Peter Boettke on Mises
Dec 27 2010

Pete Boettke of George Mason University talks with EconTalk host Russ Roberts about the life, work, and legacy of Ludwig von Mises. Boettke outlines Mises's most important contributions to economics--business cycle theory, the socialism/calculation debate, and the application of economics to a wide range of behavior beyond the financial. Boettke discusses how Mises fits into the Austrian tradition and how he influenced scholars who came after him. The conversation closes with a discussion of Mises's most important works and suggests which books and articles are most accessible to a beginner who wants to explore Mises's ideas.

Peter Boettke on Austrian Economics
Pete Boettke, of George Mason University, talks with EconTalk host Russ Roberts about the origins and tenets of Austrian economics. This is a wonderful introduction to how the so-called Austrian economists look at the world and how they continue to...
Don Boudreaux on Macroeconomics and Austrian Business Cycle Theory
Don Boudreaux, of George Mason University, talks with EconTalk host Russ Roberts about the microfoundations of macroeconomics and the Austrian theory of business cycles. Boudreaux draws on Erik Lindahl's distinction between microeconomics and macroeconomics, emphasizing the difference between individual choices...
Explore audio transcript, further reading that will help you delve deeper into this week’s episode, and vigorous conversations in the form of our comments section below.


John Arkwright
Dec 27 2010 at 11:34am

In talking about the motivation problem vs. the calculation problem in communism, Russ seems to say that the soviets lost the intellectual argument on the calculation problem, but that the calculation problem was not the true cause of the collapse of the USSR. It could be that Russ was just not clear on that point.

When we view the draining of the Aral Sea to irrigate crops that the salt water would eventually kill, consumers feeding bread to chickens because it was cheaper than wheat, the diversion of Ukrainian wheat for hard currency (yes, I realize this was, perhaps primarily, genocide with benefits), we should pause. I would have difficulty believing that the calculation problem was not a major reason that, as Russ said, “they could not produce the goods.” Massive misdirection of resources would have been a principal reason that they could not produce the goods.

Dec 27 2010 at 11:45am

I was really looking forward to this episode and am glad that I enjoyed it. Boettke did a good job of summarizing the main contributions of Mises’ scholarship. Hopefully it sparks a curiosity among the other listeners and they dive into the entire Mises oeuvre. One of the most enjoyable periods of my life was the few months I spent reading most all of Mises’ main works. If you’re on the fence after hearing this podcast, I can’t emphasize enough how enjoyable I found the sharpness and precision of Mises arguments. I literally looked forward to every short bit of time that I could squeeze in a few chapters. If your goal is to learn economics, then there is no finer place to start than with the work of Ludwig von Mises.

David B. Collum
Dec 27 2010 at 2:17pm

Great podcast. No comments. While listening to another podcast about self organizing systems, I was reminded of the following video showing what happens when you turn off all of the traffic lights in a town…

Sorry to stray so far from today’s topic (although not free market behavior)

David Boudreau
Dec 28 2010 at 10:34am

Excellent! I really appreciate the work you do. My thanks to both of you.

Mike montchalin
Dec 28 2010 at 12:40pm

One of the very best podcasts ever. Very enjoyable. Strange that Mises is still a little out of step, while his cadence matches reality.

Dec 28 2010 at 5:16pm

Fantastic show, you could hear how much these two guys love Mises!

Dec 29 2010 at 2:26am

I would love to get a bumper sticker that reads “What Would Mises Do?”

Justin P
Dec 29 2010 at 12:03pm

Great show.

I had never really thought about why Hayek stood in the spotlight over Mises against Keynes until it was brought up by Russ. It makes perfect sense now.

Just for any followers of Econtalk that don’t know… has all of Mises’ work for free as pdf and epub. So if you have a Nook or Kindle, go there and get it!

Dec 29 2010 at 12:30pm

The inability of a socialist system to allocate resources *is* the calculation problem.

Jon B
Dec 29 2010 at 2:57pm

Another excellent podcast. I really am excited that you intend to do more of these “biography” chats. I feel like a lot of historical economic greats get very notoriety, for a variety of reasons. Perhaps this podcast, and those to come, can shed some light on those economic forefathers whose accomplishments have paved the way for the modern crop to shine.

Dec 29 2010 at 6:42pm

Another really good one guys.

There often appear little gems of ideas in the tangents that force me to stop the podcast and think. In this podcast it was about the socialist counterpoint to the obvious disconnect between their method of organisation and human nature; they were of the opinion that human nature would change under socialism, a new socialist man would emerge. The term is something I must have heard many times before, but it was in listening to this podcast that I realised its importance (and had a digestive reaction to its absurdity).

More biographical podcasts would be great. So too would podcasts on specific historical economic debates. The point was raised in this podcast that the history of economics can be broken up into individual debates. It seems like the context of these debates is very important to developing a good understanding of the economic ideas within them.

Adam 2
Dec 29 2010 at 7:57pm

I’d like to echo what Kimble says: “More biographical podcasts would be GREAT.”

One of my favorite podcasts was the one about Nikolai Bukharin with Paul Gregory. I am also a huge fan of the Trotsky podcast as well. I feel like I have a pretty good understanding of a lot of the concepts of economics, but when I hear some of the historical details of the people who introduced these concepts it’s a real treat.

I hope that these econ bio-casts are a reacquiring theme on EconTalk.

Mark Plus
Dec 30 2010 at 2:23pm

Soviet central planning seemed to pay off for Fred Koch in the 1930’s. He used the money he made from building oil refineries in the Soviet Union to create the family fortune which his rentier sons Charles and David now spend on libertarian think tanks and keeping Austrian economists as clients in pretend-jobs.

In other words, Soviet economic miscalculation apparently directed resources towards the creation of American libertarianism in a roundabout way, something which wouldn’t have happened under the market process.

Dec 30 2010 at 3:41pm

Interesting how he discussed how Mises was Jewish and had to escape the Nazis. More interesting in the light that Lew Rockwell, who founded the Mises Institute has ghost written a string of antisemitic articles for Ron Paul’s newsletter.

[It is a matter of rumor, not fact, that Rockwell may have ghost-written the Ron Paul newsletter articles in question.–Econlib Ed.]

Mort Dubois
Dec 30 2010 at 9:57pm

@ David Collum: do you think turning off the lights would work so well if there hadn’t been a consistent, government enforced rules regime in place for 80 years previously? See any video of Mumbai traffic for how well “emergent” traffic order works.

D. F. Linton
Dec 31 2010 at 8:41am

Excellent podcast. I agree that more podcasts focused on critical debates in economics would be wonderful.

Since Econtalk podcasts are free, I assume your incentive structure is based on self-satisfaction and audience appreciation. In my book, your work on Econtalk fully merits the first and, from me at least, you have earned the second.

