Welcome to the EconomicPolicyJournal.com Research Room
Sunday, July 1, 2018
A Tribute to Ludwig von Mises
Ludwig von Mises
By Friedrich A. Hayek
Mr. Chairman, Professor von Mises, Ladies and Gentlemen. There has not been, and I don't expect that there ever will be in my life, another occasion when I have felt so honored and pleased to be allowed to stand up and to express on behalf of all those here assembled, and of hundreds of others, the profound admiration and gratitude we feel for a great scholar and a great man. It is an honor which I, no doubt, owe to the fact that among those available, I am probably the oldest of his pupils and that, in consequence, I may be able to tell you some personal recollections about certain phases of the work of the man we honor today.
Before addressing Professor von Mises directly, I trust he will therefore permit me to talk to you about him. But, although my recollections cover nearly forty of the fifty years which have passed since the event whose anniversary we celebrate, I cannot speak from my own knowledge about the earlier part of this period. When I first sat at the feet of Professor Mises, immediately after the first war, he was already a well-known figure with the first of his great works firmly established as the outstanding book of the theory of money. That work had appeared in 1912, and yet was by no means his first. Indeed, his first book on economics had appeared fully ten years earlier, four years even before Professor Mises got his doctorate.
How he ever did it I've never quite understood. I believe it was written before he came into contact with the one man of the older generation who can claim to have exercised an important influence on his scientific thinking, Eugen von Bohm-Bawerk. It was in Bohm-Bawerk's seminar that a brilliant group was then emerging to become the third generation of the Austrian School founded by Carl Menger. Among them it must soon have been evident that von Mises was the most independent minded.
Before I leave the student period which led up to the degree conferred fifty years ago, I will interrupt this account for an announcement. We are by no means the only ones who have thought of making this anniversary the occasion for honoring Professor Mises. I fear it will not be news to him, much as I should like to be the first bringer of this news, that the University of Vienna has also wished to celebrate the occasion. As I have learned only a few days ago, the Faculty of Law of that university resolved some time ago formally to renew the degree it granted so long ago. If the new diploma has not yet reached Professor von Mises, it should do so any day. In the meantime, I can read to you the citation which the dean let me have by air mail:
The Faculty of Law of the University of Vienna resolved at its meeting of December 3, 1955, to renew the doctor's diploma conferred on February 20, 1906, on Ludwig von Mises "who has earned the greatest distinction by his contributions to the economic theory of the Austrian School, has greatly added to the reputation of Austrian science abroad, and who has also done most beneficial work as Director of the Vienna Chamber of Commerce and to whose initiative the foundation of the Austrian Institute of Economic Research is due.
But I must return to his first outstanding contribution to economics. To us, that first decade of our century when it was written may seem a far away period of peace; and even in Central Europe the majority of people deluded themselves about the stability of their civilization. But it was not as such that it appeared to an acute observer endowed with the foresight of Professor von Mises. I believe even that first book was written in the constant feeling of impending doom and under all the difficulties and disturbances to which a young officer in the reserve is exposed at the time of constant alarms of war. I mention this because I believe it is true of all of Professor Mises's works that they were written in constant doubt whether the civilization which made them possible would last long enough to allow their appearance. Yet, in spite of this sense of urgency in which they were written, they have a classic perfection, a rounded comprehensiveness in scope which might suggest a leisurely composition.
The Theory of Money is much more than merely a theory of money. Although its main aim was to fill what was then the most glaring gap in the body of accepted economic theory, it also made its contribution to the basic problems of value and price. If its effect had been more rapid, it might have prevented great suffering and destruction. But the state of monetary understanding was just then so low that it would have been too much to expect that so sophisticated a work should have a rapid effect. It was soon appreciated by a few of the best minds of the time, but its general appreciation came too late to save his country and most of Europe the experience of a devastating inflation.
