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Money

2012-01-05T21:57:42Z

173.245.56.167:

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'''Money''' is a commonly used [[medium of exchange]].<ref name="Goods">Ludwig von Mises. [http://mises.org/humanaction/chap17sec1.asp "1. Media of Exchange and Money"], ''Chapter XVII. Indirect exchange'', [[Human Action]], online edition, referenced 2009-04-27.</ref> People wishing to achieve their ends often have to [[trade]]. They can exchange their [[good]]s ''directly'', if they have matching preferences and suitable goods, or ''indirectly'', with the help of another good, the ''medium of exchange''.

==Medium of exchange and money==
{{Main|Medium of exchange}}
Jones can trade an apple against two eggs from Brown. But this direct exchange or [[Trade#Direct Exchange|barter]] limits the number of exchanges and the extent of social cooperation. Both must have a direct personal need for the goods of the other person (this problem is called the "[[Coincidence of wants|double coincidence of wants]]") and the goods must be easily divided. Using another, marketable good between the traded and desired goods and services helps to reduce some of the problems.

: Indirect exchange means, "''if, between the commodities and services, that are the ultimate end of exchanging, are one or several media of exchange.''"<ref name="Goods" />

Another grave problem with a world of barter is that it is impossible for any business [[firm]] to '''calculate''' how it's doing, whether it is making profits or incurring losses, beyond a very primitive estimate. Suppose that you are a business firm, and you are trying to calculate your income, and your expenses, for the previous month. And you list your income: "let's see, last month we took in 20 yards of string, 3 codfish, 4 cords of lumber, 3 bushels of wheat. . . etc.," and "we paid out: 5 empty barrels, 8 pounds of cotton, 30 bricks, 5 pounds of beef." How in the world could you figure out how well you are doing? Once a money is established in an economy, however, business calculation becomes easy: "Last month, we took in 500, and paid out 450. Net profit, 50." The development of a general medium of exchange, then, is a crucial requisite to the development of any sort of flourishing market economy.<ref name="Rothbard_money">[[Murray N. Rothbard]]. [http://mises.org/books/fed.pdf The Case Against the Fed] (pdf), The Genesis of Money, p.12-15, referenced 2010-03-18.</ref>

A [[commodity]] that comes into general use as a medium of exchange is money. The concept of a "medium of exchange" is precise. But when exactly comes a medium of exchange into "common" or "general" use is not strictly definable. Whether or not is a medium money can be decided only by the judgment of the historian. Since there is a great tendency on the market for a medium of exchange to become money, it is called money for simplification.<ref name="Rothbard_medium">Murray N. Rothbard [http://mises.org/rothbard/mes/chap3a.asp#2._Emergence_of_Indirect "2. The Emergence of Indirect Exchange"] Chapter 3-The Pattern of indirect exchange, ''[[Man, Economy and State]]'', online edition, referenced 2009-05-05.</ref>

Note that money is still a [[good]] - the most marketable good. Money is valuable to the extent that others are willing to accept it in exchange. But, money itself must first have originated as a directly serviceable good before it could become an indirectly serviceable good.<ref name="Mahoney_money">Dan Mahoney. [http://mises.org/story/672 "Austrian Business Cycle Theory: A Brief Explanation"], ''[[Mises Institute]]'', referenced 2009-06-17.</ref>

==Origin and properties==
In the history of mankind, a great variety of commodities — cattle, shells, nails, tobacco, cotton, copper, silver, gold, stone wheels<ref name="Friedman_Yap">Milton Friedman. [http://hoohila.stanford.edu/workingpapers/getWorkingPaper.php?filename=E-91-3.pdf "The Island of Stone Money"] (pdf), The Hoover Institution, Stanford University, February 1991, referenced 2009-08-14.</ref>, and so on, have been used as media of exchange. In the most developed societies, the precious metals have eventually been preferred to all other goods because of their physical characteristics ([[scarcity]], durability, divisibility, distinct look and sound, homogeneity through space and time, malleability, and beauty).<ref name="Hulsmann_money">Jörg Guido Hülsmann. [[The Ethics of Money Production]], online version, 2. The Origin and Nature of Money, p.22-24, referenced 2009-05-08.</ref>

For a good to become money, it must have the physical properties and be considered valuable by itself. The [[price]] of a good, when employed only for nonmonetary purposes, is a good starting point to estimate its price for use as a money. Should the good stop being money, it will still have [[value]] due its other uses.<ref name="Hulsmann_money" />

Historically, there were often several types of money used concurrently and for different purposes. For example, [[silver]] tended to be widespread in daily use, while [[gold]] served for larger and international transactions. Livestock<ref name="Davies">Davies, Glyn. [http://projects.exeter.ac.uk/RDavies/arian/origins.html "A history of money from ancient times to the present day"], Origins of Money and of Banking, referenced 2009-05-09.</ref> was for ages associated with wealth (and while it is bulky, it can be easily transported). The role of cigarettes<ref>R. A. Radford. [http://www.albany.edu/~mirer/eco110/pow.html "The Economic Organisation of a P.O.W. Camp"], ''[[Wikipedia:Economica|Economica]]'', vol. 12, 1945, referenced 2009-05-09.</ref> in prisons is also well documented.