Dec 31 2010 at 11:48am

Great as usual, Russ. Funny that Prof. Boettke doesn’t mention the single best place to find Mises’ works–many for FREE!–the Mises Institute. I seem to remember that same oversight when you interviewed him about Mises a couple years ago. The Institute is a fantastic source for works by and about Ludwig von Mises.

[N.B. Boettke was most interested in exploring and simplifying the content of Mises’s intellectual history and biographical legacy, rather than focusing on recommending any one particular web source among several excellent ones available for reading Mises’s works in his native language or in translation. In the interest of transparency, note that EconTalk is a Liberty Fund website. Both Liberty Fund and the Mises Institute offer high quality, carefully translated and closely similar, fully authorized, editions of Mises’s works, in various formats, at various prices–including free online editions of Mises’s major works. We encourage readers to delve into all available options at both sources, or at other competitive sources; and as such we link to several sites and sources in the Readings above. –Econib Ed.]

Jason Treit
Dec 31 2010 at 2:25pm

Loving Adam’s idea of WWMD swag.

One confusion of mine as regards both Mises and Hayek is their itch to diagnose business cycles. Distorting interventionism aside, why wouldn’t booms and busts follow naturally from the understanding that economics is not a calculated stasis but a process of discovery, creative destruction, and resource reallocation through capable yet fallible human action?

Dec 31 2010 at 6:01pm
Jan 1 2011 at 5:42pm

Sorry to be a bit of a skunk at the garden party. I was a bit frustrated by Boettke’s scattershot answers, which I found disorienting. Made me wish he had made an outline in advance. Maybe he did, but for a three-hour podcast…

Jan 2 2011 at 11:27pm

I preface this comment by saying I have not actually read Mises so my understanding of his ideas is based on nothing. (I have a long and neglected reading list.)

That said, I don’t think this was a good introduction to the importance of his economic thought. Too much focus on biography – which was interesting – not enough and too dismissive on his ideas. In particular, not enough attention given to his idea of praxeology. This idea stands in stark, stark heterodoxy to the mainstream economics that has dominated the course of mankind over the past 100 years. Mises’s rejection of empiricism in the study of human action is a dangerous and very much alive challenge to the justifications that have lynch-pinned failed economic policies from Keynes to Friedman to Bush, Bernanke, and Obama. (ie. the “we printed money and GDP grew” defense.) Hayek would have called these justifications “scientism” and addressed the topic in his Nobel lecture. (Also ties in with the talk on the economics of science from a while ago.)

Also, to label Austrian monetary theory as the broken clock correct twice daily is an absolute joke.

Todd Weber
Jan 3 2011 at 10:08am

Thank you! I stumbled upon Mises almost two years ago while doing research for a paper on Socialism, and have been a fan ever since. That has led me to Hayek and others, all of whom I read at every opportunity. I so appreciate this discussion as it helps to contextualize these people and their contributions to the world. Keep up the great work!

Jan 3 2011 at 11:50am

Everything you said is definitely integral to their thought, but if it were ONLY a matter of random discovery and creative destruction, then it would occur more evenly over time. The Great Question economists have struggled with, however, is why Busts occur over such a short period, and to such a large, industry-wide degree.

Jan 3 2011 at 12:44pm

Everything I know about economics, I have learned from your podcasts! I also listen to others such as those of AEI and LSE, but yours are the best and most accessible to me. You have opened my mind and helped me to understand what a”free market” means, and the difference between capitalism and crony capitalism and just understanding those concepts has changed my political philosophy dramatically. While I still do not know much, I now KNOW that I don’t and soak up the information you provide to learn a little bit more. It’s actually a little scary to realize how little I knew before and that I am just one of many voting Americans in that predicament!

I also want to compliment you on your excellent interviewing skills. You do not overwhelm your guests with your extensive knowledge, you are very familiar with their work and lead them artfully through the salient issues. You let their work and ideas shine. Bravo!

Thank you!

Colm O'Cinneide
Jan 4 2011 at 8:28am

I really enjoyed this podcast. After listening I read Mises’s “Economic Calculation in the Socialist Commonwealth”. The information argument is very compelling because it boggles the mind to ponder how all needed information could be compiled by central planners. However, to me it falls short of being completely convincing because I really don’t know just how complex the problem is. Can anyone point me to some literature that in some sense quantifies complexity here? Many thanks in advance.

Patrick T. Peterson
Jan 14 2011 at 6:40pm

Great to see this podcast! Mises is not discussed serioiusly enough at all. This is a good start to rectifying that situation. Roberts and Boettke are obviously conversant with Mises’ ideas and influence.

I was especially pleased to hear Boettke’s wrap-up emphasis on Mises’ book Socialism. It is indeed magisterial, timely and yet still very accessible. It’s lessons on, not only, the calculation problem of socialism, but just about every variation of the socialist idea are as important today, as they were when published almost 90 years ago!

I would like to add just a few extra comments:

1. The book of essays/speeches by Mises called Planning for Freedom was a wonderful intro to Mises for me 35 years ago and I think it holds up well today on so many different issues in economics.

2. When Roberts said Mises believed that “Economics is about exchange” I ask if Mises might rather say, “more than about individual purposive choices?”

3. When Boettke stated that Mises was a Jew and that’s why he went to Geneva (and then America) from Vienna – that overlooks a couple facts:
a. Mises did not practice any religion (though his family was Jewish)
b. Mises was precient enough to warn all his students/seminar participants (I noted the incredible list of people and places you mentioned!) to get jobs outside of Vienna, and he was one of the last to leave.

4. My favorite bumper sticker could advertise this podcast: “Real Economists Read Mises”

Thank you.

Steve Woods
Jan 22 2011 at 5:38pm

I was trained as an elementary school teacher and I taught 5th grade for 10 years. I have no formal training in economics and am simply an autodidact. About twenty years ago, while studying the stock market, I came across a book called Methods of a Wall Street Master by Vic Sperandeo. Chapter 10 called Booms and Busts has an excellent overview of Mises ideas. I was so impressed that I started collecting his books. I have compared his ideas to all the other major economists. In my opinion, if humanity is to survive, we must go through the door Mises has opened. The musical works of Johann Sebastian Bach were overlooked for 100 years. In the same way, I believe, some day mankind will awaken to the importance of Mises. He will be remembered as the greatest intellectual giant of our era. His brilliance outshines everyone in the field.

Jan 25 2011 at 2:08am

Great job, professors!

I discovered and read ‘Human Action’ in my late thirties. It changed my way of thinking and deepened my understanding about how the world works. I still cannot forgive my economics professor (a Keynesian, of course!) for never mentioning it to us in school.

Nothing wrong with the books available here, but the e-pub versions at the Ludwig von Mises Institute work with iBooks.

Another good bumper sticker would be “Mises was right!”

Comments are closed.