I cannot resist the temptation to mention briefly one curious review which the book received . Among the reviewers was a slightly younger man by name of John Maynard Keynes, who could not suppress a somewhat envious expression of admiration for the erudition and philosophical breadth of the work, but who, unfortunately, because, as he later explained, he could understand in German only what he knew already, did not learn anything from it. The world might have been saved much suffering if Lord Keynes's German had been a little better.
It was not long after the publication of the book, and the appointment to a readership at the university to which it led, that Professor Mises' scientific work was definitely interrupted by the outbreak of the first great war and his being called up for active service. After some years in the artillery, I believe in the end commanding a battery, he found himself at the conclusion of the war in the economics section of the War Ministry, where he evidently was again thinking actively on wider economic problems. At any rate, almost as soon as the war was over, he was ready with a new book, a little known and now rare work called Nation, Staat und Wirtschaft of which I particularly treasure my copy because it contains so many germs of later developments.
I suppose the idea of his second magnum opus must already have been forming in his mind at the time, since the crucial chapter of it appeared less than two years later as a famous article on the problem of economic calculation in a socialist community. Professor Mises had then returned to his position as legal adviser and financial expert of the Vienna Chamber of Commerce. Chambers of Commerce, I should explain, are, in Austria, official institutions whose main task is to advise the government on legislation. At the same time, Professor Mises was combining this position with that of one of the heads of a special government office connected with carrying out certain clauses of the peace treaty. It was in that capacity that I first came to know him well.
I had, of course, been a member of his class at the university. But since, as I must mention in my own excuse, I was rushing through an abridged postwar course in law and did not spend all my spare time on economics, I had not profited from that opportunity as much as I might have. But then it so happened that my first job was as Professor Mises' subordinate in that temporary government office; there I came to know him mainly as a tremendously efficient executive, the kind of man who, as was said of John Stuart Mill, because he does a normal day's work in two hours, always has a clear desk and time to talk about anything. I came to know him as one of the best educated and informed men I had ever known and, what was most important at the time of great inflation, as the only man who really understood what was happening. There was a time then when we thought he would soon be called to take charge of the finances of the country. He was so clearly the only man capable of stopping inflation, and much damage might have been prevented if he had been put in charge. It was not to be.
Of what I had not the least idea at that time, however, in spite of daily contacts, was that Professor Mises was also writing the book which would make the most profound impression on my generation. Die Gemeinwirtschaft, later translated as Socialism, appeared in 1922. Much as we had come to admire Mises' achievements in economic theory, this was something of much broader scope and significance. It was a work on political economy in the tradition of the great moral philosophers, a Montesquieu or Adam Smith, containing both acute knowledge and profound wisdom. I have little doubt that it will retain the position it has achieved in the history of political ideas. But there can be no doubt whatever about the effect on us who have been in our most impressible age. To none of us young men who read the book when it appeared was the world ever the same again. If Roepke stood here, or Robbins, or Ohlin (to mention only those of exactly the same age as myself), they would tell you the same story. Not that we at once swallowed it all. For that it was much too strong a medicine and too bitter a pill. But to arouse contradiction, to force others to think out for themselves the ideas which have led him, is the main function of the innovator. And though we might try to resist, even strive hard to get the disquieting considerations out of our system, we did not succeed. The logic of the argument was inexorable.
It was not easy. Professor Mises' teaching seemed directed against all we had been brought up to believe. It was a time when all the fashionable intellectual arguments seemed to point to socialism and when nearly all "good men" among the intellectuals were socialists. Though the immediate influence of the book may not have been as great as one might have wished, it is in some ways surprising that it had as great an influence as it did. Because for the young idealist of the time, it meant the dashing of all his hopes; and since it was clear that the world was bent on the cause whose destructive nature the work pointed out, it left us little but black despair. And to those of us who knew Professor Mises personally, it became, of course, soon clear that his own view about the future of Europe and the world was one of deep pessimism. How justified a pessimism we were soon to learn.
