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Ludwig von Mises

Articles by Ludwig von Mises

Why Bureaucrats Aren’t Like Private Sector Workers

27 days ago

Bureaucratic management means, under democracy, management in strict accordance with the law and the budget. It is not for the personnel of the administration and for the judges to inquire what should be done for the public welfare and how the public funds should be spent. This is the task of the sovereign, the people, and their representatives. The courts, the various branches of the administration, the army, and the navy execute what the law and the budget order them to do. Not they but the sovereign is policy-making.
Most of the tyrants, despots, and dictators are sincerely convinced that their rule is beneficial for the people, that theirs is government for the people. There is no need to investigate whether these claims of Messrs. Hitler, Stalin, and Franco

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Monetary Policy and the Present Trend toward Central Planning

October 28, 2021

Monetary Policy and the Present Trend toward All-around Planning
The people of all countries agree that the present state of monetary affairs is unsatisfactory and that a change is highly desirable. However, ideas about the kind of reform needed and about the goal to be aimed at differ widely. There is some confused talk about stability and about a standard which is neither inflationary nor deflationary. The vagueness of the terms employed obscures the fact that people are still committed to the spurious and self-contradictory doctrines whose very application has created the present monetary chaos.
The destruction of the monetary order was the result of deliberate actions on the part of various governments. The government-controlled central banks and, in the

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The Economic Foundations of Freedom

October 7, 2021

Ludwig von Mises noted: “[T]he gold standard is not a game, but a social institution. Its working does not depend on the preparedness of any people to observe some arbitrary rules. It is controlled by the operation of inexorable economic law.” and furthermore: “What the expansionists call the defects of the gold standard are indeed its very eminence and usefulness. It checks large-scale inflationary ventures on the part of governments. The gold standard did not fail. The governments were eager to destroy it, because they were committed to the fallacies that credit expansion is an appropriate means of lowering the rate of interest and of “improving” the balance of trade.”

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[Economic Freedom and Interventionism (1980)]

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Currency Debasement and Social Collapse

October 3, 2021

Knowledge of the effects of government interference with market prices makes us comprehend the economic causes of a momentous historical event, the decline of ancient civilization.
It may be left undecided whether or not it is correct to call the economic organization of the Roman Empire capitalism. At any rate it is certain that the Roman Empire in the 2nd century, the age of the Antonines, the “good” emperors, had reached a high stage of the social division of labor and of interregional commerce. Several metropolitan centers, a considerable number of middle-sized towns, and many small towns were the seats of a refined civilization.
The inhabitants of these urban agglomerations were supplied with food and raw materials not only from the neighboring rural

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The Bureaucrat as a Voter

May 3, 2021

The bureaucrat is not only a government employee. He is, under a democratic constitution, at the same time a voter and as such a part of the sovereign, his employer. He is in a peculiar position: he is both employer and employee. And his pecuniary interest as employee towers above his interest as employer, as he gets much more from the public funds than he contributes to them.
This double relationship becomes more important as the people on the government’s payroll increase. The bureaucrat as voter is more eager to get a raise than to keep the budget balanced. His main concern is to swell the payroll.
The political structure of Germany and France, in the last years preceding the fall of their democratic constitutions, was to a very great extent influenced by the

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Money, Interest, and the Business Cycle

February 18, 2021

[This essay is a selection from lecture 7 in Marxism Unmasked: From Delusion to Destruction.]
The banks very often expand credit for political reasons. There is an old saying that if prices are rising, if business is booming, the party in power has a better chance to succeed in an election campaign than it would otherwise. Thus the decision to expand credit is very often influenced by the government that wants to have “prosperity.” Therefore, governments all over the world are in favor of such a credit-expansion policy.
On the market, credit expansion creates the impression that more capital and savings are available than actually are, and that projects which yesterday were not practical because of the higher interest rate are feasible today because conditions

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Politics and Ideas

February 9, 2021

In the Age of Enlightenment, in the years in which the North Americans founded their independence, and a few years later, when the Spanish and Portuguese colonies were transformed into independent nations, the prevailing mood in Western civilization was optimistic. At that time all philosophers and statesmen were fully convinced that we were living at the beginning of a new age of prosperity, progress, and freedom. In those days people expected that the new political institutions—the constitutional representative governments established in the free nations of Europe and America—would work in a very beneficial way, and that economic freedom would continuously improve the material conditions of mankind.
We know very well that some of these expectations were too

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Understanding the Roots and Causes of Inflation

January 27, 2021

[This is the fourth lecture from Mises’s “Economic Policy: Thoughts for Today and Tomorrow“]
If the supply of caviar were as plentiful as the supply of potatoes, the price of caviar—that is, the exchange ratio between caviar and money or caviar and other commodities—would change considerably. In that case, one could obtain caviar at a much smaller sacrifice than is required today. Likewise, if the quantity of money is increased, the purchasing power of the monetary unit decreases, and the quantity of goods that can be obtained for one unit of this money decreases also.
When, in the sixteenth century, American resources of gold and silver were discovered and exploited, enormous quantities of the precious metals were transported to Europe. The result of this