About this week's guest:

About ideas and people mentioned in this podcast:Books:


Podcasts, Blogs, and Video



Podcast Episode Highlights
0:36Intro. [Recording date: December 15, 2010.] Ludwig von Mises; might be model for other podcasts. Introduce listeners to his key ideas, key works, and where someone who doesn't know much about him or his work would start. Why is Mises important? Tell us about his life and contributions to economics. Mises is the key figure in the early part of the 20th century in retaining and reviving the classical liberal perspective in political economy. His developments in the science of economics that fed into that defense of a laissez faire system. He became the leading representative of the modern Austrian school of economics. He was a great teacher of economics over in Vienna, teaching at the U. of Vienna while he also had a position at we would call the Chamber of Commerce there. His students were some of the leading economists after they immigrated to the United States. People like Fritz Machlup, Gottfried Haberler, F. A. Hayek who was his most prominent student. When did he come to the United States? First moved out of Vienna to Geneva, where he taught; then moved to the United States in 1940. And came to? Ended up teaching at New York University, from around 1944-1969. What was he doing between 1940-1944? New York City, was a research economist and held a position at the National Bureau of Economic Research (NBER). Wrote two books during that time: Omnipotent Government and Bureaucracy, on fellowship from NBER; started teaching at NYU's business school. He had many influential students in the United States as well, right? Yes; influential students both technically that went on to become teachers and develop other people within the market-oriented movement, scientific teachers. His two most influential students from the U.S. period would be Israel Kirzner and the other one is not technically his student in the sense that he got his Ph.D. from Columbia U. but was very much influenced by him, Murray Rothbard. Kirzner and Rothbard were the leading developers of Austrian economics in America. Mises had a continuing interest in that regard, especially in economics because by the time those guys are getting their Ph.D.s and getting their ideas, Hayek had moved from the London School of Economics to the U. of Chicago, but at the U. of Chicago he wasn't really doing technical economics any more; he was doing more political philosophy, legal philosophy. Mises's work: influential teacher, important person in the development of modern Austrian economic theory. What was important about his economics work? He's a real generalist, as opposed to a specific contribution I'll get to in a second; he wrote covering the entire area of economics. In the same way that maybe Paul Samuelson did as well for mathematical economics, Mises did for logical economics. By "logical economics" you mean the intuition of how market forces interact? Most people like to think they do logical economics as opposed to the alternative, though people might disagree on who does which kind. Mises contrasts the notion of logical economics from mathematical economics, which were alternatives at the time, being developed; that's sort of what I mean by that language. Important to recognize that Mises, despite the fact that he was always a little bit out of step with the profession, he also was recognized. He was the Distinguished Fellow of the American Economics Association (AEA) in 1969; there was a large segment of people who pushed to try to get him the first Nobel Prize in economics. He won the highest medal of honor for scientific accomplishment from his own country, Austria. When his most famous book came out, Human Action, it was reviewed in the New York Times by John Kenneth Galbraith. Now Galbraith was a young man at the time but he still was John Kenneth Galbraith and people knew who he was. And it was in the NYTimes--very few of us could get one of our books reviewed in the NYTimes. Mises's books when they first were published in the United States were published by Yale University Press. He was very much a major player in the economics profession going all the way back to when he was in Vienna--the economics profession was a little different than it is now. Mises did have his very severe difficulties. Wonderful biography, long, don't agree with everything in it, but extremely good and worth reading, by Guido Hulsmann called The Last Night of Liberalism about Mises and then of course both Mises himself and his wife wrote stories of his life. His wife, Margit, wrote a book called My Life [Years] with Ludwig von Mises and Mises himself wrote a book called Notes and Recollections, which is more about his Vienna period. So we can learn about Mises-the-person, his struggles, and he did have very heroic struggles. On his ideas, I would say that he made contributions to Monetary Theory, which was his original work, the development of the Austrian theory of the business cycle. Mises as Mises would say he didn't understand why people called it the "Austrian theory of the business cycle. The only people adherent to it is a Swede--[Knut] Wicksell--and one Austrian, him." So, he didn't understand, he liked the fact that people would call it that; but he developed this theory which focuses on how the interest rate mechanism can, through manipulation of money and credit, can mislead investors; and you can generate the boom and bust cycle through manipulation of money and credit. And that really, his development of that and more other works in monetary economics was his first major economic contribution in a book called Theory of Money and Credit. When did that come out? It originally came out in 1912. He received his Ph.D. in 1906. He was a student of Bohm-Bawerk and he developed the Bohm-Bawerk style; first mover in the micro-foundations idea. Neo-Austrian. If you think about economics back in that time, you had monetary courses and then you had your economics courses, which was relative prices--what we would call micro today. There was no such thing as macroeconomics, but there was money economics, monetary economics, which was not necessarily integrated with what you learned in microeconomics. Just like today! What Mises did was he integrated microeconomics with the monetary economics; and then coming out of that led to this development of how the manipulation of money and credit can influence a relative price--in this case, the interest rate--and guide people the wrong way for some period of time; and then you get a self-correction mechanism; so you have a distortion and then a correction and that explains the boom and the bust cycle. So in that sense, Mises's theory of the business cycle is a price-theoretic theory of the trade cycle.
10:11Pause for a moment in discussing his contribution. Want to ask you a History of Economic Thought question related to that business cycle work. So, Hayek is his student. Hayek's important work in the 1930s is what? What does he write? Hayek starts in the 1920s working on the problem of imputation, that is: how does the value of capital goods derive from the value of consumer goods they go to satisfy and how does the value flow up through that chain? The value is imputed. Originally worked on that, which is the nature of intertemporal coordination, how is it that we get information to build cars for the people who will consume those cars ten years from now? People now working on designs. How is that not a mess? There are signals that flow back that businessmen rely on to be able to justify those investments. Hayek worked on that problem, which means he started working on capital theory. He goes to work for Mises. Technically wasn't Mises's student; was student of Wieser, of Vienna, who was his thesis adviser. But we have a picture now of Hayek's report card, and we know now that the way they did it at the U. of Vienna, people would sign off on the grades; and Mises did sign off on the grades. Supervisor or teacher in some form. He never remembers it and Mises never remembers it. When we call him Mises's student, it's because of the influence of his ideas. Well, it's because he goes to work for him at the Austrian Institute for Business Cycle Research, at the Chamber of Commerce. Mid to early 1920s. So the world is booming. Mises arranges to help Hayek get a research fellowship to come to the United States. Mises was very much respected and was involved with a version of the Rockefeller Foundation that tried to support European intellectuals coming to the United States and studying with people here. So, Hayek went to Columbia U. where he worked with Wesley Claire Mitchell, early chronicler of the business cycle. They were developing at Columbia the idea of time series analysis to study business cycles. Hayek went there and then came back to Austria; went to work with Mises at the Chamber of Commerce; eventually Hayek and Mises started an institute called the Austrian Institute for Business Cycle Research. Hayek became the director; started to