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Ludwig Von Mises Becomes a Professor
In 1913, Ludwig Von Mises became an economics professor in Vienna, Austria at the University of Vienna at age 32. Von Mises had attended Vienna University beginning in 1900, and learned from the famous Austrian economist, Carl Menger von Wolfensgrün. Von Mises' position as professor was unpaid and so he also worked for the Vienna Chamber of Commerce and for his country as an economist until 1934 when he received a paid position from the university. Vienna was the capitol city of Austria-Hungary in 1913, and in 1914, World War I was preparing to rearrange the map. As World War I began in July 1914, Mises became an artillery officer on the front lines of the war where he served for the first three years. In the final year of the war, he worked for the economics department of the Austria-Hungary War Department.1
Before receiving his unpaid position as a university professor, Mises published his first book in January 1912, titled The Theory of Money and Credit. Murray Rothbard, a modern American economist in line with the Austrian School of economics called it one of "the best book[s] on money ever written."2 Despite Mises going on to become a world-renowned economist, the book was never given credit by the mainstream economic schools. For one, it was not translated into English from German until 1934.3 Furthermore, World War I left a vacuum where fewer economists were building economic theories and unfortunately, the vacuum in America was filled by Irving Fisher of Yale University and Frank Knight from Chicago University. In Britain, John Maynard Keynes stepped into spotlight. Each of these men were advocates of monetary expansion/elasticity in order to answer economic challenges and fluctuations in the business cycle.4
Following the war, there were several openings for paid economics professors at Vienna University, however Mises, despite his brilliance, was skipped over in favor of other, less qualified candidates.5 According to former students and faculty, Mises had three problems that disqualified him. First, he was Jewish, which was becoming more and more unpopular in those days. Second, he was immovable in his beliefs and convictions. And Third, his beliefs were that laissez-fair liberal capitalism was the best economic system, which stood in antithesis to the growing popularity of socialism and Marxism.6 In fact, to highlight this point, it is interesting that several future socialist and Marxist revolutionaries all lived in Vienna at the exact same time in 1913. This included Adolf Hitler, Joseph Stalin, Leon Trotsky, and Tito Broz. It is even suspected that Vladimir Lenin visited the city and met with Stalin and Trotsky in 1913. Socialism and Marxism were gaining ground and Ludwig Von Mises was located at ground zero, fighting a losing battle, advocating its polar opposite ideology. Naturally, this came with a cost to Von Mises' career.
Richard Von Mises
To highlight Von Mises' pedigree, he also had gifted siblings as the oldest of three sons. In 1916, his next youngest brother, Richard Von Mises, invented the Mises Aircraft, which was a 600 horse power aircraft created for Austria in the war despite never seeing any action in the war. Richard Von Mises went on to become the chairman of the Dresden Institute of Technology. Dresden was the capitol city of German Saxony. In 1918, Richard Von Mises also created the statistical theory of the "Von Mises Distribution."
Von Mises Versus Socialism
In 1917, Russia removed itself from World War I as the Bolshevik Revolution was beginning. In the midst of the Bolshevik Revolution, Ludwig Von Mises was outspoken that socialist economies are an impossibility. In 1920 he wrote an essay titled Economic Calculation in the Socialist Commonwealth and followed that up with a more thorough assessment in a book titled Socialism which he published in 1922. He was one of the first to challenge the socialists to demonstrate how their pricing system would work in a socialist economic system. Of course, there was no good answer.
In this simple explanation from his book Socialism, he demonstrates why socialism and Marxism are guaranteed to fail.