In the present, money is mostly in the form of [[coin]]s and [[banknote]]s.

{{See also|History of money and banking}}

===Commodity money===
The emergence of money happens through a gradual process, in the course of which more and more market participants, each for himself, decide to use one [[commodity]] rather than others in their indirect exchanges. Thus the historical selection of gold, silver, and copper was not made through some sort of a social contract or convention. Rather, it resulted from the spontaneous convergence of many individual choices, a convergence that was prompted through the objective physical characteristics of the precious metals. Money selected in the free market. i.e. money that comes into use by the voluntary cooperation of acting persons, is also called ''natural money''.<ref name="Hulsmann_money" />

By adding a new component to the pre-existing (barter) demand for these goods, their marketability is still further enhanced. Based on their perception of this fact, other market participants increasingly choose the same goods for their inventory of exchange media, as it is in their own interest to select media of exchange that are already employed by others for the same purpose. Initially, a variety of goods may be in demand as common media of exchange. However, since a good is demanded as a medium of exchange to facilitate future purchases of directly serviceable goods (i.e., to help one buy more cheaply) and simultaneously widen one's market as a seller of directly useful goods and services (i.e., help one sell more dearly), the more widely a commodity is used as a medium of exchange, the better it will perform its function.<ref name="Hoppe_money">Hans-Hermann Hoppe. [http://mises.org/journals/rae/pdf/RAE7_2_3.pdf "How is Fiat Money Possible? - or, The Devolution of Money and Credit"] (pdf), The Review of Austrian Economics Vol.7, No. 2 (1994). Referenced 2010-04-28.</ref>

Because each market participant naturally prefers the acquisition of a more marketable and, in the end, universally marketable medium of exchange to that of a less or non-universally marketable one, "there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money."<ref name="Mises_origin">Ludwig von Mises. [http://mises.org/books/tmc.pdf "Theory of Money and Credit"] (pdf), p.32-33, referenced 2010-04-28.</ref>

===Fiat money===
Money did not and never could begin by some arbitrary social contract, or by some government agency decreeing that everyone has to accept the tickets it issues. Even coercion could not force people and institutions to accept meaningless tickets that they had not heard of or that bore no relation to any other pre-existing money.<ref name="Rothbard_money" />

If anyone could produce [[paper money]] on their own, without backing by an underlying commodity, a [[hyperinflation]] would soon follow. Free entry into the note-production business must be restricted, and a money [[monopoly]] must be established. Fiat money can be only established via the development of money substitutes (paper titles to commodity money) - but only fraudulently and only at the price of economic inefficiencies. [[Wikipedia:Hans-Hermann Hoppe|Hoppe]] speaks of the "devolution" of money.<ref name="Hoppe_money" />
{{Main|Fiat Money}}

==Types==

===Commodity money===
As the more marketable [[Commodity|commodities]] in any society begin to be picked by individuals as media of exchange, their choices will quickly focus on the few most marketable commodities available. The demand for these commodities has now an additional component - not only for their direct use, but also for their use as a medium of exchange. This increase in the demand greatly increases their marketability. If e.g. butter begins as one of the most marketable commodities and is therefore more and more chosen as a medium, this increase in the demand for butter greatly increases the very marketability that makes it useful as a medium in the first place. The process is cumulative, with the most marketable commodities becoming enormously more marketable and with this increase spurring their use as media of exchange. The process continues, with an ever-widening gap between the marketability of the medium and the other commodities, until finally one or two commodities are far more marketable than any others and are in general use as media of exchange.<ref name="Rothbard_medium" />

===Money substitutes===
Or ''money certificates'', are placeholders for actual money, that is stored in a [[bank]] and can be redeemed at any time by the present owner of the note. Instead of trading e.g. silver, people would trade with notes representing the silver. Apart from paper notes, the main types of such substitutes are token coins, certificates of deposit, checking accounts, credit cards, and electronic bank accounts on the [[Internet]]. The advantage are lower transaction costs, the downside is a greater potential for abuse (and historically, this lure appeared to be irresistible).<ref name="Hulsmann_certificates">Jörg Guido Hülsmann. [[The Ethics of Money Production]], Chapter 2. Money certificates p.35-41, referenced 2009-05-10</ref>

===Credit money===
Credit money is created when financial instruments are used in indirect exchange. It is only a derived kind of money: it receives its [[value]] from an expected future redemption. For example, an [[Wikipedia:IOU (debt)|IOU]] can be accepted by others, if they trust the reputation of the issuer of [[debt]]. This risk of [[default]] also limits its application.