study the boom and bust cycle. People claim, but like a lot of things a broken clock gets the time right twice a day, so if you take a sort of oh, wow, this inflation is going to cause a recession then it happens; they were geniuses. It is definitely true that their theory pointed out that the manipulation of money would have a cost to it, and they developed this idea. To back up a little: at the time Mises starts developing his monetary theories, we have two different competing ideas. One is that there is no connection between the supply of money and the prices in an economy. These are what Mises calls "monetary cranks." You look at the world and see people who are poor and say: they lack money, let's print money and give it to them; that will fix our poverty problem. Then there's the other types, the quantity theory: which is that if you double the money supply you are going to double the price level. Irving Fisher. Different kind of crank. Totally respected. In fact the quantity theory is one of the most important ideas because basically you are not going to make everyone better off by printing money. You are just going to make prices go up. So, there is a relationship between the quantity of money and prices in the economy. What Mises does is he defends the quantity theory, but he argues that we can't have a mechanical interpretation of it. So, the classical dichotomy, classical economists, argues that reals only affect reals and nominal only affect nominals. That means that real things matter and determine the quality of our life; things like the number you attach to the price of something isn't so important--if both prices and wages are higher, your standard of living is unchanged, so you wouldn't expect printing money to necessarily impoverish or enrich. It's going to eventually be washed out by the real underlying things. Tell my students the only way to increase real income is to increase real productivity, and the way to do that is to increase your human capital, increase the machinery you are working with, or increase the managerial talent that does that. That's the sort of bottom line. That's what the source is of generating real income increases. Mises doesn't deny that but he argues that the quantity theory of money viewed mechanically underestimates the distortionary forces of inflation. It's as if as soon as I double the money supply, prices are going to double instantly and there won't be these consequences--the only costs of inflation are the menu costs: you have to change the numbers on restaurant menus. Mises wanted to show, and this was a great innovation on his part, was that injection effects, the way that prices adjust through the economy, they adjust through relative price changes, not a whole price level change. Eventually the math is going to work out that way: you double the money supply, eventually all prices are going to adjust. But in the short run there can appear to be a case where the effect on a nominal variable can have a real impact. You distort relative prices, distort your choices. That's what sets up the business cycles. And we still have this debate today. The arguments about real business cycles, quantitative easing are all connected up with these debates, and Mises was really at the core of that and Hayek was right with him. They were partners. I have a picture in my office of Hayek and Mises working together, and I have always viewed this Austrian tradition as one of a Mises-Hayek tradition. Even though there are subtle and profound differences between the two of them, and it would be foolish for me to deny that as a matter of history of ideas, but as a contemporary person working in the Austrian tradition, I view it as the Mises and Hayek tradition. Always tell the students what you should do is read Mises as a Hayekian: what I mean by that is read Mises looking for all the emphasis on spontaneous order and invisible hand, and read Hayek as a Misesian: what you are doing is seeing in Hayek the logic of choice. When you do that you can see how it is we can change the way we think about economics today.
18:24Question I'm really driving at: Mises in 1912 writes The Theory of Money and Credit, gets linked up with Hayek in the 1920s, a time when the world is booming. The bust comes, with the Great Depression, whether they foresaw it or not, as you say; they certainly had a framework for interpreting it as the result of an excessive boom driven by cheap money, interest rates that were too low, distorted choices, etc. What was Hayek's major work in that period on the business cycle? He wrote a book called Monetary Theory and the Trade Cycle. The German edition of that is in the 1920s. Is that the book that John Maynard Keynes reviews? No--he reviews The Theory of Money and Credit and says he can't really judge how good it is because he only knows what German he already knows. Then he says it doesn't say anything new. I'm curious about the history of economic thought, the intellectual thought question: Why is it that in the 1930s it's Hayek who is sparring with Keynes, and not Mises. Great question. That's what the world looks back at and remembers. What's fascinating about that story is that during the 1920s, Mises's seminar in Vienna in which Hayek is a major participant, becomes a world-renowned center for economic scholarship. Frank Knight speaks in it, a lot of different people. Where is Schumpeter? Schumpeter is part of it; Schumpeter and Mises were classmates. Schumpeter's kind of a shining star; but then as often referred to as the infant terrible of the Austrian school because he kind of rejects the teachings of the school and becomes more of a Walrasian. Does his own thing and it becomes complicated. But what's fascinating is that one of the people who came and participated in the Mises seminar is Lionel Robbins, who is at the London School of Economics (LSE); he goes back to the LSE and wants to take what he learned in the Mises seminar to the LSE. Writes "The Nature and Significance of Economics." What year is that? It comes out in 1932 or 1933 I think. But he's already working on these ideas, defending a lot of the Mises positions. One of the things we're skipping over here is that Mises is simultaneously involved in a debate over socialism as well. Probably going to be a three-hour podcast! That was a joke. Robbins gets himself situated at the LSE and he brings Hayek over. Hayek produces his set of lectures called Prices and Production. That becomes sort of famous, where everyone becomes a Hayekian. That's in 1931 that he gives those lectures. One of the great thrills of my life was that I actually gave a memorial lecture at the LSE in 2004 and was told I gave it on the same stage as Hayek gave his Prices and Production lecture. I don't know if that's true; that's my story and I'm sticking with it. The answer to your question is at this time, not many of Mises's writings are in English, and Hayek is starting to write in English audiences. Mises writes another book in the late 1920s, the Manipulation of Money and Credit, a very detailed and more mature discussion than he had just in The Theory of Money and Credit. But neither book are translated into English at the time. He's still a German scholar. Even when he goes to Switzerland in the 1930s he's writing in German, not in English. It's not until a little later that you start seeing Mises transition into an English-language economist. So Hayek is the English language representative of the Austrian school. Plus, he's a young man, in his thirties, obviously bright and talented; becomes a kind of focal point for the anti-Keynesian argument. And that was not only in academics but also, remember in the 1930s Hayek is writing in the Times of London and he's joined by Robbins. I really do think that Lionel Robbins plays a major role in that intellectual history because he and Hayek have a very strong notion that this upstart LSE school is going to take on the Oxbridge orthodoxy in the English language of economics; and they get their own journal and things like that. The real irony in Hayek's story--by the way, the Hayek story is a great name that Sir John Hicks gave to that period of time; wrote an article called "The Hayek Story" and he says: When the definitive history of the 1930s gets to be written, and what a drama it was, one of the main characters will be F. A. Hayek. Because at the time, none of us knew who was right, Hayek or Keynes. And now we know! He was writing at the time that we knew, and now we're back to the same thing. Now go back to your rap video where you are saying we've been battling back and forth for a century--that's actually true. And it's still going. So Hayek becomes the representative of the Misesian position in the English language world--as does Robbins. So, Robbins becomes the defender of Mises's position on methodology, and Hayek becomes the defender of Mises's position on substantive economics, both in terms of the business cycle and Austrian capital theory and monetary theory and its integration into the Austrian business cycle theory; but also on the debate with socialism. Hayek is very different from Mises, but he's also in a large way his greatest student, in the sense that he picks up the Misesian positions in the debate in the English language world.