Young people do not readily take to an argument which makes a pessimistic view of the future inevitable. But when the force of Professor Mises' logic did not suffice, another factor soon reinforced it – Professor Mises' exasperating tendency of proving to have been right. Perhaps the dire consequences of the stupidity which he chastised did not always manifest themselves as soon as he predicted. But come they inevitably did, sooner or later.
Let me here insert a paragraph which is not in my manuscript. I cannot help smiling when I hear Professor Mises described as a conservative. Indeed, in this country and at this time, his views may appeal to people of conservative minds. But when he began advocating them, there was no conservative group which he could support. There couldn't have been anything more revolutionary, more radical, than his appeal for reliance on freedom. To me, Professor Mises is and remains above all, a great radical, an intelligent and rational radical but, nonetheless, a radical on the right lines.
I have spoken about Socialism at length because, for our generation, it must remain the most memorable and decisive production of Professor Mises' career. We did, of course, continue to learn and profit from the series of books and papers in which, during the next fifteen years, he elaborated and strengthened his position. I cannot mention them here individually, though each and every one of them would deserve detailed discussion. I must turn to his third magnum opus, which first appeared in Switzerland in a German edition in 1940, and ten years later in a rewritten English edition under the title Human Action. It covers a wider field than even political economy, and it is still too early definitely to evaluate its significance. We shall not know its full effects until the men whom it struck in the same decisive phase of their intellectual revolution have in turn reached their productive stage. I, for my person, have no doubt that, in the long run, it will prove at least as important as Socialism has been.
Even before the first version of this work had appeared, great changes had occurred in Professor Mises' life which I must now briefly mention. Good fortune had it that he was a visiting professor at Geneva when Hitler marched into Austria. We know that the momentous events which followed soon afterward gave him to this country and this city which has since been his home. But there occurred at the time another event about which we must equally rejoice. We, his old pupils of the Vienna days, used to regard him as a most brilliant but somewhat severe bachelor, who had organized his life in a most efficient routine, but who, in the intensity of intellectual efforts, was clearly burning the candle at both ends. If today we can congratulate a Professor Mises, who not only seems to me as young as he was twenty years ago, but genial and kind even to adversaries as we hardly expected the fierce fighter of yore ever to be, we owe it to the gracious lady which at that critical juncture joined her life to his and who now adorns his house and tonight our table.
I need not speak to you at length about Professor Mises' activities since he has resided among you. Many of you have, during these last fifteen years, had more opportunity to know him and to benefit by his counsel than is true of most of his old pupils. Rather than telling you more about him, I will now turn to him to express, in a few words, the grounds on which we admire and revere him.
Professor Mises! It would be an impertinence to enlarge further on your learning and scholarship, on your wisdom and penetration, which has given you world renown. But you have shown other qualities which not all great thinkers possess. You have shown an undaunted courage, even when you stood alone. You have shown a relentless consistency and persistence in your thought, even when it led to unpopularity and isolation. You have for long not found the recognition from the official organization of science which was your due. You have seen your pupils reap some of the rewards which were due to you but which envy and prejudice have long withheld. But you have been more fortunate than most other sponsors of unpopular causes. You knew before today that the ideas for which you had so long fought alone or with little support would be victorious. You have seen an ever-growing group of pupils and admirers gather round you and, while you continue to push further, endeavor to follow up and elaborate your ideas. The torch which you have lighted has become the guide of a new movement for freedom which is gathering strength every day.
The token of admiration and gratitude which we have been privileged today to present to you on behalf of all your disciples is but a modest expression of what we feel. I wish I could claim a little of the credit of having organized this; but it was, in fact, entirely the younger generation of your pupils who took the initiative of actually doing what many of us older ones had long wished should be done. It is to the editor of the volume and to the Foundation for Economic Education that the credit belongs of having provided this opportunity for the expression of our wishes.
And now, Ladies and Gentlemen, it only remains for me to invite you to raise your glass in honor of Professor von Mises, in order to wish him long and fruitful years ahead in which he may remain our guide, our counselor, and our inspiration. Professor von Mises!