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Mises Explains the Santa Claus Principle

December 22, 2020

[From “The Exhaustion of the Reserve Fund” in Human Action, chap. 36.]
The idea underlying all interventionist policies is that the higher income and wealth of the more affluent part of the population is a fund which can be freely used for the improvement of the conditions of the less prosperous. The essence of the interventionist policy is to take from one group to give to another. It is confiscation and distribution. Every measure is ultimately justified by declaring that it is fair to curb the rich for the benefit of the poor.
In the field of public finance progressive taxation of incomes and estates is the most characteristic manifestation of this doctrine. Tax the rich and spend the revenue for the improvement of the condition of the poor, is the principle of

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Individualism and the Industrial Revolution

December 21, 2020

[Marxism Unmasked (2006)]

Liberals stressed the importance of the individual. The 19th-century liberals already considered the development of the individual the most important thing. “Individual and individualism” was the progressive and liberal slogan. Reactionaries had already attacked this position at the beginning of the 19th century.
The rationalists and liberals of the 18th century pointed out that what was needed was good laws. Ancient customs that could not be justified by rationality should be abandoned. The only justification for a law was whether or not it was liable to promote the public social welfare. In many countries the liberals and rationalists asked for written constitutions, the codification of laws, and for new laws which would permit the

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What “Capitalism” Really Means

December 14, 2020

[Economic Policy: Thoughts for Today and Tomorrow (1979), lecture 1 (1958)]

Descriptive terms which people use are often quite misleading. In talking about modern captains of industry and leaders of big business, for instance, they call a man a “chocolate king” or a “cotton king” or an “automobile king.” Their use of such terminology implies that they see practically no difference between the modern heads of industry and those feudal kings, dukes or lords of earlier days. But the difference is in fact very great, for a chocolate king does not rule at all; he serves. He does not reign over conquered territory, independent of the market, independent of his customers. The chocolate king—or the steel king or the automobile king or any other king of modern

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Warum die Anhänger des freien Marktes die Sozialisten unterschätzen

December 5, 2020

2. Dezember 2020 – von Ludwig von Mises

Ludwig von Mises (1881-1973)

Die breite Masse der Menschen hängt keiner eigenen Idee an, weder einer guten, noch einer schlechten. Stattdessen suchen sie sich unter den vielen von intellektuellen Vordenkern erdachten Ideologien eine aus. Ihre Wahl aber ist verbindlich und bestimmt den Gang der Dinge. Wenn die Masse schlechte Grundsätze bevorzugt, ist das Unheil nicht mehr abzuwenden.
Die Sozialphilosophie der Aufklärung verkannte die Gefahr, die von der Vorherrschaft schlechter Ideen ausgeht. Die gewöhnlich angebrachten Einwände gegen den Vernunftglauben der klassischen Ökonomen und Utilitaristen sind nicht stichhaltig. Dennoch hat ihr Ansatz einen Mangel. Sie waren der Ansicht, dass sich das Vernünftige, einfach weil es

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When Governments Confiscate Wealth to Fund Government Programs

December 2, 2020

The entrepreneurs try to undertake only such projects as appear to promise profits. This means that they endeavor to use the scarce means of production in such a way that the most urgent needs will be satisfied first, and that no part of capital and labor will be devoted to the satisfaction of less urgent needs as long as a more urgent need, for whose satisfaction they could be used, goes unsatisfied.
When the government intervenes to make possible a project which promises, not profits, but losses, then there is only talk in public of the need which finds satisfaction through this intervention; we do not hear anything of the needs which fail to be satisfied because the government has diverted to other purposes the means of satisfying them. Only what is gained by

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Socialists Have Never Shown How They Could Increase the Standard of Living

November 4, 2020

[A selection from Nation, State, and Economy. Editor’s note: When Mises refers to “liberals” or “liberalism” he means the ideology of laissez-faire, sometimes now called “classical liberalism.”]
Marxism sees the coming of socialism as an inescapable necessity. Even if one were willing to grant the correctness of this opinion, one still would by no means be bound to embrace socialism. It may be that despite everything we cannot escape socialism, yet whoever considers it an evil must not wish it onward for that reason and seek to hasten its arrival; on the contrary, he would have the moral duty to do everything to postpone it as long as possible. No person can escape death; yet the recognition of this necessity certainly does not force us to bring about death as

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Understanding the Proper Meaning of “Equality”

November 1, 2020

[A Selection from Liberalism: In the Classical Tradition.]
Nowhere is the difference between the reasoning of the older liberalism and that of neoliberalism clearer and easier to demonstrate than in their treatment of the problem of equality. The liberals of the eighteenth century, guided by the ideas of natural law and of the Enlightenment, demanded for everyone equality of political and civil rights because they assumed that all men are equal. God created all men equal, endowing them with fundamentally the same capabilities and talents, breathing into all of them the breath of His spirit. All distinctions between men are only artificial, the product of social, human — that is to say, transitory — institutions. What is imperishable in man — his spirit —