25:13Curious, just as an historical footnote: Mises was Jewish. He's in Austria in a time--we're talking about the mid-1930s--when Hitler is on the rise in Germany; there is talk of unification of Austria and Germany; and it was not a good time to be a Jew in either place. Did he have personal issues with anti-Semitism and fear of Nazism? I assume that's what pushed him to Switzerland and the United States. Did it also affect his ability to work, given what was going on in universities? Yes, but it goes back even deeper, to the 1920s. The Hulsmann biography and also Notes and Recollections, Mises's book, are very useful to look at on this. The standard story is that Mises was second in line a lot of times for some major appointments at the university. It's not that he wasn't considered for the positions, but he'd be considered for a big chair and come in second. Didn't quite get it. The argument was a man of his stature should have gotten these things, a man of his accomplishments, which is an argument that seems to be true. The argument that people say in retrospect is that: the problem was that Mises was 1. a classical liberal, 2. a very strident debate partner--not like he backed off in debates; he wasn't mealy-mouthed, and 3. he was a Jew. The argument is that you could survive if you only had two of these, but you could never survive all the way through if you had all three. So that handicaps some of his professional accomplishments in the 1920s. But in that crucial period, I'm thinking of that period, say, 1933, where Hitler comes to power in Germany, from 1933 on--a Jewish scholar must have been increasingly uncomfortable. Fascinating story; been immortalized in DC Comics because what happens is Mises's library gets confiscated by the Nazis in the 1930s. When the Nazis are taken over, then his library is re-confiscated by the Soviets. When Communism collapsed, his library was discovered over in Moscow and people like Richard Eberling and other scholars discovered those papers. In fact, Eberling, with Liberty Fund, has brought out the Selected Works, along with the Collected Works of Mises which Liberty Fund has been doing. The Selected Works of Ludwig von Mises--many of those papers are papers that Richard Eberling discovered when he was over in Moscow and does the editing for. Asked because I was wondering what role that played in his being less of a voice relative to Hayek. Part of it was Hayek was writing and speaking in English and was physically in England, whereas Mises was stuck in Austria at a time when he was worried about his life and I assume wasn't as academically engaged. He left to go to Geneva, but Geneva is not LSE. Mises made choices of where he went; those were the options. During the period of time in the 1930s when he was in Geneva, that is a period of tremendous productivity for him research-wise, and he writes the first edition of what later becomes Human Action. It's published in German in 1940, bad timing for a book to come out, a weighty scholarly book as well; audience limited compared to what he would reach when he comes to the United States. If you look at Mises's students, you've got Hayek going to the LSE, Machlup being able to eventually end up teaching at Johns Hopkins and eventually at Princeton; you have Haberler going to Harvard; Morgenstern going to Princeton. So his students and the people around him, even someone like Alfred Schutz who was a sociologist went to the New School for Social Research in New York City--those are bigger positions to launch your academic ideas from than the college in Switzerland. His story of escaping from Vienna to go to Switzerland and then from Switzerland to come to the United States is a great drama, one of person high-risk stakes and all these personal issues that makes Mises a compelling character to study and learn about.
30:41We started with his contribution to what used to be trade cycle theory--now we call it business cycle theory--the boom and the bust cycle. So, he starts that in 1912, revises it in the 1920s, and then influences a whole cadre of scholars who in English push those ideas with their own twists and variations. That's one important contribution--the monetization and really the creation of what's now called Austrian business cycle theory. What else is he important for? In 1919 he publishes a book called Nation, State, and Economy, which is his criticism of the war and his examination of war planning during WWI. One of the big things in the zeitgeist at the time was that war planning was a model for peacetime because it proved to be so efficient during the wartime. Same zeitgeist that got created after WWII. Because of the Great Depression--Milton Friedman has a great line where he says: People believe the Great Depression and WWII did two things; one, it demonstrated that free markets are unstable and two, that government planning can actually work. D-Day, they got on the beach and were successful. By the way, that quote from Friedman was what people perceived, not what he believed. In 1919, at the time, one gentleman who was Mises's classmate in Bohm-Bawerk's seminars, a man named Otto Neurath, developing the idea, so people's faith in capitalism is shredded. Because we've had this post-WWI crisis, a lot of poverty. Civilization is collapsing, revolution in the air both in Russia and the Weimar Republic. Hyperinflation. Neurath believes you can have a Marxian idea of a natural economy and that by eliminating production for exchange and substituting production for direct use you could have a burst of productivity; eliminate the class warfare, life the average man into a new world order. Mises picks up pen to paper in this debate; as he says in one of his books: Socialism, we have to admit, is one of the grandest ideas of all of mankind; and we have to deal with it with the utmost seriousness. And he does. He writes a paper called "Economic Calculation in the Socialist Commonwealth" in 1920, and in that paper he identifies what he believes to be the lynchpin argument against socialism. And it's not just that socialists would not have the incentives to be able to do what's right, because in your debate partners--important to remember your debate partners in these discussions--one of the assumptions that the socialists were making is that when you change the nature of the institutional structure, you would change the nature of the human beings that populated that world. So you would get a Socialist Man. Even though the incentives that Capitalist Man is used to wouldn't be there, he'd have the higher ideals that would motivate him to do for the common good instead of just for his own paycheck. So Mises has to defeat that argument. It's an anthropological argument. So, one of the oldest arguments in human history is the fact that collective property produces poor incentives. Goes all the way back to Aristotle's critique of Plato. So, we have this argument that communal property doesn't produce very good incentives; we have plenty of experience with this. We just celebrated Thanksgiving, and the discussion about the true meaning of Thanksgiving. Mises: For the sake of argument, let's assume that this human being is being transformed. How is it that the chickens are going to end up in the mouth of the comrades? Even if you had solved the incentive problem through some sort of heroic community spirit or reformation of humanity, the problem is that you are not going to have the ability to engage in the calculation about how to use scarce means to obtain the objective ends that you want. This is Mises's calculation argument, and he lays that out. That's why it's called "Economic Calculation in the Socialist Commonwealth" and that is a lynchpin argument against socialism claiming that socialism will have to do without economic calculation, which means that socialism will not be able to achieve its own ends. Brilliant argument. The incentive argument is basically saying you are not going to get much output because people are going to free ride--take advantage of other people--as a result, people are going to loaf and output is going to be very small. Instead, he took the assumption they made that there's going to be a new Economic Man and Woman who are going to work like crazy because unlike the capitalist system where they are self-motivated, they are going to be motivated for the common good--he said even under that world you've got a serious problem. Which became the argument they lost on intellectually. Wasn't the argument they lost on in practice--in practice they didn't produce the goods and there was an immense amount of loafing in the so-called Socialist Revolution. But the intellectual debate on the calculation problem became the central intellectual question of the 1920s and 1930s. And it becomes a major issue later on after Hayek interprets it in