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At September 29th we celebrate the famous Austrian Economist, Ludwig von Mises, who was born in 1881.
Mises made a number of profoundly important contributions that challenged many of the fashionable and influential collectivist and socialist ideas of his time.
Mises made a number of profoundly important contributions that challenged many of the fashionable and influential collectivist and socialist ideas of his time.
Born in Lemberg, Austria-Hungary (now Lviv, Ukraine) and died on October 10, 1973, at the age of 92. Educated at the University of Vienna, for many years he made his living as a senior economic policy analyst at the Vienna Chamber of Commerce in his native Austria.
He taught at the Graduate Institute of International Studies in Geneva, Switzerland from 1934 to 1940, until permanently moving to the United States, where he taught a graduate seminar beginning in 1945 at New York University until his retirement in 1969 at the age of 89.
Author of over 20 books and hundreds of scholarly and popular articles, Mises influenced several generations of economists, sociologists, historians, and other social philosophers over his professional career, and his books and articles continue to be a major intellectual force
His most famous work is Human Action: A Treatise on economics in which he spans the entire fields of economics, history, and social philosophy that offers a comprehensive analysis of man, society, and the economic and political order.
The gist of Mises’s argument is that the booms and busts of the business cycle are not inherent in the workings of the market economy. Such macroeconomic fluctuations in employment, output, and prices have their origin in central bank mismanagement of the money supply
Contrary to Keynesian economics, Mises and other Austrian economists have argued that the only lasting path to a sustainable return to full employment and healthy economic growth are open, competitive markets that permit the necessary adjustments in prices, wages,
and sectoral production shifts across the economy with the least interference from “activist” monetary and fiscal policies by governments.
Mises’s long-run policy prescriptions to reduce the likelihood and severity of business cycles are to limit government and central bank discretion over the money supply by linking the quantity of money and credit in the banking system to a gold standard,
or to fully eliminate central bank influences over money and interest rates through an institutional shift to a private, competitive free banking system
Perhaps Ludwig von Mises’ most famous contribution was, his critique of socialist central planning, especially in his book, Socialism: An Economic and Sociological Analysis. In the nineteenth and twentieth centuries, socialists condemned the capitalist system
and called for the abolition of private property in the means of production, with government ownership and centralized planning of all economic activity in place of competitive free enterprise.
Market-generated prices enable entrepreneurs to undertake economic calculations that facilitate rational and efficient uses of income and resources in society. Prices for consumer goods tell entrepreneurs what goods consumers may want and the relative values they place on them
The prices for the factors of production—land, labor, resources, capital equipment—inform competing entrepreneurs about the alternative demands and opportunity costs of producing desired goods with differing combinations of scarce means of production.
Entrepreneurs are able to calculate profit and loss, and the most cost-efficient employment of inputs to produce outputs.
But with the abolition of private property in the means of production, elimination of private enterprise, and a resulting lack of a market-generated pricing
But with the abolition of private property in the means of production, elimination of private enterprise, and a resulting lack of a market-generated pricing
system the socialist central planner—no matter how wise and well-intentioned—would be flying blind with no way to know what consumers really want or how best to produce goods and services in the least costly value terms. Hence, full and comprehensive socialist central planning
would lead to economic disorder, supply and demand imbalances and society-wide inefficiency. The experiences in virtually all socialist command economies of the last one hundred years have confirmed Mises’s critique of the impossibility of a socialist system superior to
competitive capital system.
Matching Mises’s critique of socialist planning is his analysis of the modern interventionist or regulated economy. Partial government regulations and controls of certain prices or production methods and activities are not as deadly as comprehensive
Matching Mises’s critique of socialist planning is his analysis of the modern interventionist or regulated economy. Partial government regulations and controls of certain prices or production methods and activities are not as deadly as comprehensive
central planning. But nonetheless, they are similar to “sand in the machine” that prevents the competitive market system from operating as dynamically and adaptively to the continuous and unexpected changes that constantly arise in a diverse and interdependent global marketplace
such as ours.This latter point highlights an element that runs through most of Mises’s writings on economics, and that is his emphasis on seeing and understanding the market economy as a dynamic process of never-ending change containing within it the potential and possibilities
for human creativity and entrepreneurial innovation that when left free and open offers a wide arena for human improvement and rising standards of living for all over the long run. Indeed, one sees the principles behind and the potentials for human liberty and prosperity
Some of the information in this thread was taken from the article "Ludwig von Mises: An Economist for Freedom and Free Enterprise"
By Richard Ebeling
By Richard Ebeling
