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Ludwig von Mises: The Man and His Economics. - book review
American Journal of Economics and Sociology, The, July, 2003 by R.A. Gonce
Kirzner, Israel M. (2001). Ludwig von Mises: The Man and His Economics. Wilmington, DE: ISI Books. ISBN 1-882926-61-7. xv, 226 pp.
Beautifully written by Mises's greatest living disciple, this slender volume abstracts Mises's economics and advocacy of laissez faire from his "imposing unified system of a liberal social philosophy" (Hayek 1941:126) that ranges "over the whole economic and social field" (Hayek 1969[1951]:197-18). The book's admirably compressed chapters warmheartedly deal with Mises's career and the development of his thought; with his method, although brevity prevents this chapter from meeting him at his own philosophical depth about his method and his epistemological basis for it; with his doctrines about the market process and then about monetary, interest rate, and cycle theory; and with his advocacy of laissez faire and his critique of the possibility of economic calculation under socialism. Then follow a postscript about Misesian economics after Mises, a list of Mises's books, 19 pages of valuable notes to the chapters, and an index.
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The book's major claims appear to be that Mises's method is "not so extreme" (pp. 81-89), that his doctrines accord with Austrian orthodoxy, that his economics is wertfrei. And that he advocates laissez faire because it is "scientifically demonstrated to be the best policy" (p. 170).
Abstracting from Mises's "imposing unified system" removes evidence relevant to the meaning Mises gives to laissez faire and to the book's third and fourth claims. The reasons for all this began early in Mises's career when he came to believe that ideology is transcendingly important and that socialist ideology was menacing Western civilization and freedom. He dedicated his life to defending his own conception of freedom and to controverting socialism, as is well known. The "ideology" or "social philosophy" of classical liberalism (Mises 1927:13; 1962:xvii) could be useful: it upholds freedom and it "alone" can mount resistance to socialism (Mises 1919:204).
However, classical liberalism had become outdated, and its sociological and economic foundations had to be re-laid (Mises 1932:462). He reconstructed it finally on an epistemology supporting a method involving "apriorism' that enables one to discern essences (i.e., what is natural) lying beneath all conventions, abstraction, and methodological individualism that explains all social phenomena as spontaneous, unplanned outcomes of self-interested, rational individuals' choices. Professing to use this method, he develops what he calls the ideology of classical liberalism based on the scientific grounds of sociology and economics (Mises 1927:88), later renaming sociology "praxeology" (Mises 1940:122-23, 1960:viii) and economics "catallactics." Sociology, he believes, explains human action in general and serves as the foundation for his economics, making it invulnerable to the charge that it is merely a partial social science (Mises 1966:3, 7, 199, 231, 232).
His sociology has four parts. First is the economy of Robinson Crusoe renamed the "autistic economy" (Mises 1966:243). Consumption is Crusoe's chief interest. "One of the great ideas of liberalism is that it lets the consumer interest count alone and disregards the producer interest" (Mises 1919:198). Crusoe's natural wants exceed natural resources, creating natural scarcity. Second is the origin of society. Division of labor "originates in two facts of nature" (Mises 1932:292). It increases productivity and (along with other implicit assumptions) makes social cooperation more profitable than self-sufficiency for all. Individuals realize this. Thus not some social contract but methodological individualism explains the origin of society. Third is the origin of social order. "Egoism is the basic law of society" (Mises 1932:402). Belief by individuals in conflicts of interest "sprang from ignorance of the natural laws of social life" (Mises 1932:329). Liberalism acknowledges that peaceful social cooperation depe nds on moral laws (Mises 1927:33-37), which include laws of private ownership. Presumably, natural conditions engender these laws. However, steadily professing to reject natural law thought, Mises refers to "the fundamental laws of social cooperation," the "rules demanded by social cooperation" (Mises 1927:17, 36), and so on. Obeying these laws is in man's rightly understood self-interest. Grounded in nature, not artifact, they are the minimum necessary laws, and obedience allows maximum freedom. Each individual's obedience, or "pursuit of his rightly understood self-interest assures the highest attainable degree of general welfare" (Mises 1919:191). Moreover, harmony of interests prevails. "The point of departure of all liberalism lies in the thesis of the harmony of rightly understood interests of individuals" (Mises 1919:182). Since the consumer interest alone counts, all other interests are harmonized with it, establishing what Mises would later call "consumer sovereignty." Their rightly understood self-i nterest is to obey these laws, individuals realize. Thus methodological individualism explains how social order arises. Fourth is the origin of political order. No anarchist, Mises allows that many do not obey their rightly understood self-interest. A state is necessary, but, liberalism teaches, its power must be minimized. This occurs if it uses juristic law to enforce, leaving unhampered the "fundamental" laws, thereby practicing laissez faire.