The fundamental objection advanced against the practicability of socialism refers to the impossibility of economic calculation. It has been demonstrated in an irrefutable way that a socialist commonwealth would not be in a position to apply economic calculation. Where there are no market prices for the factors of production because they are neither bought nor sold, it is impossible to resort to calculation in planning future action and in determining the result of past action. A socialist management of production would simply not know whether or not what it plans and executes is the most appropriate means to attain the ends sought. It will operate in the dark, as it were. It will squander the scarce factors of production both material and human. Chaos and poverty for all will unavoidably result.7
Von Mises and FA Hayek on Socialism
Von Mises had several brilliant students who would go on to become renowned economists in their own right. Perhaps the most famous enrolled at Vienna University in 1918, named Friedrich August von Hayek. FA Hayek went on to receive doctorates in law and economics in 1921 and 1923, respectively. Hayek experienced an illustrious career as an economist at the University of London and even became a British citizen in 1938 prior to World War II. Hayek and Von Mises remained lifelong friends and the two held each other in high regards until the end. However, Hayek did tend to drift away from his teacher in certain areas of praxeology. For example, Hayek believed that liberty could somehow become compatible, or operate alongside the welfare state, whereas Von Mises contended that these are two incompatible, mutually exclusive ideas.8 With Von Mises, there was no such thing as neutral ground that could be compromised. Von Mises and Hayek largely agreed with one another but Hayek held certain theories slightly to the left of his teacher, Von Mises.9 Again, this goes to demonstrate Von Mises' unwavering convictions, in my opinion.
German National Socialism
When the 1930s arrived, Von Mises had already lived through one world war and was about to experience another. He kept his finger firmly on the pulse of Nazism and warned of its dangers early on. Thanks to his early warnings to leave Austria, some of his peers would credit Von Mises' for saving their life. He joked that one day him and a handful of his students would immigrate to South America and start a nightclub.10 FA Hayek was first to immigrate from Austria-Hungary in 1931 as he received a paid professorship at the London School of Economics just as the monetary world was falling into chaos during the Great Depression. Von Mises escaped the Holocaust just as it was about to reach its peak, leaving in 1940 for the United States, as Operation Reinhard started in 1941 and the Final Solution in 1942. After moving to New York, he was able to write using grants from the National Bureau of Economic Research and returned to teaching in 1945 for the Graduate School of Business at New York University.11
Ludwig Von Mises was an economic light in one of the darkest economic periods in history. He lived near ground zero where the ideas opposite of his own were born and growing. In the face of great danger, he remained steadfast in his convictions that socialism and Marxism are evil and that laissez-faire capitalism is the best solution. In 1952, Ludwig Von Mises republished his book, The Theory of Money and Credit, and put this in the newly written preface to the book.
Forty years have passed since the first German-language edition of this volume was published. In the course of these four decades, the world has gone through many disasters and catastrophes. The policies that brought about these unfortunate events have also affected the nations' currency systems. ...all countries today are vexed by inflation and threatened by the gloomy prospect of a complete breakdown of their currencies.12
...one of the main tasks of economics is to explode the basic inflationary fallacy that confused the thinking of authors and statesmen from the days of John Law down to those of Lord Keynes. There cannot be any question of monetary reconstruction and economic recovery as long as such fables as that of the blessing of 'expansionism' form an integral part of official doctrine and guide the economic policies of the nations.13
Today, the nations of the world are still plagued by inflationary, fiat currency, even all these years later. The nations, broadly speaking, have still not learned their lesson and turned from these evil ideologies. But there is something unique and different today than there was in the days of Von Mises. Today, a solution has presented itself in the form of a new currency called bitcoin, which is not under the control of any nation-state. And for those who wish to operate in a world where their money has defined scarcity instead of unlimited 'elasticity,' that option has finally become available.
Sources:
Rothbard, Murray Newton. The Essential Von Mises. United States: Bramble Minibooks, 1973. 68.
“The Theory of Money and Credit,” Mises Institute, accessed October 26, 2023, https://mises.org/library/theory-money-and-credit.
Rothbard. The Essential Von Mises. 26.
Rothbard. The Essential Von Mises. 26.
Rothbard. The Essential Von Mises. 69.
Rothbard. The Essential Von Mises. 70.
Socialism. N.p.: Ludwig von Mises Institute, (n.d.). 585.
Rothbard. The Essential Von Mises. 111-112.
“The Hayek and Mises Controversy: Bridging Differences,” Mises Institute, accessed October 26, 2023, https://mises.org/library/hayek-and-mises-controversy-bridging-differences-0.
Rothbard. The Essential Von Mises. 96.
“Mises: His Life & Influence | Online Library of Liberty,” accessed October 26, 2023, https://oll.libertyfund.org/page/mises-his-life-influence.
Von Mises, Ludwig. The Theory of Money and Credit. Germany: Harcourt, Brace, 1935. 9.
Von Mises. The Theory of Money and Credit. 9.