the way that modern economics developed--information economics. Hayek's "The Use of Knowledge in Society." I think the reason why Mises's argument is so important is because the vast amount of intellectuals thought at the time when they ever saw socialism fail in the past, it was always that we didn't try hard enough. It was always that socialism is a wonderful ideal but humanity failed to live up to it. Whereas what Mises is pointing out is that socialism is a bad idea because it fails to live up to the demands that are required by human. A modern life. A tribe, family, that's one thing, but a society of relative strangers in large numbers, you're not going to have that work very well. Mises's notion is what capitalism generates is what he calls social cooperation under division of labor. And the problem with socialism is that the very institutional and economic mechanisms at work are not going to be able to generate that social cooperation and division of labor. It's those that are the source of our ability to have the shoes that you have without you knowing who made them for you. What Leonard Read and Milton Friedman later made famous by holding up a pencil and saying none of you know how to make this pencil. The reason why a pencil is able to access that vast amount of division of labor worldwide is because of the various price signals. I try to summarize Mises's point by saying you need property, prices, and profit/loss. They give us incentives, information, and innovation. Without the three P's you can't get the three I's; if you don't get the three I's you are not going to be able to make that pencil. The three I's are incentives, information, and innovation.
39:23Now, he writes that paper in 1920. The so-called Socialist Calculation debate takes place over space and time with Mises and Hayek on one side saying you've got a logistics problem. And Robbins. And on the other side is Abba Lerner that I know of. Who else? What happens is Mises publishes a book in 1922 called Socialism and it has this huge impact among the people in his inner circle back in Vienna. Which Robbins comes and visits and becomes a convert. These books are available online, no charge, at the Library of Economics and Liberty. Again, he's in a German language debate. So his debate is with people like Jacob Marschak, who becomes a famous economist; but that's a debate that takes place in German. When Hayek moves to the LSE, he becomes the representative in English. Mises's book is not available in English yet, and his article doesn't become available in English until Hayek brings it out in a collection called Collectivist Economic Planning, 1935, summary of the calculation debate all in English. Hayek writes the introduction and the conclusion for that volume. That's where the position is laid out, first time it appears in English. Now, Oskar Lange is not a student, but Abba Lerner is--of Hayek at the LSE. Oskar also tries to pick up the challenge, take Mises's position and show Mises to be wrong on his own terms. So you have Lange trying to do that. You have Lerner trying to do that. And Hayek is the responder to that. There's also gentlemen like Dickinson and some other people that were in the English language. Became a kind of LSE-centered debate, with some discussion in the United States. Fred Taylor had published a paper on the use of marginalist principles under socialism. Basically the idea is that in a Walrasian economy, no false trades take place. Walrasian economy is a mathematically-based world of n people and x goods. We know there are some conditions--under the conditions of perfect competition, will lead to situation where price will equal marginal cost and output will be at that level which minimizes average cost; and we know that we'll get exchange efficiency and production efficiency in that world. So what the market socialists did was they tried to use the marginalist principles as guide tools toward the socialist planning. Big computer, which they didn't have at the time but they could imagine it; they had a lot of equations, what people like and how much they produce, and we'll put the relative prices in and figure out how much each person should get--how many chickens this guy gets, and this guy doesn't like chicken so we'll give him turkey or vegetables. Totally different from the original debate with Marxists. Remember the original debate was we're going to get rid of production for exchange and put in production for direct use. Now what we're actually saying is how can we get the socialist planner to mimic what the market would do if the market were operating but we were in control of the market. Which we might have to do because there really isn't going to be any perfect competition and we don't have the perfect conditions. Lange actually makes an argument that socialism will be identical to the pure theory of capitalism in theory, but in practice will outperform because in practice real capitalism suffers from monopoly and business cycles. At this time, you have the Berle/Means stuff which is about that the separation of ownership and control creates problems. So in the heads of someone like Lange--We're in the 1930s--he points out that capitalism has a separation of ownership and control problem. They've got their own incentive problem. So they're going to be messed up, but we're going to be in control and we'll be able to manage it. We won't have the business cycle and we'll be able to do this. So that's now where Hayek has to jump in and find a response to that; and that's how the relationship is between Mises and Hayek as well. Just got done teaching history of thought class and said: The way to understand modern economics is to think of it in terms of debate partners and who it is that you are debate partner is. Each time it switches, the debate changes. Think about it. In your case, you were educated at the University of Chicago; Milton Friedman was debating with different people and who Bob Lucas ended up debating with. Milton Friedman is talking in the beginning, when we were all undergraduates, probably debating someone like Walter Heller. Then later on you get a different debate when you get who Bob Lucas is criticizing. But similarly even though Lucas and Friedman have lots of disagreements, theoretically they are all on the same debate team. Like Hayek and Mises. Certainly Lucas would proudly admit to being influenced by Friedman in all kinds of ways. Same kind of thing here. Hayek writes a journal article. He is a 20th century economist. Mises, in a large part, always remains a 19th century economist. He made his main contributions through books, whereas Hayek is editing Economica, writing journal articles. If you ask: What do you think about when you think about Hayek, you might say The Road to Serfdom, but if you ask an economist, they'll say "The Use of Knowledge in Society." So, they'll pick a journal article. Mises is writing these books. The debate takes place in journal articles back and forth. Two things important about this: First is, this calculation debate argument about whether socialism is superior to capitalism is taking place in the middle of capitalism's greatest crisis. Never thought about this. In the 1920s when socialism is very much on people's minds; we're in the post WWI period, disillusioning event particularly in Europe. People are looking for alternatives. There's this romance about socialism. And Mises stands athwart that train and says stop, which is a very brave thing to do in 1922. But it's good economic times for capitalism. In the 1930s they're saying stop at a time when a lot of people are desperately looking for an alternative to capitalism. Second point, for people not familiar with this episode of intellectual history--correct me if I'm wrong--this is one of the very rare intellectual disputes where there is an immense amount of passion and intellectual effort and words on both sides where there is a winner. The people who are representing the socialist side said: We lose. Certainly the world picked a winner, which was Mises, Hayek, and Robbins; but I think even the protagonists in the debate can see that they lost. Is that correct? Ultimately, Lerner, Lange said: We had the wrong view. At the time? No, eventually. Yes. What happens is Robert Heilbroner writes a New Yorker article after the collapse of communism in 1989 and says: Mises was right. Amazing thing. DeLong wrote a similar article in the late 1990s saying that Hayek was right; the one thing we've learned is that markets work really well at most things. We would disagree about where "the most" is, where the fraction is, what's left over. We went through a long period of time when people believed the opposite position: the Soviet system works better but they don't have as much freedom. Their economy is more efficient than ours--which is not true. I edited a nine-volume work which is not available for free, library work called Socialism versus the Market, documentary history of the intellectual debate over "Economic Calculation in the Socialist Commonwealth" going back with Marx, Nuerath, Mises's argument, carrying it all the way to the modern period of time. Routledge published it around 2000. This debate went on for a long period of time.
