Mises as We Knew Him (1978)

Friedrich A. Hayek
Issue CCXXIII - December 17, 2009
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[This "Introduction" by F.A. Hayek was written for the German-language edition of Mises's Notes and Recollections (Erinnerungen von Ludwig von Mises [Stuttgart: Gustav Fischer, 1978]). It was translated into English by Hans-Hermann Hoppe and published in the Austrian Economics Newsletter (Fall 1988): 1–3. It now appears in Memoirs by Ludwig von Mises.]

Although without a doubt one of the most important economists of his generation, in a certain sense Ludwig von Mises remained an outsider in the academic world until the end of his unusually long scholarly career — certainly within the German-speaking world — but also during the last third of his life, when in the United States he raised a larger circle of students. Before this, his strong immediate influence had essentially been restricted to his Viennese Privatseminar, whose members for the most part only became attracted to him once they had completed their original studies.

If it would not have unduly delayed the publication of these memoirs, found among his papers, I would have welcomed the opportunity of analyzing the reasons for this curious neglect of one of the most original thinkers of our time in the field of economics and social philosophy. But, in part, the fragmentary autobiography he left provides in itself the answer. The reasons why he never acquired a chair at a German-speaking university during the 1920s or before 1933, while numerous and often indisputably highly unimportant persons did, were certainly personal. His appointment would have been beneficial for every university. Yet the instinctive feeling of the professors that he would not quite fit into their circle was not entirely wrong.

Even though his subject-knowledge surpassed that of most occupants of professorial chairs, he was nonetheless never a real specialist. When, in the realm of the social sciences, I look for similar figures in the history of thought, I do not find them among the professors, not even in Adam Smith; instead, he must be compared to thinkers like Voltaire and Montesquieu, Tocqueville and John Stuart Mill. This is an impression that has by no means been reached only in retrospect. But when more than fifty years ago I tried to explain Mises's position in pretty much the same words to Wesley Clair Mitchell in New York, I only encountered — perhaps understandably — a politely ironic skepticism.

Essential to his work is a global interpretation of social development. In contrast to the few comparable contemporaries such as Max Weber, with whom he was connected by a rare mutual respect, in this Mises had the advantage of a genuine knowledge of economic theory.

The following memoirs say much more about his development, position, and views than I know or could tell. I can only attempt here to supplement or confirm information regarding the ten years of his time in Vienna (1921–1931) during which I was closely associated with him. I came to him rather characteristically not as a student, but as a fresh doctor of law and a civil servant, subordinate to him, at one of those special institutions that had been created to execute the provisions of the peace treaty of St. Germain.

The letter of recommendation by my university teacher Friedrich von Wieser, who described me as a highly promising young economist, was met by Mises with a smile and the remark that he had never seen me in his lectures.

However, when he found my interest confirmed and my knowledge satisfactory, he helped me in every regard and contributed much to make my lengthier visit to the United States possible (before the time of the Rockefeller fellowship) to which I owe a great deal. But although I saw him during the first years daily in an official capacity, I had no idea that he was preparing his great book, Socialism, which upon its publication in 1922 influenced me decisively.

Only after I returned from America in the summer of 1924 was I admitted to that circle, which had been in existence for some time, and through which Mises's scholarly work in Vienna mainly exerted its influence. This "Mises Seminar," as we all called the biweekly nightly discussions in his office, is described in detail in his memoirs. Mises though does not mention the hardly less important regular continuations of the official discussions that lasted long into the night at a Viennese coffeehouse. As he correctly describes, these were not instructional meetings, but discussions presided over by an older friend whose views were by no means shared by all members. Strictly speaking, only Fritz Machlup was originally Mises's student.

As regards the others, of the regular members, only Richard Strigl, Gottfried Haberler, Oskar Morgenstern, Lene Lieser, and Martha Stefanie Braun were specialists in economics. Ewald Schams and Leo Schönfeld, who belonged to the same highly gifted but early deceased intermediate generation as Richard Strigl, were, to my knowledge, never regular participants in the Mises Seminar. But sociologists like Alfred Schütz, philosophers like Felix Kaufmann, and historians like Friedrich Engel-Janosi were equally active in the discussions, which frequently dealt with the problems of the methods of the social sciences, but rarely with special problems of economic theory (except those of the subjective theory of value). Questions of economic policy, however, were discussed often, and always from the perspective of the influence of different social philosophies upon it.