"Not surprisingly, therefore, credit money has reached wider circulation only when the credit was denominated in terms of some commodity money, when the reputation of the issuer was beyond doubt, and when it was the only way to quickly provide the government with the funds needed to
conduct large-scale war."<ref name="Hulsmann_credit_money">Jörg Guido Hülsmann. [[The Ethics of Money Production]], 2. The origin and nature of Money, p.28-29, referenced 2009-05-10</ref>

===Fiat money===
{{Main|Fiat Money}}
Often called '''paper money''', fiat money is in a wider sense any money declared to be [[Legal tender|legal tender]] by government ''fiat''. In the narrower sense used here, fiat money is an [[Wikipedia:intrinsic|intrinsically]] useless good used as a means of payment and a storable object.<ref>Walsh, Carl E. Monetary Theory and Policy, The MIT Press 2003, ISBN 978-0-262-23231-9, [http://www.google.com/url?sa=U&start=4&q=http://books.google.com/books%3Fid%3DeX3n3LSZVrIC%26dq%3DWalsh,%2BCarl%2BE.%2BMonetary%2BTheory%2Band%2BPolicy%26printsec%3Dfrontcover%26source%3Dbn%26hl%3Den&ei=kCwHSuypIoGH_Qb99sXcBg&usg=AFQjCNFILyic0qj63G7aiTnMpix5BJaRDQ&ei=kCwHSuypIoGH_Qb99sXcBg&oi=book_result&ct=result&resnum=4 online version], referenced 2009-05-10.</ref> All modern paper [[Currency|currencies]] are fiat money.

There are many reported advantages to fiat money as opposed to commodity-based money, among them:
* much lower costs of production
* the quantity can be easily modified to suit the needs of trade
* the quantity can be easily modified to stabilize the value of the money unit.

The main risk of this money is the possibility of a complete loss of value.

{{See also|For and against paper money}}

===Electronic money===
The information technologies have been able to develop very efficient and beneficial new instruments to access and transfer. But no purely electronic money has been produced so far, except for government money, which is free from competition.<ref name="Hülsmann_fiat">Jörg Guido Hülsmann. [[The Ethics of Money Production]], Chapter 1., 5. Paper Money and the Free Market, p. 29-33, referenced 2009-05-10.</ref> A possible candidate for a purely electronic money, which is currently in the experimental stage, is [[bitcoin]].

==Production of money==
The [[production]] of additional units of money will decrease the value of already existing units. Those owning these additional units will tend to pay more money for goods and services or demand additional goods and services, and demand in turn more money when selling their own goods and services. Thusly, the production of money has a tendency to raise money [[price]]s, starting from the producers of money and spreading to other economical actors.

In the free market, the amount of money produced depends in the free market on the consumers. They decide not only the amount of goods (or money) to be produced, but also the the types of money widely used. Historically, coins of several metals and alloys were used concurrently, this appears to be the natural state of things.

It is often asserted, that higher money prices benefit debtors, as it lowers the relative value of their debts. This may not always be the case: if the lender's estimate of the rising prices is too high, the debtor may end up paying more on account of the expected [[inflation]].

The final and possibly most important effect of a rising [[money supply]] is in its timing - the positive effect of "having more money" benefits the producer of money and those getting it first; while the negative effects impact the latecomers. This redistribution of of wealth and rising prices may be limited to some degree, but cannot be avoided.<ref name="Hulsmann_production">Jörg Guido Hülsmann. [[The Ethics of Money Production]], Chapter 3 Money within the Market Process, referenced 2009-05-10.</ref>

===The optimal quantity of money===
For all products except money, an increase is socially beneficial, since it means that production and living standards have increased in response to consumer demand. If steel or bread or houses are more plentiful and cheaper than before, everyone‘s standard of living benefits. But an increase in the [[Money supply|supply of money]] cannot relieve the natural scarcity of consumer or capital goods; all it does is to make the money cheaper, that is, lower its purchasing power in terms of all other goods and services. Once a good has been established as money on the market, then, it exerts its full power as a mechanism of exchange or an instrument of calculation. All that an increase in the quantity of dollars can do is to dilute the effectiveness, the purchasing-power, of each money. Hence, the great truth of monetary theory emerges: once a commodity is in sufficient supply to be adopted as a money, no further increase in the supply of money is needed. Any quantity of money in society is "optimal." Once a money is established, an increase in its supply confers no social benefit.<ref name="Rothbard_money" />

This is not the situation with '''commodity money'''. Money originally emerged from an ordinary commodity that people demanded because it contributed tangible benefits to their life and well being - one of them the service of a medium of exchange. Therefore, an increase of the production of commodity means more useful goods.<ref name="Shostak">Frank Shostak. [http://mises.org/daily/1596 "The Subsistence Fund"], Mises Daily, August 2004, referenced 2010-05-10.</ref>

==Using money==
Money can be employed in several ways:<ref name="Mahoney_money" />

* Money can be held. Holding it "buys" alleviation from a currently felt uneasiness about an [[Uncertainty|uncertain]] future. If the future seems more uncertain, people will increase their cash holdings.
* Money can be used to buy consumer [[good]]s. People increase their consumption if their time preference rises.
* Finally, it can be [[Saving|saved]], to buy producer goods and so form [[capital]]. People save because their [[Time preference|time preference]] falls.

