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IC's Top 25 Philosophical and Ideological Conservative Books
No. 22 - Ludwig von Mises, Method, Money, and the Market
Process: Essays

by Dr. Enrico Peppe
3 December 2003Ludwig von Mises

Method, Money, and the Market Process is a beautiful introduction to the work of Ludwig von Mises. The twenty one essays deal with the topics of methodology, money, trade, economic systems, and ideology.

Ludwig von Mises was born in the Ukraine in 1881. His family moved to Vienna shortly thereafter. He entered the University of Vienna after gymnasium and studied economics under the great theorist Eugen Bohm-Bawerk and the noted professor Menger, whose textbook, "Principles of Economics," regarded even today as the foundational text for Austrian economics, became inspirational for the young Mises.

After brief stints with sundry government agencies in Austria (the bureaucracy of which he abhorred), he began work with the Vienna Chamber of Commerce, where he honed his skills as an economist and writer. While there, he published the "Theory of Money and Credit," a monograph demonstrating that money is not a neutral commodity, and has varying effects on income redistribution. He served as an officer in World War I.

Following service, he published "Socialism" and "Liberalism." Both works became influential in world economic circles. These works influenced Hayek and Ropke, who would became major economists in their own right (the former in the world of academe and the latter as a major influence on the German miracle following the second world war).

Mises began to develop his grand theory on economic epistemology, wherein he contended that economics was an "a priori" consideration and thus did not lend itself to the a posteriori method of scientific analysis. He termed his approach "praxeology," the science of human action.

He left for the United States after marrying Margit and worked (where he had considerable influence) for the National Bureau of Economic Research and the National Association of Manufacturers. In 1945, he became professor in the School of Business at New York University, where he remained until he became ill in 1969.

In 1949, his most elaborate work, "Human Action" was published, and in such expanded his original Theory of Praxeology. Today this work rests very comfortably alongside the "Wealth of Nations," "Kapital," "Progress and Poverty," and the "General Theory." His influence on his students was extraordinary (Rothbard and Kirzner, notably). Mises died in 1973, leaving behind a considerable amount of scholarly essays, monographs, and books. The Mises Institute is the recognized depository of his work. 

The collection of essays (selected by his widow), "Method, Money, and the Market Process," is a beautiful introduction to his work, spanning, as it does, both his early and later periods. The twenty one pieces, comprising the entire book, deal with the topics of methodology, money, trade, economic systems, and ideology.
There is not one poor essay in the mix.

A leitmotif surrounds Austrian economics, all of which, at one time or another, and in varying genres, Mises pays homage to and expands upon. Econometrics is verboten since, no matter the sophistication of the mathematics involved, one cannot divine what the human actor will do in a given marginal situation as well as in a particular historical and cultural milieu. Man's perception of the possible is the cornerstone of all economic transactions, so that elasticities of supply and demand depend upon the actor's choice in terms of what is best for him. Mises was first to point out that econometric (read:"Keynesian") analyses could not knowingly account for the hyper-inflation of the German economy after the first world war since statistizing cannot fathom the fact that many of the the human actors were out of work mainly due to malnutrition.

The econometrician, limited by finite mathematics, is not able to dissect, as the Austrian economists dissect, the step-by-step sequential process of individual market actions.

Dr. Ebeling, who composed the fine introduction to the collection, explains that, "macroeconomic aggregates (in Austrian methodology), ... are decomposed into their microeconomic components by rigorously analyzing the 'transmission mechanism(s) of monetary injections." The reviewer adds that in all cases, the injections are government-induced.

A recurring Austrian (and Misesian) theme is the debunking of the Keynesian notion that since markets clear at equilibrium prices, market economies and planned economies are interchangeable. In fact (and here is Mises' great worth), planned economies fix nothing. State interventions make worse the economic conditions that the interveners (the Left) attempt to remedy. Ebeling's explication is brilliant: "An intervention impinges upon the economic system at some point. The relative price and production relations of the market are disturbed resulting in a (distortion) of the market order." 

Snowballing occurs and supplies and demands become imbalanced. Mises aims to fix this by his construction of a sequence analysis that reinforces the older classical approaches that analyze short-run effects of intervention while keeping in mind longer-run consequences. Mises and the Austrian School do not buy into Keynes' famous rejoinder that in the long run, "we are all dead."
Five essays stand out for me for their relevance to the current dynamics (and squabbles) found in the movement of the Right.

Essay I, Social Science and Natural Science (1942)
Mises writes in the same tradition as Kirk, Weaver, Strauss and Voegelin. He takes to task the Enlightenment and its birthing of positivism and scientism. 

As a result of a posteriori thinking, economics was not able to become a discipline of its own. Economics, says Mises, is a deductive system. It studies human reason and conduct. Human action is based on a priori considerations (in this sense, it's like theology). I cannot think of a camp on the right, other than "Leftist" anarchism, denying this contention.

Essay V, The Non-Neutrality of Money (1938)
Mises cunningly demolishes the Left's fixation with the Keynesian fix-it-quick-with-money approach. Since socialists perceive money as static and symbolic, Mises, by brilliant logic, demonstrates that money has a life of its own. It always ends up in someone's pocket, and hence wields power (which usually is state-power).

Essay XII, The Plight of the Underdeveloped Nations (1952)
Mises examines the enormous (albeit erroneous) influence of the Western left on the political and economic thinking of most leaders of the "Third World." Underdeveloped nations should remove all obstacles "fettering the spirit of enterprise...(the) accumulation of domestic capital...and the inflow of capital from abroad."
Only in this way is there a fair distribution of wealth and income. 

