Ludwig von Mises

Ludwig von Mises (September 29th 1881 - October 10th 1973) is a Austrian economist which had an important influence on the liberal movement and modern Libertarien.

Biography

Born in Austria-Hungary, he teaches at the university of Vienna of 1913 with 1934, while being economic council of the Chamber of commerce of Vienna. He leaves the Austria for Switzerland in 1934, following an offer of a pulpit of international economic relations at the Academic institute of High Eudes Internationales of Geneva, then emigrates in the United States in 1940; he teaches at the university of New York of 1945 with 1969 (he obtains American nationality in 1946). He is regarded as one of the leaders of the Austrian École of economy which defends the Capitalisme and the traditional liberalism.

Its economic theory has a realistic base; on the basis of general empirical premises, it proceeds of an analysis of the human nature and concept of human action which results from this.

With the antipodes of the Macroeconomics, which analyzes statistical sizes, aggregates and averages, von Mises underlines the paramount role of the Subjectivité in economy. He insists on the importance of the subjective opinions of the individuals in the formation of the social phenomena, on imbalances which result from this, and on the central role of the Entreprise.

In agreement with the decreasing theory of marginal utility, it defines the Valeur like the degree of importance allotted by a subject to a given quantity of a good, in the circumstances of the moment (water glass in the desert does not have the same value as same water glass in an area where water is abundant - but the second and third glasses will undoubtedly have less value than the first).

In 1912 it publishes its “Theory on the Monnaie and the Crédit”, one of its principal contributions to the economic thinking which assied its reputation in Europe. It already warns against the catastrophic handling of the money Supply, which led thereafter to the Krach of 1929. He explains why the law of supply and demand also applies to the currency, and its “price confers to him”, which is its purchasing power.

In 1922, in its book “Socialism”, it predicts the fall of the Communisme, and explains why according to him any central planning system is not only less effective than the free-market, but must necessarily end up collapsing, an economy not being able according to him to function without contract price.

According to von Mises, the Marché, not blocked by official interventions, produces a spontaneous Ordre optimal that no organization or planning could reach. “Individual planning” is higher than any collective planning.

Its theoretical work refutes the Collectivisme and the state control under all their forms, as well moderate like the keynesianism, as anti-capitalists like the Socialisme and the Communisme, or the Nazisme.

Settings is a partisan of the standard Or, because it withdraws the Monnaie from the control of the policy and the tendencies Inflation nists of all the governments.

Friedrich Hayek, Murray Rothbard and Israel Kirzner is its most eminent pupils.

Socialism is dedicated to the failure

It writes in 1920 an article: economic calculation in mode collectivist in which it defends a thesis included in socialism (1922).

It defends the irrationality of socialism, because the subjectivism is a value.

According to him, there is at the collective level a symmetry between the idea of market and the idea of rationality. Thus a rational system is merchant, because socialism is unable to produce a paramount thing that only the market is able to produce: information (on the request, i.e subjective preferences of the consumers). The socialist system is unable to produce it. It should not be forgotten that it is an economic good, it thus has a value and must be produced. One cannot have information produced on the desires of the consumers because within the socialist system one cannot have price, of information on the value of the things. Without the prices, one cannot organize the production, know what it is necessary to produce. Paradoxical thesis because Marx develops a theory of value work. Problem: one does not know how this theory can function because two types of problems are raised: with the difference of the currency and monetary calculation (let us consider two goods M and being worth Me each one 1€: one can exchange without problem the two coins of 1 € (that is indifferent for us), but not work because M is not Me), one cannot compare the work hours either (qualified, déqualifié; effective, noneffective: it is different to produce socks or a diamond during one hour, one can also do in one hour what someone else can do in five minutes); the value work does not take either counts of them the scarcity of the raw materials and the differences of the methods of production.

Two types of goods exist: consumer goods and goods of production. Up to what point in general is it possible to have prices of consumption? Thanks to the exchange. This is also valid in the socialist system, because there exists a certain property of the consumer goods in this system (it is not interdict to exchange apples against cigarettes). That makes it possible to create a structure of goods (A>B>C). But, in the life, one often finds oneself to buy B or C rather than has because that is not worth the blow (Ferrari (Profit 1000/Coût 1800) > 4L (300/100) > Vélo (10/5)), therefore the cost is higher than the profit (in this example, it is to better buy a 4L rather than Ferrari, or a bicycle because that would involve in debt us too a long time, or would not pay to us enough). Thus to know how to allocate the resources rationally, it is necessary not only one information for us on the profits, but still information on the costs. The plan cannot know what the production costs the population (one can define the cost by the production costs, i.e of the resources that one must obtain to produce has or B or C). In a capitalist system, the production costs are known because the least resource has a fixed price. In the communist system, the prices are not fixed, because the property rights are vague: the goods all of productions belong to the State. As it cannot exchange with itself, it cannot know the prices. No price exists for the factors of production. Result: one does not produce that has, by using many resources, and nobody buys them because it is too expensive (one does not agree to sacrifice all the resources used to buy A). The system thus comes from there to produce goods which do not correspond to the real needs (Ferrari does not replace the daily bread).