==Monies over the course of history==
According to a study of 775 present and historical [[Currency|currencies]] by DollarDaze.org, twenty percent failed through hyperinflation, 21% were destroyed by war, 12% ended by independence, 24% were monetarily reformed, and 23% are still in circulation.<ref name="Hewitt_Fate">Mike Hewitt. [http://dollardaze.org/blog/?post_id=00405 "The Fate of Paper Money"], ''DollarDaze.org'', January 7th, 2009. Referenced 2011-08-17.</ref>

==See also==
* ''[[Money, Bank Credit, and Economic Cycles]]''
* ''[[The Ethics of Money Production]]''

==References==
{{Reflist}}

==Links==
* Murray N. Rothbard, [http://mises.org/rothbard/mes.asp Man, Economy and State], esp. Chapters 2 and 3
* Ludwig von Mises, [http://mises.org/resources/3250 Human Action], esp. Chapter XVII
* [[Wikipedia:Money|Wikipedia page]] on money and [[Wikipedia:History of money|history of money]]
* Frank A. Fetter, Economics In Two Volumes: [http://chestofbooks.com/finance/economics/Economics2-Modern-Economic-Problems/index.html Volume II. Modern Economic Problems]

[[Category:Money|*]]
[http://www.pennyseeds.com/make-money-online/how-to-budget-money How To Budget Money]

Ludwig von Mises

2011-12-25T22:10:12Z

173.245.56.167: /* Professional life */

[[File:Ludwig von Mises.jpg|thumb|right|Ludwig von Mises]]

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{{Quote|"Economics deals with society's fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen."|Ludwig von Mises|''[[Human Action]]''}}
'''Ludwig von Mises''' was one of the most notable economists and social philosophers of the twentieth century. In the course of a long and highly productive life, developed an integrated, deductive science of [[economics]] based on the fundamental axiom that individual human beings [[Action|act]] purposively to achieve desired goals. Even though his economic analysis itself was "value-free" — in the sense of being irrelevant to values held by economists — Mises concluded that the only viable economic policy for the human race was a policy of unrestricted laissez-faire, of free markets and the unhampered exercise of the right of private property, with government strictly limited to the defense of person and property within its territorial area.

For Mises was able to demonstrate (a) that the expansion of free markets, the division of labor, and private capital investment is the only possible path to the prosperity and flourishing of the human race; (b) that socialism would be disastrous for a modern economy because the absence of private ownership of land and capital goods prevents any sort of rational pricing, or estimate of costs, and (c) that government [[intervention]], in addition to hampering and crippling the market, would prove counter-productive and cumulative, leading inevitably to socialism unless the entire tissue of interventions was repealed.

Holding these views, and hewing to truth indomitably in the face of a century increasingly devoted to statism and collectivism, Mises became famous for his "[[Wiktionary:intransigence|intransigence]]" in insisting on a non-inflationary [[gold standard]] and on laissez-faire.

Effectively barred from any paid university post in Austria and later in the United States, Mises pursued his course gallantly. As the chief economic adviser to the Austrian government in the 1920s, Mises was single-handedly able to slow down Austrian inflation; and he developed his own "private seminar" which attracted the outstanding young economists, social scientists, and philosophers throughout Europe. As the founder of the "neo-Austrian School" of economics, Mises’s [[Austrian Business Cycle Theory|business cycle theory]], which blamed [[inflation]] and depressions on inflationary bank credit encouraged by Central Banks, was adopted by most younger economists in England in the early 1930s as the best explanation of the [[Great Depression]].

Having fled the Nazis to the United States, Mises did some of his most important work here. In over two decades of teaching, he inspired an emerging Austrian School in the United States. The year after Mises died in 1973, his most distinguished follower, [[Friedrich Hayek|F.A. Hayek]], was awarded the Nobel Prize in economics for his work in elaborating Mises’s business cycle theory during the later 1920s and 1930s.

==Early life==
Mises was born on Sept 29, 1881, in the city of Lemberg (now [[Wikipedia:Lviv|Lvov]]) in [[Wikipedia:Galicia (Central Europe)|Galicia]], where his father, a Viennese construction engineer working for the Austrian railroads, was then stationed. Both Mises’s father and mother came from prominent Viennese families; his mother’s uncle, Dr Joachim Landau, served as deputy from the Liberal Party in the Austrian Parliament.

Entering the University of Vienna at the turn of the century as a leftist interventionist, the young Mises discovered ''[[Wikipedia:Principles of Economics|Principles of Economics]]'' ([http://www.mises.org/etexts/menger/principles.asp text], [http://mises.org/etexts/menger/Mengerprinciples.pdf pdf]) by [[Carl Menger]], the founding work of the [[Austrian Economics|Austrian School of economics]], and was quickly converted to the Austrian emphasis on individual action rather than unrealistic mechanistic equations as the unit of economics analysis, and to the importance of a free-market economy.

