Ludwig von Mises (1881-1973)

Hello Kinkaid:

 will let history decide if, as some say, I was the neglected giant of 20th century economics, and if my Human Action: A Treatise on Economics was its masterwork. But I was certainly unpopular and ‘before my time.’ No U.S. economics department would hire me after I escaped the Nazis for America in 1940, while many of my students (who went Keynesian in policy and mathematical in methodology) assumed top positions in academia.

My era was a sad one with two world wars and the Great Depression between. Quantitative economics and government economic planning were the rage (the two go together). I offended the mainstream by explaining that our discipline was not a predictive, mathematical science but a qualitative, explanatory one. I also offended with my arguments that the Keynesian “middle way” between capitalism and socialism was fallacious in theory and unstable in practice.

“I set out to be a reformer, but only became the historian of decline,” I wrote in a despairing moment. But things have changed. My disciple F. A. Hayek won the Nobel Prize in 1974, the year after I died. Communism collapsed from the problems I wrote about nearly a century ago. A thriving U.S. institute is named after me. Economists are still looking for their first quantitative law, and econometrics has proven little of that we didn’t already know about necessary causal relations. But most of all, there are now hundreds of top students and professors around the world working in Austrian-school (aka real-world) economics.

In the 1920s, I refuted socialism as a rational economic system. It was a simple argument, really. When government owns the means of production, competition cannot set scarcity values for land, labor, and capital. And without true prices, rational choice is not possible between competing alternatives. Even if angels ran a socialist commonwealth (my disciple James Buchanan would say ‘wait a minute’), their economic calculation problem would remain.

I have made other contributions as well. My theory of the business cycle, which Hayek also explicated, predicted America’s Great Depression by identifying the government-stimulated boom phase (part of the ‘Roaring Twenties’) as the problem—and the bust as the necessary correction. (Your present Great Recession is also due to a government-facilitated boom—and subsequent intervention has delayed recovery, just like Hoover’s and FDR’s actions did eighty years ago.)

I also stressed how entrepreneurship—the essence of business and markets—cannot be captured mathematically or even diagrammatically. Remember this when you take a college course in Microeconomics. The real action of a market economy is what happens outside, not inside, equilibrium. Such concepts as uncertainty, expectations, time, and ignorance are what economics is about, not perfect knowledge, perfect divisibility, and other simplifying or false assumptions.

Beware of Macroeconomics from start to finish! There is really only ‘microeconomics’ because economic causality comes from the individual human mind. Aggregates do not exist and therefor they cannot have ‘purpose’ and be causal.

I am flattered that some top Kinkaid students were reading my works in the late 1960s and early 1970s—and your community is trying to include me now in the curriculum. Best wishes in your study of purposive human action, better known as economics.


“How one carries on in the face of unavoidable catastrophe is a matter of temperament. In high school, as was custom, I had chosen a verse by Virgil to be my motto: ‘Do not give in to evil, but proceed ever more boldly against it.’ I recalled these words during the darkest hours of the war. … I would not tire in saying what I knew to be true.”

“Economics is not about goods and services; it is about human choice and action.”

“Economics is not specifically about business; it deals with all market phenomena and with all their aspects, not only with the activities of a businessman.”

“The study of economics has been again and again led astray by the vain idea that economics must proceed according to the pattern of other sciences.”

“As there are in the field of social affairs no constant relations between magnitudes, no measurement is possible, and economics can never become quantitative.”

“The economist must never be a specialist. In dealing with any problem he must always fix his glance upon the whole system.”

“What distinguishes the successful entrepreneur and promoter from other people is precisely the fact that he does not let himself be guided by what was and is, but arranges his affairs on the ground of his opinion about the future. He sees the past and the present as other people do; but he judges the future in a different way.”

“Lord Keynes … says: In the long run we are all dead. But unfortunately nearly all of us outlive the short run. We are destined to spend decades paying for the easy money orgy of a few years.”

“The essence of Keynesianism is its complete failure to conceive the role that saving and capital accumulation play in the improvement of economic conditions.”

“The essence of an individual’s freedom is the opportunity to deviate from traditional ways of thinking and of doing things.”