after his mother died, Mises surprised all his friends
by getting married on July 6, 1938. His
wife was the former Margit Herzfeld, an actress who had performed in plays
by Johann Wolfgang von Goethe, Henrik Ibsen, Friedrich Schiller, William
Shakespeare and Leo Tolstoy, among others.
Born July 6, 1890, she was, according to Bettina Bien Greaves,
"a glamorous woman about five feet six inches tall.
She always dressed well. She
was a bit vain and something of a snob, but she was always a gracious
host. She was Mises' biggest
booster, even though he cautioned her that 'I write about money, but I'm
never going to have much.' Many
people reported that she made him more relaxed and gave him peace of
mind."
Margit met Mises at a dinner party back in the fall of 1925 when he
was 44 and she was a 35-year-old widow with a three-year-old son Guido and
eight-year-old daughter Gitta. "What impressed me about him,"
she wrote in her memoir, "were his beautiful, clear blue eyes, always
concentrated on the person to whom he talked, never shifting away.
His dark hair, already a little grayish at the sides, was parted,
not one hair out of place. I
liked his hands, his long slim fingers, which showed that he did not use
them for manual work. He was
dressed with quiet elegance. A
dark custom-made suit, a fitting silk necktie.
His posture indicated the former army officer...The next day, when
my hosts told me that he was considered to be the greatest living mind in
Austria, it gave me quite a shock. He
seemed so unpretentious and simple, so easy to talk to."
As Mrs. Mises reflected on their romance, "he kept it a
secret. And I didn't talk
very much. A few friends of
mine knew about it. You know
if something moves you inside very, very much, you don't talk about your
feelings. Lu didn't talk
about his personal affairs. No one knew about me. I
remember that a friend of my husband's told me many years later that she
had seen my husband once at the theater in those years with a young lady
who was exquisitely dressed. She
was astonished, because she was not used to seeing him with anyone in the
theater. Later on she
discovered I was the lady who was with him that evening."
Even in Switzerland, government interfered so much in private life
that the Mises' needed five lawyers and 19 documents for the marriage
which was a civil ceremony. On
the appointed day, Mises noted in his diary only that he was going to have
lunch with the two best men, jurist Hans Kelson and economist Gottfried
Haberler. Since Mises was in frail health, Mrs. Mises prayed that they
might have 10 years together.
Mises conducted only one seminar a week in Geneva and no longer
spent his time on Austrian Chamber of Commerce business, so he could focus
on a big book. The result was
the 756-page Nationaloekonomie,
Theorie des Handelns und Wirtschaftens [Economics:
Theory of Action and Exchange], published in 1940.
Reasoning from fundamental axioms about human action, he developed
a comprehensive case for free markets and attacked every type of
government intervention. It
was an act of courage to offer such a book while collectivism dominated
intellectual trends everywhere, and nations plunged into another world
war. The Geneva publisher,
Editions Union, issued a small press run.
By this time, Hayek had come to disagree with Mises' a priori
analytical method. Hayek
attempted "to persuade Mises himself that when he asserted that the
market theory was a priori, he was wrong; that what was a priori was only
the logic of individual action, but the moment you passed from this to the
interaction of many people, you entered into the empirical field.
Curiously enough, while Mises was very resentful of any criticism
by his pupils and temporarily broke with Machlup and Haberler because they
had criticized him, he took my critique silently..." In The Economic Journal,
Hayek graciously wrote that "Mises' lone voice seems...considerably
nearer the truth than the commonly accepted views."
As Hitler expanded his conquests throughout Europe, Mises stayed in
Geneva. He wanted to hold
onto the only professorship he had ever had.
He had a good salary and a solid reputation in the German-speaking
world. He approached his 60th
birthday and didn't relish the prospect of starting over in a new country
and a second language. "Of
course he knew English already," Mrs. Mises explained.
"He lectured once in a while in English, and he had written
some English articles. But he
never knew English as well as he did French.
French he really did know very well.
And he spoke it well! He
didn't have the bad accent which he had in English."
Then came the fall of France.
"The Germans had erected their flag high on top of the Eiffel
Tower," recalled Mrs. Mises. "It
was only then Lu himself decided to go." On July 4, 1940, the
Mises boarded a bus at the American Express office and left Geneva. They headed for Cerberes, France, a Mediterranean town near
the Spanish border, often changing routes to avoid the Nazis.
Three times they were turned back as they tried to cross into
Spain. They took a train to
Barcelona, then an airplane to Lisbon.
All ships to America were booked solid, and for 13 days Mrs. Mises
called on steamship line offices before they could book a passage on the
Export Line ship Exochorda.
Ludwig and Margit von Mises arrived in the United States on August
2, 1940.
After living in a succession of hotel rooms and apartments, they
settled in the 3-1/2-room apartment E at 777 West End Avenue, the
southwest corner of 98th Street, which they would occupy for the rest of
their lives. Mises didn't
have any prospects for a steady job.
In September 1940, he got $25 for giving a lecture at New York
University and $50 for writing a 5,000-word article about European
economic and social conditions.
Apparently, Mises had some funds in England, but he couldn't
transfer them to the United States because of exchange controls.