Mises became a prominent post-doctoral student in the famous University of Vienna seminar of the great Austrian economist [[Eugen von Böhm-Bawerk]] (among whose many accomplishments was the devastating refutation of the Marxian labor theory of value).

The [[Mises Institute]]'s coat of arms (see [http://mises.org/images/misescrest-large.jpg full view]) is that of the Mises family, awarded in 1881 when Ludwig von Mises's great-grandfather Mayer Rachmiel Mises was ennobled by the [[Wikipedia:Franz Joseph I of Austria|Emperor Franz Josef I of Austria]]. In the upper right-hand quadrant is the staff of [[Wikipedia:Mercury (mythology)|Mercury]], god of commerce and communication (the Mises family was successful in both; they were merchants and bankers). In the lower left-hand quadrant is a representation of the Ten Commandments. Mayer Rachmiel, as well as his father, presided over various Jewish cultural organizations in Lemberg, the city where Ludwig was born. The red banner displays the Rose of Sharon, which in the litany is one of the names given to the Blessed Mother, as well as the Stars of the Royal House of David, a symbol of the Jewish people. Ludwig's lifelong motto was from Virgil: ''tu ne cede malis, sed contra audentior ito'' ("do not give in to evil, but proceed ever more boldly against it").

==Professional life==
During this period, in his first great work, [[The Theory of Money and Credit]](1912) ([http://www.mises.org/books/Theory_Money_Credit/Contents.aspx text], [http://www.mises.org/books/tmc.pdf pdf]) Mises performed what had been deemed an impossible task: to integrate the theory of money into the general theory of marginal utility and price (what would now be called integrating "macroeconomics" into "microeconomics"). Since Bohm-Bawerk and his other Austrian colleagues did not accept Mises’s integration and remained without a monetary theory, he was therefore obliged to strike out on his own and found a "neo-Austrian" school.

In his monetary theory, Mises revived the long forgotten [[British Currency School]] principle, prominent until the 1850s, that society does not at all benefit from any increase in the money supply, that increased money and bank credit only causes [[inflation]] and [[business cycle]]s, and that therefore government policy should maintain the equivalent of a 100 percent [[gold standard]].

Mises added to this insight the elements of his business cycle theory: that credit expansion by the [[bank]]s, in addition to causing inflation, makes depressions inevitable by causing "malinvestment", i.e. by inducing businessmen to overinvest in "higher orders" of [[capital]] goods (machine tools, construction, etc.) and to underinvest in consumer [[good]]s.

The problem is that inflationary bank credit, when loaned to business, masquerades as pseudo-savings, and makes businessmen believe that there are more savings available to invest in capital goods production than consumers are genuinely willing to save. Hence, an inflationary boom requires a recession which becomes a painful but necessary process by which the market liquidates unsound investments and reestablishes the investment and production structure that best satisfies consumer preferences and demands.

Mises, and his follower [[Friedrich Hayek|Hayek]], developed this [[Austrian Business Cycle Theory|cycle theory]] during the 1920s, on the basis of which Mises was able to warn an unheeding world that the widely trumpeted "[[Roaring Twenties|New Era]]" of permanent prosperity of the 1920s was a sham, and that its inevitable result would be bank panic and depression. When Hayek was invited to teach at the [[London School of Economics]] in 1931 by an influential former student at Mises’s private seminar, [[Lionel Robbins]], Hayek was able to convert most of the younger English economists to this perspective. On a collision course with [[John Maynard Keynes]] and his disciples at [[University of Cambridge|Cambridge]], Hayek demolished Keynes’s Treatise on Money (1930), but lost the battle and most of his followers to the tidal wave of the [[Keynesian Revolution]] that swept the economic world after the publication of Keynes’s [[The General Theory of Employment, Interest and Money|General Theory]] in 1936.

The policy prescriptions for business cycles of Mises-Hayek and of Keynes were diametrically opposed. During a boom period, Mises counseled the immediate end of all bank credit and monetary expansion; and, during a recession, he advised strict laissez-faire, allowing the readjustment forces of the recession to work themselves out as rapidly as possible.

Not only that: for Mises the worst form of intervention would be to prop up [[price]]s or wage rates, causing unemployment, to increase the money supply, or to boost government spending in order to stimulate consumption. For Mises, the recession was a problem of under-saving, and over-consumption, and it was therefore important to encourage savings and thrift rather than the opposite, to cut government spending rather than increase it. It is clear that, from 1936 on Mises was totally in opposition to the worldwide fashion in macroeconomic policy.

[[Socialism]]-communism had triumphed in Russia and in much of Europe during and after World War I, and Mises was moved to publish his famous article, "[[Economic Calculation in the Socialist Commonwealth]]" (1920, [http://mises.org/econcalc.asp text]), in which he demonstrated that it would be impossible for a socialist planning board to plan a modern economic system; furthermore, no attempt at artificial "markets" would work, since a genuine pricing and costing system requires an exchange of property titles, and therefore private property in the means of production.