All this seemed to be the rare mental distraction of a man, who, during the day, was fully occupied with urgent political and economic problems, and who was better informed about daily politics, modern history, and general ideological developments than most others. What he was working on, even I, who officially saw him almost daily during those years, did not know; he never spoke about it. We could even less imagine when he would actually write his works. I knew only from his secretary that from time to time he had a manuscript typed from his distinctively clear handwriting. But many of his works only existed in handwriting until publication, and an important article was considered lost for a long time, until it finally resurfaced among the papers of a journal editor. No one knew anything regarding his private work methods until his marriage. He did not speak about his literary activity until he had completed a work. Though he knew that I was most willing to occasionally help him, he only asked me once to look up a quote for his work, and this was after I mentioned that I wanted to consult a work on the canonists in the library. He never had, at least in Vienna, a scholarly assistant.

The problems with which he concerned himself were mostly problems for which he considered the prevailing opinion false. The reader of the following book might gain the impression that he was prejudiced against the German social sciences as such. This was definitely not the case, even though in the course of time he developed a certain understandable irritation. But he valued the great early German theoreticians like Thünen, Hermann, Mangoldt, or Gossen more highly than most of his colleagues, and knew them better. Also, among his contemporaries he valued a few similarly isolated figures such as Dietzel, Pohle, Adolf Weber and Passow, as well as the sociologist Leopold von Wiese and, above all, Max Weber.

With Weber a close scholarly relationship had been formed during Weber's short teaching activity in Vienna, in the spring of 1918, which could have meant a great deal if Weber had not died so soon.

But in general, there can be no doubt that he had nothing but contempt for the majority of the professors who, occupying the chairs of the German universities, pretended to teach theoretical economics. Mises does not exaggerate in his description of the teachings of economics as espoused by the historical school. Just how far the level of theoretical thinking in Germany had sunk is indicated by the fact that it needed the simplifications and coarseness of the — herein certainly meritorious — Swede Gustav Cassel in order to again find an audience for theory in Germany. Notwithstanding his exquisite politeness in society and his generally great self-control (he could also occasionally explode), Mises was not the man to successfully hide his contempt.

This drove him to increased isolation among professional economists generally as well as among those Viennese circles with which he had scholarly and professional contacts. He became estranged from his cohorts and fellow students when he turned away from the advancing ideas of social policy. Twenty-five years later I could still feel the emotion and anger his seemingly sudden break had caused — when he had turned away from the dominating ideals of the academic youth of the first few years of the century — when his fellow student F.X. Weiss (the editor of the shorter writings of Böhm-Bawerk) told me about the event with unconcealed indignation, obviously in order to prevent me from a similar betrayal of "social" values and an all-too-great sympathy for an "outlived" liberalism.

If Carl Menger had not aged relatively early and Böhm-Bawerk had not died so young, Mises probably would have found support among them. But the only survivor of the older Austrian School was my revered teacher Friedrich von Wieser, and he was more a Fabian — proud, as he believed, to have provided a scientific justification for progressive income taxation with his development of the theory of marginal utility.

Mises's return to classical liberalism was not only a reaction to a dominating trend. He completely lacked the adaptability of his brilliant seminar fellow Josef Schumpeter, who always quickly accommodated current intellectual fashions, as well as Schumpeter's joy in "épater le bourgeois" [shocking the middle classes]. In fact, it appeared to me as if these two most important representatives of the third generation of leading Austrian economists (one can hardly consider Schumpeter a member of the "Austrian School" in the narrower sense despite all mutual intellectual respect) each got on the other's nerves.

In today's world, Mises and his students are regarded as the representatives of the Austrian School, and justifiably so, although he only represents one of the branches into which Menger's theories had already been divided by his students, and the close personal friendship between Eugen von Böhm-Bawerk and Friedrich von Wieser. I only admit this with some hesitation, because I expected much of the tradition of Wieser, which his successor Hans Mayer attempted to advance. But these expectations have not yet become fulfilled, even though those stimuli may perhaps still prove more fruitful than they have been so far. Today's active "Austrian School," almost exclusively in the United States, is at base a Misesian school that goes back to Böhm-Bawerk, while the man in whom Wieser had set such great hopes and who had succeeded him in his chair never really fulfilled the promise.