50:04In a way what happened was both sides declared victory. Mises and Hayek had never said they had lost. The other side said Mises and Hayek had lost the debate. They could maintain that because there was not a lot of really good data on how the Soviet Union was really doing. And as I've pointed out was what happened was the theoretical debate went into various different mathematical modeling exercises and the empirical debate went into growth theory. So it actually became macroeconomics estimates of growth rates rather than the microeconomic evaluations that Mises and Hayek would have wanted you to look at. The debate went onto a different turf. Our anecdotal evidence all sort of fit with the Mises story. Like the one-ton nail. Which is? Where the Soviet planners decide they need a ton of nails, so the Soviet firm produces one giant ton nail. Is that true? No, apocryphal. Something they would make fun of themselves about themselves. When socialism collapsed, one of the things we found out was the phenomenon of what's called negative value-added firms--firms in which the value of the inputs are greater than the value of the outputs they go to produce. I agree that in the real world world there are incentive issues that are overwhelming, but there's also these calculational issues, and I think this negative value-added firm thing is a calculational issue. They didn't have an idea of how to calculate the efficient use of resources. They didn't have real prices. So, the socialist calculation debate becomes a central thesis and eventually what happens is Mises and Hayek come to understand that their conception of the nature of the market, like what it means--Hayek writes an essay called "The Meaning of Competition"--and Mises starts developing and using the term the "market process" as opposed to equilibrium states of affairs. That analytical approach follows on the heels of what they learned in their debate over other economists over socialism, because what other economists were doing was going to the equilibrium end-states and saying: If the equilibrium end-state is defined as x, I can just say under socialism, let's assume x and then we've mimicked what it is that capitalism would deliver. And Mises and Hayek said no, we have to explain how x comes about, how it emerges from the exchange behavior of individuals. Because you can't really take tastes and endowments as given--that's an illusion that makes the math look nice but in real practice could never be implemented. Buchanan's short note, two pages, "Order Defined in the Process of its Emergence." Hayek, if you look at "The Use of Knowledge in Society," he says economic problem in society is a function of the introduction of change; and Mises also talks about change as opposed to statics. So, that develops the more mature Austrian understanding of the market process, which then Israel Kirzner picks on and develops. Correct my factual statement: Did the participants on the socialist side concede defeat, or just the observers like Heilbroner? Did Lerner? No, because they had already passed away. Some evidence that Lange--conflicting stories. So, Lange went back to being in charge of planning in Poland but he never implemented his own model of socialism--oh, no, it would never work. But then in 1967 he wrote an article where he says if I had the debate with Hayek today, I'd say what's the problem; I have this computer and I'll just put it in a supercomputer. So they get it, but they don't get it in some sense.
54:36Two ideas of Mises's so far; want to give you a third one. Two and a half: whole way that the Austrian school and moderns look at the market process versus the Walrasian modern economists' view that it's just bunch of equations we've got to solve. I would think the other thing that is uniquely Mises's great idea is the universal applicability of the economic way of thinking to human action outside of the market context. When he wrote his book Human Action, he develops the subject he calls praxeology, which if you take it literally is the study of human action. Idea that we would call today rational choice, or analytics, or the economic way of thinking applies to the realm of law, politics, religion--all walks of life can be made sense of through the economic lens--that is the notion of purposeful human action. Some people have translated this universal applicability into a pure choice theoretic model, in which case it's constrained optimization on all these. Gary Becker. There's an aspect in which Mises's argument goes along with that, but there's an aspect in which the calculators are not necessarily mechanical. Not perfect. So, what happens is--I like to say it's a rational choice model as if the choosers were human. William Jaffa wrote a review about Menger and Walras and Jevons many years ago, and he called them "dehomogenized," and he summarized the position: To Menger, man was not a lightning calculator of pleasure and pain. To Menger, man was caught between alluring hopes and haunting fears. Literary line. Mises is postulating that human beings are capable but fallible. As a result, when you read the first 100 pages of his treatise, Human Action, which I personally think is the greatest book ever written in economics, but that reflects my biases--but the first 100 pages both lays out the logic of human action, but at the same time this opening up of the choice dilemma that individuals face that deals with uncertainty and the coping with our ignorance that allows for the roles institutions play in helping us ameliorate our uncertainty and ignorance. Property rights; how various different economic environments, ecology, will force and channel our behavior such that they matter, rather than the idea that it's just that we are these robots that make these choices and therefore could succeed under any conceivable set of environment. When you look at Buchanan's pieces on applying the economic way of thinking to the area of voting, he has right in there footnotes to Mises. When you look at Henry Manne and he's developing his ideas on the market for corporate control and things like that, he has footnotes about Mises. These guys all read Human Action because it came out in 1949 in English. Even Vernon Smith has pointed out that Mises's book came out it was very influential, became part of the background of the way they think about their ideas. I like to think about modern history of economics as having a critical nodal point of decisions which is in the late 1940s. On the one hand you have Samuelson's book coming out, Foundations, 1948, and then you have Hayek's Individualism and Economic Order and Human Action by Mises--they come out in 1948 and 1949 respectively; and what happens is that neoclassical or modern economics splits in some sense. One direction moves towards an institutionally antiseptic theory--Samuelson--whereas the other one is individual choice, institutional filter, and then an understanding of economic outcomes. And the heavy lifting is done by comparative institutional analysis. That's the focus on rules, property rights, institutions within the market that enable entrepreneurship or impede entrepreneurship. The imperfection of psychology of the human being, of knowledge and ability to transmit knowledge, transactions costs--all that is in this other, Hayekian, tradition. That's what I would argue. You see things like F. A. Hayek, Nobel Prize, Jim Buchanan, Nobel Prize, Doug North, Nobel Prize--out of order here--Ronald Coase, Vernon Smith, Nobel Prize; but also in between, Alchian, Demsetz, Mancur Olsen, Yale Brozen--who didn't win the Nobel Prize but important people in the Hayekian tradition. That tradition since the 1940s has been recognized but marginalized. Not the flashier, sexier, glamorous part of the profession. Whenever the rubber hits the road on these big debates, it comes back with a vengeance. It was no surprise, for example, when socialism starts to crack up that all of a sudden everyone's talking about the role of institutions and property rights and why that matters. Because that society didn't have effective institutions. Fiscal imbalance and all of a sudden Buchanan's work, incentives within fiscal policy making matter. Inflationary issues and inflationary expectations, lack of fiscal stimulus--all those arguments come back to the forefront. Marginalized, but they always seem to find a way to raise their ugly head right in the middle of a debate. You meant beautiful head, right? Yes. If you go back and look at the Newsweek article that appeared, or the article that they talked about you in The Economist, and you go back to the 1970s and talking about stagflation, similar articles about Hayek appeared then. Now it is true he won the Nobel Prize in 1974, so he was the flavor of the day. Quiet Nobel Prize. Didn't produce a groundswell of Ph.D. students using his work to write their