Mises developed the article into his book [[Socialism (book)|Socialism]] (1922, [http://mises.org/books/socialism/contents.aspx text]), a comprehensive philosophical and sociological, as well as economic critique which still stands as the most thorough and devastating demolition of socialism ever written. Mises’s Socialism converted many prominent economists and social philosophers out of socialism, including Hayek, the German [[Wilhelm Röpke]]<ref name="Röpke">Shawn Ritenour. [http://mises.org/about/3241 "Wilhelm Röpke (1899-1966): Humane Economist"], ''[[Mises Institute]]'', referenced 2009-05-24.</ref>, and the Englishman [[Lionel Robbins]].

In the United States, the publication of the English translation of Socialism in 1936 attracted the admiration of the prominent economic journalist [[Henry Hazlitt]], who reviewed it in the New York Times, and converted one of America’s most prominent and learned Communist fellow-travelers of the period, [[J.B. Matthews|J.B. Matthews]], to a Misesian position and to opposition to all forms of socialism.

Socialists throughout Europe and the United States worried about the problem of [[economic calculation]] under socialism for about fifteen years, finally pronouncing the problem solved with the promulgation of the "market socialism" model of the Polish economist [[Oskar R. Lange|Oskar Lange]] in 1936. Lange returned to Poland after World War II to help plan Polish Communism. The collapse of socialist planning, in Poland and the other Communist countries in 1989, left Establishment economists across the ideological spectrum, all of whom bought the Lange "solution", mightily embarrassed.

Some prominent socialists, such as [[Robert Heilbroner]], have had the grace to admit publicly that "Mises was right" all along (the phrase "Mises was Right" was the title of a panel at the annual 1990 meeting of the Southern Economic Association at New Orleans).<ref>[http://www.reason.com/news/show/32874.html "The Man Who Told the Truth"], ''[[Reason (magazine)|Reason]]'', 1990. Retrieved on April 4 2009.</ref>

If socialism was an economic catastrophe, government intervention could not work, and would tend to lead inevitably to socialism. Mises elaborated these insights in his Critique of Interventionism (1929, [http://mises.org/etexts/mises/critique/contents.asp text]), and set forth his political philosophy of laissez-faire liberalism in his [[Liberalism (book)|Liberalism]] (1927; [http://mises.org/liberal.asp text], [http://mises.org/books/liberalism.pdf pdf]).

In adition to setting himself against all the political trends of the twentieth century, Mises combated with equal fervor and eloquence what he considered the disastrous dominant philosophical and methodological trends, in economics and other disciplines. These included positivism, relativism, historicism, polylogism” the idea that each race and gender has its own "logic" and therefore cannot communicate with other groups), and all forms of irrationalism and denial of objective truth. Mises also developed what he considered to be the proper methodology of economic theory--logical deduction from evident axioms, which he labeled "praxeology", and he leveled trenchant critiques of the growing tendency in economics and other disciplines to replace praxeology and historical understanding by unrealistic mathematical models and statistical manipulations.

==In the United States==
Emigrating to the United States in 1940, Mises’s first two books in English were important and influential. His [[Wikipedia:Omnipotent Government|Omnipotent Government]] (1944; [http://www.mises.org/etexts/mises/og.asp text]) was the first book to challenge the then-standard Marxian view that fascism and Nazism were imposed upon their nations by big business and the "capitalist class". His [[Wikipedia:Bureaucracy (book)|Bureaucracy]] (1944; [http://www.mises.org/etexts/mises/bureaucracy.asp text]) was a still unsurpassed analysis of why government operation must necessarily be “bureaucratic” and suffer from all the ills of bureaucracy.

Mises’s most monumental achievement was his [[Human Action]] (1949), the first comprehensive treatise on economic theory written since the first World War. Here Mises took up the challenge of his own methodology and research program and elaborated an integrated and massive structure of economic theory on his own deductive, “praxeological” principles. Published in an era when economists and governments generally were totally dedicated to statism and Keynesian inflation, Human Action was unread by the economics profession. Finally, in 1957 Mises published his last major work, ''Theory and History'' ([http://mises.org/th.asp text], [http://mises.org/Books/theoryhistory.pdf pdf]), which, in addition to refutations of Marxism and historicism, set forth the basic differences and functions of theory and of history in economics as well as all the various disciplines of human action.

In the United States as in his native Austria, Mises could not find a paid post in academia. [[Wikipedia:New York University|New York University]], where he taught from until 1945 until his retirement at the age of 88 in 1969, would only designate him as Visiting Professor, and his salary had to be paid by the conservative-libertarian [[Wikipedia:William Volker Fund|William Volker Fund]] until 1962, and after that by a consortium of free-market foundations and businessmen. Despite the unfavorable climate, Mises inspired a growing group of students and admirers, cheerfully encouraged their scholarship, and himself continued his remarkable productivity.