Because he never occupied a regular chair in his field in the German-speaking world, and had to devote most of his time to other-than-scholarly activities until his late fifties, Mises remained an outsider in academia. Other reasons contributed to isolating him in his position in public life and as a representative of a great social-philosophical project.

A Jewish intellectual who advocated socialist ideas had his respected place in the Vienna of the first third of this century, a place that was accorded to him as a matter of course. Likewise, the Jewish banker or businessman who (bad enough!) defended capitalism had his rights. But a Jewish intellectual who justified capitalism appeared to most as some sort of monstrosity, something unnatural, which could not be categorized and with which one did not know how to deal.

His undisputed subject-knowledge was impressive, and one could not avoid consulting him in critical economic situations, but rarely was his advice understood and followed. Mostly he was regarded as somewhat of an eccentric whose "old-fashioned" ideas were impracticable "today."

That he himself had constructed, in long years of hard work, his own social philosophy was only known by very few and perhaps could not be understood by distant observers until 1940, when in his Nationalökonomie he presented for the first time his system of ideas in its entirety. But by this time he could no longer reach readers in Germany and Austria. Apart from the small circle of young theoreticians who met at his office, and some highly gifted friends in the business world who were similarly concerned about the future and who are mentioned in the following, he only encountered genuine understanding among occasional foreign visitors like the Frankfurt banker Albert Hahn, whose work in monetary theory he smiled at, however, as a vain sin of youth.

Yet he did not always make it easy for them. The arguments by which he supported his unpopular views were not always completely conclusive, even though some reflection could have shown that he was right. But when he was convinced of his conclusions and had presented them in clear and plain language — a gift that he possessed to a high degree — he believed that this would also have to convince others and only prejudice and stubbornness prevented them from understanding. For too long he had lacked the opportunity of discussing problems with intellectual equals who shared his basic moral convictions in order to see how even small differences in one's implicit assumptions can lead to different results. This manifested itself in a certain impatience that was easily suspected of being an unwillingness to understand, whereas an honest misunderstanding of his arguments was the case.

I must admit that I myself often initially did not think his arguments to be completely convincing and only slowly learned that he was mostly right and that, after some reflection, a justification could be found that he had not made explicit. And today, considering the kind of battle that he had to lead, I also understand that he was driven to certain exaggerations, like that of the a priori character of economic theory, where I could not follow him.

For Mises's friends of his later years, after his marriage and the success of his American activity had softened him, the sharp outbursts in the following memoirs, written at the time of his greatest bitterness and hopelessness, might come as a shock. But the Mises who speaks from the following pages is without question the Mises we knew from the Vienna of the twenties; of course without the tactful reservation that he invariably displayed in oral expression; but the honest and open expression of what he felt and thought. To a certain extent this may explain his neglect, even though it does not excuse it. We, who knew him better, were at times outraged, of course, that he did not get a chair, yet we were not really surprised. He had too much to criticize about the representatives of the profession into which he was seeking entrance to appear acceptable to them. And he fought against an intellectual wave which is now subsiding, not least because of his efforts, but which was much too powerful then for one individual to successfully resist.

That they had one of the great thinkers of our time in their midst, the Viennese have never understood.

F.A. Hayek (1899–1992) was a founding board member of the Mises Institute. He shared the 1974 Nobel Prize in Economics with ideological rival Gunnar Myrdal "for their pioneering work in the theory of money and economic fluctuations and for their penetrating analysis of the interdependence of economic, social and institutional phenomena." See his article archives.

This "Introduction" by F.A. Hayek was written for the German-language edition of Mises's Notes and Recollections (Erinnerungen von Ludwig von Mises [Stuttgart: Gustav Fischer, 1978]). It was translated into English by Hans-Hermann Hoppe and published in the Austrian Economics Newsletter (Fall 1988): 1–3. It also appears in the Fortunes of Liberalism: The Collected Works of F.A. Hayek (Chicago: University of Chicago Press, 1992), pp. 153–59.

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