Hayek helped by purchasing rare books and sending them to Mises,
which was legal. For 28
guineas plus shipping cost, Mises seems to have acquired a set of Jeremy
Bentham's works. Hayek spent
almost L60 to get Mises a first edition of Adam Smith's
Wealth of Nations.
Mises was deeply depressed. Reflecting
on his life, he wrote: "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."
Within a month after he arrived in America, Mises gave New York Times financial editor Henry Hazlitt a call.
Hazlitt had first encountered Mises' name when he was reading
The Value of Money (1917) by Benjamin Anderson.
Here's the passage that caught Hazlitt's eye: "In von Mises,
there seems to me to be very noteworthy clarity and power.
His Theorie des Geldes und
der Umlaufsmittel [The Theory of
Money and Credit] is an exceptionally excellent book.
Von Mises has a very wide knowledge of the literature of the theory
of money. He has a keen
insight into the difficulties involved."
Hazlitt had reviewed the new English edition of
Socialism in the January 9, 1938
New York Times: "No open-minded reader can fail to be impressed
by the closeness of the author's reasoning, the rigor of his logic, the
power and unity of his thought?this book must rank as the most
devastating analysis of socialism yet penned...Mises analyses his problem
from so many sides that it is difficult even to outline his argument in a
brief review. The contention
most closely associated with his name is that socialism is certain to fail
because it is incapable by its very nature of solving the problem of
economic calculation. Unable
to solve this, a Socialist society would not know how to distribute its
labor, capital, land and other factors of production to the best
advantage."
Hazlitt remarked that he thought of Mises as a distant historic
figure and was as amazed to get the call from Mises as he would have been
to hear from John Stuart Mill (who died in 1873).
Mises didn't talk about his financial difficulties, but his wife
Margit mentioned that he needed a job.
Hazlitt asked his friend Benjamin Anderson, who had been an
economist with Chase National Bank for almost two decades, and Anderson
arranged some kind of meeting at Harvard University, but it didn't go
well. Hazlitt made inquiries
at Manhattan's New School for Social Research which was hiring refugee
scholars from Europe, but nothing came of that, either.
Hazlitt encouraged Mises to write nine articles about the European
situation, and they were published in the
New York Times. The
articles brought Mises some important recognition and led to a connection
with the National Association of Manufacturers, a leading opponent of
government intervention in the private sector.
"Lu was invited to work with the Economic Principles
Commission, which was authorized by NAM's president and board of directors
and which labored over many years," Mrs. Mises reported.
"Lu was a contributing member of the special group that
created a two-volume study called The
Nature and Evolution of the Free Enterprise
System. Lu's relations
with the NAM lasted from 1943 to 1954, giving him a forum where he met all
the important industrialists of the country, the most respected
economists, and the best known businessmen."
Meanwhile, on December 24, 1940 -- the day before Christmas --
Mises was notified that the Rockefeller Foundation made a grant to the
National Bureau of Economic Research so that he would have some income.
That Foundation had previously funded visits to the United States
by Mises (1926) and fellow Austrians Gottfried Haberler, Fritz Machlup and
Oskar Morgenstern. Mises'
grant was renewed through 1944. It
enabled Mises to write Omnipotent
Goverment and Bureaucracy --
Mises' first books in English.
Hazlitt proved he was a loyal friend when he helped get Margit von
Mises' daughter Gitta Sereny, then about 20, out of Nazi-occupied Paris.
"When you first told me about Gitta's problems," he
reminisced with Mrs. Mises, "I got in touch with Anne O'Hare
McCormick, my colleague on the TIMES, who as you know was the chief writer
on foreign affairs for the TIMES then, and she suggested that I get in
touch with Breckinridge Long, then Assistant Secretary of State, and in
charge of the refugee problem. I
went to Washington and called on him.
He promised to take personal interest in the matter, and kept his
word, finally notifying me that an immigration visa had been issued to
Gitta Sereny on January 21, 1941...As you may remember, there was also a
great deal of correspondence for months after that about how to get Gitta
out of Portugal, which we finally did."
Hazlitt did more. "After
I had fruitlessly written to some half-dozen publishers trying to get
OMNIPOTENT GOVERNMENT published," he told Mrs. Mises, "I spoke
to my colleague on the TIMES, Charles Merz, and found that he was a
trustee of the Yale University Press.
He offered to write to them about the book, and must have done so
on April 12, 1943; for I have a copy of Eugene Davidson's reply, dated
April 13, 1943, referring to the letter, saying 'We'll be very glad to see
von Mises' book, or whatever parts of it are completed.'
You will remember that they agreed to publish it only if I would
edit it, which I agreed to do."
Yale published Bureaucracy and Omnipotent
Government in 1944.
Bureaucracy mounted a new
attack against socialism. Mises
explained that private entrepreneurs can delegate considerable
responsibility to their managers, because performance is easily measured
by profit and loss. But
bureaucratic management, which socialists want to run the world, can't be
measured by profit and loss. Consequently,
rulers limit the discretion of administrators with regulations, and
obeying the regulations becomes the supreme standard of conduct.
"They are no longer eager to deal with each case to the best
of their abilities," Mises continued, "they are no longer
anxious to find the most appropriate solution for every problem.
Their main concern is to comply with the rules and regulations, no
matter whether they are reasonable or contrary to what was intended.
The first virtue of an administrator is to abide by the codes and
decrees. He becomes a
bureaucrat." |