Mises was also sustained by and worked together with free-market and libertarian admirers. From its origin in 1946 until his death, Mises was a part-time staff member of the [[Wikipedia:Foundation for Economic Education|Foundation for Economic Education]] at Irvington-on-Hudson, New York; and he was in the 1950s an economic advisor to the [[Wikipedia:National Association of Manufacturers|National Association of Manufacturers]] (NAM) working with their laissez-faire wing which finally lost out to the tide of "enlightened" statism.

As a free trader and a classical liberal in the tradition of [[Wikipedia:Richard Cobden|Cobden]], [[Wikipedia:John Bright|Bright]], and [[Wikipedia:Herbert Spencer|Spencer]], Mises was a libertarian who championed reason and individual liberty in personal as well as economic matters. As a rationalist and an opponent of statism in all its forms, Mises would never call himself a “conservative,” but rather a liberal in the nineteenth-century sense.

Indeed, Mises was politically a laissez-faire radical, who denounced tariffs, immigration restrictions, or governmental attempts to enforce morality. On the other hand, Mises was a staunch cultural and sociological conservative, who attacked egalitarianism, strongly denounced political feminism as a facet of socialism. In contrast to many conservative critics of capitalism, Mises held that personal morality and the nuclear family were both essential to, and fostered by, a system of free-market capitalism.

Mises’s influence was remarkable, considering the unpopularity of his epistemological and political views. His students of the 1920s, even those who later became Keynesians, were permanently stamped by a visible Misesian influence. These students included, in addition to Hayek and Robbins, [[Wikipedia:Fritz Machlup|Fritz Machlup]]<ref name="Machlup">Mark Thornton. [http://mises.org/about/3237 "Biography of Fritz Machlup (1902-1983)"], ''[[Mises Institute]]'', referenced 2009-05-24.</ref> [[Wikipedia:Gottfried von Haberler|Gottfried von Haberler]]<ref name="Haberler">[http://mises.org/journals/aen/aen20_1_1.asp "Between Mises and Keynes An Interview with Gottfried von Haberler (1900-1995)"], ''The Austrian Economics Newsletter'' Spring 2000 Volume 20, Number 1, referenced 2009-04-27.</ref>, [[Wikipedia:Oskar Morgenstern|Oskar Morgenstern]], [[Wikipedia:Alfred Schutz|Alfred Schutz]]<ref name="Schutz">Peter Kurrild-Klitgaard. [http://mises.org/journals/qjae/pdf/qjae6_2_2.pdf "The Viennese Connection: Alfred Schutz and the Austrian School"](pdf), ''The Quarterly Journal Of Austrian Economics'' Vol.6, no.2, referenced 2009-05-24.</ref>, [[Wikipedia:Hugh Gaitskell|Hugh Gaitskell]], Howard S. Ellis, John Van Sickle, and [[Wikipedia:Erich Voegelin|Erich Voegelin]].

In France, [[Wikipedia:Charles de Gaulle|General DeGaulle’s]] major economic and monetary adviser, who helped swing France away from socialism, was [[Wikipedia:Jacques Rueff|Jacques Rueff]], an old-friend and admirer of Mises. And part of post-World War II Italy’s shift away from socialism was due to its President [[Wikipedia:Luigi Einaudi|Luigi Einaudi]], a distinguished economist and long-time friend and free-market colleague of Mises. In the United States, Mises was scarcely as influential. Under less promising academic conditions, his students and admirers included Henry Hazlitt, [[Wikipedia:Lawrence Fertig|Lawrence Fertig]], Percy Greaves, Jr., Bettina Bien Graeves, [[Wikipedia:Hans F. Sennholz|Hans F. Sennholz]], William H. Peterson<ref name="Peterson">[http://mises.org/fellow.aspx?Id=24 "William H. Peterson"], ''[[Mises Institute]]'', referenced 2009-05-25.</ref>, Louis M. Spadaro, [[Wikipedia:Israel Kirzner|Israel M. Kirzner]], [[Wikipedia:Ralph Raico|Ralph Raico]], [[Wikipedia:George Reisman|George Reisman]], and [[Murray N. Rothbard]]. But Mises was able to build a remarkably strong and loyal following among businessmen and other non-academics; his massive and complex Human Action has sold extraordinarily well ever since the year of its original publication.

Since Mises’s death in New York City on October 10, 1973 at the age of 92, Misesian doctrine and influence has experienced a renaissance. The following year saw not only Hayek’s Nobel Prize for Misesian cycle theory, but also the first of many Austrian School conferences in the United States. Books by Mises have been reprinted and collections of his articles translated and published. Courses and programs in Austrian Economics have been taught and established throughout the country.