Essay XIII, Capitalism versus Socialism (1969)
This is the best essay in the collection. With brilliance of brevity, Mises eradicates the economics of the Left. With a philosophic flair sometimes absent in his larger works, he equates capitalism with Liberalism (in its correct nineteenth-century meaning) and develops fully the thesis that historically, capitalism, only capitalism, has improved man's lot. 

Essay XXI, The Idea of Liberty is Western (1950)
"The history of civilization is the record of a ceaseless struggle for liberty." With this statement, Mises commences a cogent castigation of the eastern mind with its steadfast adherence to totalitarianism, and a concrete celebration of the evolved political traditions of Athens, Rome and Philadelphia. If only today's Neoconservatives would have taken the Mises admonition, we might have been spared the turmoil evident in winning peace.

I have reached two conclusions from a re-reading of the Mises collection as these relate to the current fissures taking place within the movement of the Right.

1. In addition to the Paleocon versus Neocon split, which seems too deep to be easily resolved, there are serious problems within the Libertarian movement, which might be settled, though it will take an abundance of cheek to do so (for a review of the seriousness of the Paleo/Neo problem, read IC editor Rachel Alexander's excellent piece.) The Libertarian movement, represented by the Mises Institute, now under the leadership of Lew Rockwell, must dissociate itself from the divisive nuisances of: Justin Raimondo's Leftist Anti-war.com, Sam Francis and his Paleoconservative exclusivism, the monarchy-loving fantasies of Hans-Hermann Hoppe (derived as it is from the Old Right's Seward Collins), the libertine, Taki, of the American Conservative, Joe Sobran and his obsession with Zionism, Charley Reese and his ambivalence toward conservatism, the editorial leadership of Reason magazine, and sundry other publications, personalities, and movements (the purely Leftist anti-global, anti-deodorant, demonstrants come to mind), not sharing the vision and subtlety of a Mises. There is no room in this great movement for rude, self-styled "libertarians" like Bill Maher and Howard Stern.

In no way do I disparage the above-named. They have the obvious right to ply their trades. Sam Francis, Charley Reese, and Joe Sobran are excellent wordsmiths -- their columns sparkle.
But, they are impediments to a fusion of the sound movements of the Right.

Edward Feser puts it this way:  "(Both Libertarians and Conservatives are committed)...to the idea of the dignity of man...(the Left) tends to portray human beings in de-humanizing terms, as little more than clever animals...(not capable) of living up to any morality...True libertarianism isn't 'cultural libertarianism.' It is instead a profound vision of human beings as free, not properly subject to the arbitrary will of any man...or government -- and if it is to succeed...it ought to be committed also to the promotion of an ennobling and inspiring use of that freedom." 

Reason magazine and The Nation belong together -- LewRockwell.com and NR Online belong together.

Left-libertarians are in hate with traditional values and religious proclivities. But, Mises and Hayek blend well with Burke. The bitter lessons learned by Lew Rockwell and his championing of the Buchanan candidacies, and that of Rothbard's past acceptance of Karl Hess, need to be re-learned and re-iterated time and again.

The "fusionism" sought years ago by Frank S. Meyer, and touted today by Donald Devine of the ACU can be achieved, but only if all principals involved will abandon ideological and stylistic consistency for the sake of such, and cult-like adoration of their heroes.

2. From my reading of the Mises collection and some other of Mises' works (I say "some" advisedly since I would be called home long before I finished all of his canon), I see no reason why a synthesis of sorts could not occur with the reasonings of Milton Friedman, Ayn Rand, and George Will. In the late, great Henry Hazlitt's magnificent work, "Economics in One Lesson" (1946), he states:  "The art of economics consists in looking not merely at the immediate, but at the longer effects of any act or policy; it consists in tracing the consequences of that policy, not merely for one group, but for all groups."

The Left believes in no such dictum. The Right would not disagree. But, for proper fusion, the Austrian School must cede some of its original, and sometimes, wrong conclusions, and take what is correct, and share with the Chicago Friedmanites, who must cede some of their adherence to floating exchange rates, and revisit the necessity of a gold standard. It would bode well to welcome the current scholars of the Ayn Rand tradition since their work on the connection between egoism and liberty, within the frame of capitalism, is sadly neglected, and if properly studied, could only validate the verities and varieties of the Right-wing cause. Their top-notch studies of Aristotle, Thomas Aquinas and Ortega y Gasset are certainly not Leftist fare.

Finally, the movement might carefully examine George Will's statement in his Statecraft as Soulcraft in which he ruminates on how an individual lives, as being inseparable from the idea of a good society. He says, "All economic arrangements, whatever the mixture of free trade and protection and subsidies and entitlements, should be discussed as expedients. They should be evaluated in terms of the contributions they make to the things we value fundamentally." 

I am convinced that the bona fide camps on the Right hold as solemn the twin notions of liberty and justice.

There is room for disputation in the Academy. There is no room for disputation on the front.

Method, Money and the Market Process: Essays is available at Amazon.com.

Other books in the series
#23. Eric Voegelin -- Science, Politics and Gnosticism
#24. Frank Meyer -- In Defense of Freedom: A Conservative Credo
#25. Leo Strauss -- Natural Right & History

Dr. Enrico Peppe is a retired educator who runs the website The Third Way. A widower with too much time on his hands, he spends most of his time reading and thinking about the conservative movement, studying Catholic theology, working on his "Third Way" website, listening to Sinatra and Miles Davis, and admiring Ann Coulter.

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