The plan is thus blind by the lack of exchange of the goods of production. It is thus necessary that there exists a property right not only on the consumer goods but still on the goods of production. Socialism cannot function because it rests on an error. It leads to “chaos”.

It has a procedural vision of the economic system: the main issue is to produce information, which can be produced only by the market.

This paragraph summarizes the thought that Mises had socialist theory, and does not represent all its work.

Works

Theory of Geldes und der Umlaufsmittel , 1912 ( The Theory off Money and Credit , " Crédit" and theory of money;)
Die Gemeinwirtschaft , 1922 ( Socialism , socialism: analyzes economic and sociological )
Liberalismus , 1927 ( Liberalism )
Grundprobleme der Nationalökonomie , 1933 ( Epistemological problems off Economics , fundamental problems of the political economy )
Nationalökonomie , 1940
Omnipotent Government , 1944 ( the omnipotent government: totalitarian state and all-out war )
Bureaucracy , 1944 ( the Bureaucracy )
Planned Chaos , 1947 ( the Chaos of planning )
Human Action has Treatise one Economics , 1949, the human Action, Traité economy , 1985)
Planning for Freedom, and Other essays , 1952 (" To plan freedom and others essais")
The Anti-capitalist Mentality , 1956 (" Anti-capitaliste" mentality;)
Theory and History , 1957 ('' Théorie and history : an interpretation of the economic and social evolution )

The Ultimate Foundation off Economic Science , 1962 (" The ultimate Base of science économique")

Quotations

Mathematical calculation and economy

The mathematical method must be rejected not only because of its sterility. It is a completely vicious method, on the basis of assumptions false and leading to fallacious inférences. Its syllogisms are not only sterile; they divert the spirit of the study of the real problems and deform the relations between the various phenomena.
The subject of the economy, they are not the goods and the services, they is the actions of the alive men. Its goal is not to extend on imaginary constructions such as balance. These constructions are only tools of reasoning. The only task of the economy, it is to analyze the actions of the men, to analyze processes.
The value is not intrinsic, it is not in things. It is in us; it is the way in which the man reacts to the conditions of his environment.
The relation of exchange is the fundamental social relation. The interpersonal exchange of the goods and the services weaves the bond which links the men in the company. The formula sociétale is: C C of the .

Market economy

People who fight for the free enterprise do not defend the interests of those which are today to be rich.
Let make does not mean: let act of the mechanical forces without heart. It means: allow each individual to choose how he wants to cooperate in the social division of work; allow the consumers to determine what the contractors must produce.
The man not becomes a social being by sacrificing his own interests to mythical Moloch called Société, but while seeking to improve his own wellbeing.
The market economy does not need apologists nor propagandists. (...) If you seek his monument, look around you .
The capitalist system of production is an economic democracy in which each penny gives a right to vote. The consumers constitute the sovereign people.
What produces the profit of a man in the course of the businesses in an free society of market, it is not the misery and the distress of its fellow-citizen, but the fact that it reduces or removes completely what causes the feeling of embarrassment of its fellow-citizen. What makes suffer the patient, it is the plague, not the doctor who treats the disease. The profit of the doctor is not the result of the epidemics, but of the assistance which it brings to those which are affected.

Government

If the men were perfect, there would not be no need for government. With imperfect men, no system of government can function in a satisfactory way.
If the members of the government regard as the representatives either taxpayers, but of the recipients of treatments, salaries, subsidies, allowances and other advantages drawn from the public resources, it in is done democracy.
The graduated income is a mode exaggerated of expropriation.

Currency

It is possible no to durably support economic a “boom” resulting from an expansion of the credit. The alternative is or to lead to a crisis earlier by voluntary stop of the monetary expansion, or later by the complete collapse of the currency which is in question.
The quantity of currency available in the economy is always sufficient to allow each one all that the currency made and can do.

Liberalism

Liberalism is rationalist. It supports that it is possible to convince the vast majority which the peaceful co-operation within the framework of the company serves better their interests precisely included/understood that mutual battles and social disintegration. It has full confidence in the reason of the man. It may be that this optimism is not founded and that the liberals are mistaken. But then there does not remain any more any hope for the future of humanity.

Totalitarianisms

At the base of all the totalitarian doctrines the belief is that controlling them are wiser and of a spirit higher than their subjects, than they thus know better than them what is advantageous for them.
Fascism is not, like the fascists protested it, " a new way towards the vie" , it is a rather old way towards the destruction and death.
It is important to understand that Fascism and the Nazism were socialist dictatorships
Because of destruction of the pricing system, the paradox of “planning” is due so that it is impossible to make a plan there, economic miscalculation. What one names planned economy is not an economy of the whole. It is very right a system of gropings in the black.
The Marxism and national-socialisme in common have their opposition to the liberalism and the rejection of the social order and the capitalist mode. Both aim at a socialist mode.

See too

Austrian School of economy
List of the famous economists
Ludwig von Mises Institute off Alabama

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