theses. I read, as a first-year grad student in 1976, "The Use of Knowledge in Society," but I was at the U. of Chicago. Most students at the top programs never read an article by Mises or Hayek ever, and still don't. They are out of fashion; but not forgotten, and come back to play a role in a lot of ways. And if you know a lot about their work you see it in other marginalized but recognized people. So, for example, if you look at Lin Ostrom's work on property rights you can see arguments that she derives in some extent maybe from Armen Alchian, but Alchian got a lot of those arguments from Hayek and Mises. Chain. Six degrees of separation kind of rule. Just have to be very excited about it. So, I would say in terms of contributions, I would look at Mises's contribution on business cycle theory, critique of socialism, and his further and more mature understanding of the market as a dynamic process of entrepreneurial discovery, and then finally his overarching analysis of the pursuit of economic logic in areas outside of the market. So, the development of public choice, law and economics, modern institutional economics--a lot of all of that has its antecedent in Mises's idea. If you think in terms of this split decision that took place--either move in an institutionally antiseptic, formal theory direction, or in an institutionally laden economics in which you interact between the theory of human action with the institutional contingencies to deal with our imperfections and ignorance and the uncertainties of the world that steer dynamic behavior. Economics is about exchange and the institutions within which exchange takes place--very Smithian. Mises and Hayek are the modern Smithians in that regard. Man's propensity to truck, barter, and exchange; not man settling in on the equilibrium point.
1:05:14Let's talk about his most important works--which we've touched on. What are his most important books? Interesting question. Mancur Olsen--I used to be involved with the center he ran at the U. of Maryland--and he one time asked me: You're always talking about this Mises! I understand if I talk about Hayek that I'll get "Use of Knowledge in Society." But what is it that I'm going to read about Mises. I'm sitting there thinking this is a really difficult question because I'm now going to recommend a 1000-page book. It's not what he wants. Don't get to the guide yet. There's an argument to be made that his "Economic Calculation in the Socialist Commonwealth" article is the single greatest article that he wrote. And so, if people want to get a sense of the logic of Mises as an economist, pure economist, that probably is his best article. Published in 1920; it's unbelievable, actually, the way in which he gets across his idea. And keep in mind the logic of what he's doing, because he's trying to get across not a normative argument but a completely positive economic argument about why it is that the most appealing normative idea of his zeitgeist is fundamentally wrong. And so there's this kind of amazing connection to that. Think that there are some essays that he wrote on the manipulation of money and credit which you can get. There's the Eberling Collection that I mentioned at Liberty Fund, the Selected Works of Mises has some essays that he wrote; and then some of his more popular books later on in life--sort of economic policy. Liberty Fund has these books. The essays in that can communicate his strong ideas about inflation. Those are what you tell people to start with. We're out of order. What are his most important? The most important work that he did was Human Action, and then Socialism, and then Theory of Money and Credit. Those three, which are all available online at the Library of Economics and Liberty. But the problem--and Hayek's got his own problem--is, as you say, if you've been turned on as you say by this podcast and these ideas, Human Action is a daunting book. It's 1000 pages; it's not an easy read. Not Robert Ludlum-like prose. Would you recommend that someone try to wade through that to start with? No. First of all, any attempt to read Human Action is awesome, so I would recommend that, but I do think there are ways to get the core argument to prepare yourself. One of them is that Murray Rothbard's Man, Economy, and State is a very readable translation in some sense into a more modern English prose. And a more plain-language approach. It is a masterful work; it has its own unique contributions, which we could talk about on a different thing. But just as straight-up economics, he makes Mises very plain. If that's too daunting for you, Henry Hazlitt is a very good introduction to Mises as well, in like Economics in One Lesson. Mises himself--I think a book like Liberalism is very readable, very short in the scheme of things; gets right to the issues of liberalism and the kind of economic theories and classical liberalism that a lot of listeners on this show and readers might be interested in. I would say between the three Mises books I mentioned that Theory of Money and Credit is in some sense Mises's most technical work in economics. It's very demanding in terms of your ability to understand monetary theory, history of monetary theory. It rewards you tremendously if you read it, especially in our current context--because that's what's going on around us today; Mises's book is just as lively today. But it is technical economics. And challenging because the terminology is not quite the same as we use. It's 1912. Human Action is daunting because it's a mix of both refined points in economic theory mixed with a kind of ideological fervor that's a product of its age. Meaning you have right on the heels of Nazism, development of the interventionist economies in the West because they are going the wrong way--Mises used to say that he started out to be a theories and he became a historian of decline. So the book has that kind of rhetoric. Because I agree with him, I find the rhetoric charming. But someone like Israel Kirzner has spent his entire career trying to cull out of Mises the technical economics of the market process without the rhetoric of why the furor is horrible or whatever. And remember, that's my background so there's a little bias here. To me, Socialism is just as amazing intellectual achievement that sits between both worlds. You have the technical economics--The Theory of Money and Credit--and the more broad-sweeping economics of Human Action, and then you have this book Socialism, which is an Economic and Sociological Analysis--that's the subtitle--of this grand idea in which Mises is taking his opponents extremely seriously, trying to defeat them with logic and evidence, taking them on. To me, it's an amazing achievement of the human mind that I would recommend to any of the readers to pick that book up and wrestle with it. I think it's very well-translated so the English in it is easy to read. I think it stays focused, doesn't try to make a contribution on every area of economics; and it deals with a topic we still care about. There's discussions in there on the nature of the family, and what we now would call green economies. All of that stuff is right there. Mises will talk about the value of a waterfall and the problem of calculation in that, and property rights. The real bottom line is that his syllogism, without private property in the means of production there'd be no market in the means of production, without a market for the means of production there'd be no prices for those means of production; without prices reflecting relative scarcities, there's no way for the economic planner to be able to allocate scarce resources among competing ends, right? That syllogism is then played out across various different efforts at socialism in a way that I think is really a majesterial treatment. So I would recommend Socialism--little bit of a different twist today. I think most people who would sit in this chair would tell you Theory of Money and Credit after we get off of Human Action because it's about today. But it's not so accessible. Socialism is more accessible. His book Liberalism more so. In the 1920s Mises wrote three books: Socialism, Liberalism, and Interventionism; and he tried to go at each of the systems. He argued socialism is impossible; interventionism is unstable, therefore undesirable; and liberalism, he tries to show is both desirable, stable, leads to prosperity, all these things like that. Trifecta. Not many alternatives. By "liberalism" he meant? Our liberalism, classical liberalism, a society of free and responsible individuals; private property--he says liberalism can be summed up in one phrase: private property and the consistent application of that. And then what happens is when he comes in 1944, he publishes The Omnipotent Government which is his critique of the Nazi state. So you have Mises as a comparative systems economist--going to analyze socialism; interventionism, which a version of that is the manipulation of money and credit in the business cycle; he's going to analyze liberalism; fascism. Whole gamut of systems there.