Taking the lead in this revival of Mises and in the study and expansion of Misesian doctrine has been the [[Mises Institute|Ludwig von Mises Institute]], founded by [[Wikipedia:Lew Rockwell|Llewellyn Rockwell, Jr.]] in 1982 and headquartered in [[Wikipedia:Auburn, Alabama|Auburn, Alabama]]. The Mises Institute publishes scholarly journals and books, and offers courses in elementary, intermediate and advanced Austrian economics, which attract increasing numbers of students and professors. Undoubtedly, the collapse of socialism and the increased attractiveness of the free market have greatly contributed to this upsurge of popularity.

<small>[http://mises.org/about/3248 Original text] written by [[Murray N. Rothbard]], used with generous permission of the [[Mises Institute]].</small>

==Curriculum Vitae==

=====Academic Degrees=====
*Dr. Jur. (Doctorate of Law), University of Vienna, Austria (1906)

=====Academic Appointments=====
*Lecturer of Economics, Vienna Business Academy, Austria (1906-1912)
*Lecturer of Economics, University of Vienna, Austria (1913-1914)
*Associate Professor of Economics, University of Vienna, Austria (1919-1934)
*Professor of International Economic Relations, Graduate Institute of International Studies, Switzerland (1934-1940)
*Visiting Professor of Economics, National University of Mexico (1942)
*Visiting Professor of Economics, Graduate School of Business Administration, New York University (1945-1969)
*Visiting Professor of Economics, Plano University (1965-1971)

=====Other Positions=====
*Economic Councillor, Austrian Chamber of Commerce (1909-1934)
*Captain, Artillery Regiment, Austro-Hungarian Army, WWI (1914-1918)
*Director, Austrian Restitution-and-Settlements Office (1918-1920)
*Member, Association for Social Policy (1919-1933)
*Founder, Austrian Institute for Business Cycle Research (1927)
*Advisor, Foundation for Economic Education (1946-1973)
*Member, Economic Principles Commission, National Association of Manufacturers (1946)
*Co-Founder, Mont Pelerin Society (1947)
*Advisor, National Association of Manufacturers (1954-1955)

=====Awards=====
*Distinguished Service Award, Fellowship of Former Overseas Rotarians (1957)
*Austrian Decoration for Science and Art (1962)
*Distinguished Fellow Award, American Economics Association (1969)

=====Honorary Degrees=====
*Hon. LL.D., Grove City College (1957)
*Hon. LL.D., New York University (1963)
*Dr. rer. pol. h.c. (Honorary Doctorate of Political Science), University of Freiburg, Germany (1964)

==See also==
* ''[[The Essential von Mises]]''
* ''[[Mises: The Last Knight of Liberalism]]''
* ''[[Political Economy, Public Policy and Monetary Economics]]''

==References==
{{Reflist}}

==Links==
* [http://mises.org/literature.aspx?action=author&Id=280 Books and Essays by Mises] (complete texts)
* [http://mises.org/misesbib.asp The complete Mises bibliography]
* [http://mises.org/quotes.aspx The Mises Quotation Machine]
* [http://mises.org/books/lastknight.pdf Mises: The Last Knight of Liberalism] (pdf) by Jörg Guido Hülsmann
* [http://mises.org/misestributes/misesjgh.asp Who was Mises?] by Jörg Guido Hülsmann
* [http://mises.org/misestributes/misestributes.asp Tributes to Mises] by Economists, Journalists, and Others
* [http://mises.org/lostpapers.asp The Story of the Lost Papers]
* [http://mises.org/journals/qjae/pdf/qjae11_3_5.pdf The Great Depression: Mises vs. Fisher] (pdf) by Mark Thornton, November 2008
* [http://mises.org/daily/4715 The Enduring Power of Bureaucracy] by Marcia Sielaff, September 2010
* "Ludwig von Mises" ([http://mises.org/journals/aen/aen10_1_1.pdf PDF]) by [[F.A. Hayek]], May 1977
* "The Cultural Thought of Ludwig von Mises" ([https://mises.org/journals/jls/10_1/10_1_3.pdf PDF]) by [[Jeffrey A. Tucker]] and [[Llewellyn H. Rockwell, Jr.]], Fall 1991
* [http://blog.mises.org/5298/the-wisdom-of-ludwig-von-mises/ "The Wisdom of Ludwig von Mises"] by Stephan Kinsella, July 2006
* "Ludwig von Mises and the Austrian School of Economics" ([http://mises.org/journals/rae/pdf/rae5_2_2.pdf PDF]) by [[Jeffrey M. Herbener]], 1991
* [http://www.lewrockwell.com/orig3/huebert2.html "The Ludwig von Mises Legacy: A Reality Check"] by by J. H. Huebert, December 2002
* [[Wikipedia:Ludwig von Mises|Ludwig von Mises]] on Wikipedia
* [http://www.anarcocapitalista.com/MisesSalarios.htm Audio by Ludwig von Mises (english and spanish transcription)]

{{Mises books}}
{{Austrian economists}}

{{DEFAULTSORT:Mises, Ludwig von}}
[[Category:Economists]]
[[Category:Libertarians]]