"At first we all felt he was frightfully exaggerating and even offensive in tone. You see, he hurt all our deepest feelings, but gradually he won us around" Hayek, the free-market man who we learned influenced Margaret Thatcher’s opinions on politics, spoke these words in an interview. Hayek used to be a democratic socialist; but, like many others, he radically changed his views to become a free market capitalist after reading Mises’ work.
Ludwig Von Mises was born in Austria in 1881, and served as Austria’s top public economic adviser during the 1920’s, and effectively controlled Austria’s inflation rate. During this time, Mises organized economic seminars that drew people throughout Europe. Mises founded the “Austrian school of economics,” and he came to the United States in 1940. To offer a perspective on the paradigm shift brought upon by the resurgence of neoliberal ideas in the 1980’s; Mises had extreme difficulty finding a paid academic position at any university when he moved to the United States in the 1940’s due to his free market capitalist views.
Mises wrote Liberalism: A Classical Tradition to provide a sweeping argument supporting liberal policy. It is important to understand that the term “liberal” Mises used when he wrote this book in 1929 means something very different than what it means to Americans today. When he wrote this text, the word “liberal” meant someone who supported a small government, similar to how modern day “libertarians” want to reduce the size of the government. Nowadays, those who identify as liberals in the United States tend to support concepts such as social justice or equality of opportunity.
This book is composed of five separate chapters:
1. The Foundations of Liberal Policy- Mises seeks to provide a compelling base that supports liberalism for not only its economic significance, but also on the basis of human rights and culture.
2. Liberal Economic Policy- Mises points out the central tenants of liberal economic policy, providing strong support for private property, private ownership of capital, and the undesirability of socialism.
3. Liberal Foreign Policy- (I had to grab some popcorn for this chapter; it was quite interesting) Mises uses a single word to describe liberal foreign policy: peace. In addition, he provides convincing economic arguments supporting peace and explains that liberal societies will produce a peaceful world due to economic interdependence.
4. Liberalism and Political Parties- Mises outlines the significance that political parties will have in a liberal society, mentioning that current political parties are composed of special groups that have a vested interest in fighting liberalism.
5. The Future of Liberalism- Mises makes some wishes for the future, stating that although liberalism misses the colors and culture associated with political parties, the liberals still have arguments on their side.
A reader can succinctly narrow this text into a few points:
– Liberalism seeks to minimize human misery while maximizing human happiness
– Liberal policies aren’t only the most morally justifiable, but they produce the best results
Mises covers the topics of standard of living and income inequality, which we’ve also learned about in class:
Mises blames the variance of the standard of living between countries on trade barriers and immigration controls. He goes on to explain that more European workers (in 1929) would like to move to the U.S. to increase their wages, but the U.S.’s strict immigration laws make this very difficult. Therefore, Mises believes that the U.S. has strict immigration laws to serve to increase their own wages at the expense of European workers’ wages. I agree with Mises’ view that immigration should have minimal regulation, but I disagree with his assertion that allowing more immigrants will decrease an area’s wages. His assertion assumes that allowing more immigrants will increase the labor supply and decrease wages. This assertion ignores that immigrants not only take employment, but immigrants are also business owners and provide employment.
When we read or hear about income inequality, we often hear about how much better off the poor would be if we only redistributed wealth from the rich to the less fortunate. While I still believe that income inequality is an imperative problem, Mises offers information on this issue that most people ignore when discussing income inequality. He points out that economists cannot assume that wealth in a society will remain constant after modification in the economy. It is difficult to accurately calculate how much better off a section of society would be after redistribution, because this distribution modifies the incentives present within the society.
One thing Mises could have included in this book is his view on intellectual property. He effectively defends the right for private property in this text, but he fails to mention intellectual property. I was hoping for Mises to offer his view on IP because (at least, from what I have read) he doesn’t offer his viewpoint on intellectual property in any of his other texts. He discusses it, but doesn’t offer his perspective. This would have been an excellent addition to this text because intellectual property is something that divides Austrian economists and is one of the questions that needs answering in a liberal society.
This book changed some of my views, because Mises expressed some opinions in this book that I was surprised to hear. One of these is his opinion on democracy. Many liberals usually reject the concept of democracy, believing that a person’s rights are not something that should be determined by a vote. Instead, these liberals favor a constitutional republic or constitutional monarchy that guarantees the rights of citizens. Mises states that democracy is a means of decision-making that controls dissatisfaction or the uprising of the citizens, and can have a place in a liberal society. Although this text didn’t change my view on fascism, he took a neutral tone when describing fascist leaders in Europe. He described fascism as a last resort against the threat of the violent spread of communism.
Bibliography:
Photo of Mises from: Wikimedia Commons
Introductory quote borrowed from: Internet Archive
Biographical information from: Mises Biography
The entire text for this book can be found here: Liberalism: In the Classical Tradition