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Why “Taxing the Rich” Doesn’t Make Us Better Off

September 29, 2020

The complete confiscation of all private property is tantamount to the introduction of socialism. Therefore we do not have to deal with it in an analysis of the problems of interventionism. We are concerned here only with the partial confiscation of property. Such confiscation is today attempted primarily by taxation.
The ideological motivations of such action are immaterial. The only question of interest to us is merely: What is sought by these measures and what is actually accomplished?
Let us first consider taxes which directly or indirectly affect incomes only. In all countries there is today a tendency to tax larger incomes at higher rates than smaller incomes. In the case of incomes which exceed a certain amount most countries tax away, even nominally, up to

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Inflation: Its Effects and Failures

September 23, 2020

Inflationism is that policy which by increasing the quantity of money or credit seeks to raise money prices and money wages or seeks to counteract a decline of money prices and money wages which threatens as the result of an increase in the supply of consumers’ goods.
In order to understand the economic significance of inflationism we have to refer to a fundamental law of monetary theory. This law says: The service which money renders to the economic community is independent of the amount of money. Whether the absolute amount of money in a closed economic system is large or small does not matter. In the long run the purchasing power of the monetary unit will establish itself at the point at which the demand for money will equal the quantity of money. The fact that

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Mises: To Adopt Keynesian Terminology Is to Legitimize It

March 1, 2020

Some years ago, there was published a book in the German language with the title L.T.I. These three letters stood for three Latin words, lingua Tertii Imperii, the language of the Third Reich. And the author, a former professor of Romance languages at one of the German universities, described in this book his adventures during the Nazi regime. And his thesis was that all people, without any exception, in Germany of course, were Nazis—not because they had accepted openly and consciously the doctrines of Nazism, but because they had, without a wrong cooperation necessarily, accepted the language, the terminology in which these doctrines were expressed.
And of course one knows very well that these Nazi doctrines had a very long history from Hegel to Heidegger and

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Do People Really Seek to Maximize Profit?

February 5, 2020

[This article is excerpted from chapter 14 of Human Action.]
It is generally believed that economists, in dealing with the problems of a market economy, are quite unrealistic in assuming that all men are always eager to gain the highest attainable advantage. They construct, it is said, the image of a perfectly selfish and rationalistic being for whom nothing counts but profit. Such a homo economicus may be a likeness of stock jobbers and speculators. But the immense majority are very different. Nothing for the cognition of reality can be learned from the study of the conduct of this delusive image.
It is not necessary to enter again into a refutation of all the confusion, error, and distortion inherent in this contention. The first two parts of this book have

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How Do We Calculate Value?

January 18, 2020

[From Socialism: An Economic and Sociological Analysis, by Ludwig von Mises, pp. 113–22.]
All human action, so far as it is rational, appears as the exchange of one condition for another. Men apply economic goods and personal time and labour in the direction which, under the given circumstances, promises the highest degree of satisfaction, and they forego the satisfaction of lesser needs so as to satisfy the more urgent needs. This is the essence of economic activity — the carrying out of acts of exchange.12
Every man who, in the course of economic activity, chooses between the satisfaction of two needs, only one of which can be satisfied, makes judgments of value. Such judgments concern firstly and directly the satisfactions themselves; it is only from these

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How to Write and Understand History

December 30, 2019

[Adapted from Chapter 2 of Human Action.]
The study of all the data of experience concerning human action is the scope of history. The historian collects and critically sifts all available documents. On the ground of this evidence he approaches his genuine task.
It has been asserted that the task of history is to show how events actually happened, without imposing presuppositions and values (wertfrei, i.e., neutral with regard to all value judgments). The historian’s report should be a faithful image of the past, an intellectual photograph, as it were, giving a complete and unbiased description of all facts. It should reproduce before our intellectual eye the past with all its features.
Now, a real reproduction of the past would require a duplication not humanly

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Economics and the Revolt against Reason

December 25, 2019

The Revolt Against Reason
It is true that some philosophers were ready to overrate the power of human reason. They believed that man can discover by ratiocination the final causes of cosmic events, the inherent ends the prime mover aims at in creating the universe and determining the course of its evolution. They expatiated on the “Absolute” as if it were their pocket watch. They did not shrink from announcing eternal absolute values and from establishing moral codes unconditionally binding on all men.
Then there was the long line of utopian authors. They drafted schemes for an earthly paradise in which pure reason alone should rule. They failed to realize that what they called absolute reason and manifest truth was the fancy of their own minds. They blithely

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There Is No End to History, No Perfect Existence

November 23, 2019

All doctrines that have sought to discover in the course of human history some definite trend in the sequence of changes have disagreed, in reference to the past, with the historically established facts and where they tried to predict the future have been spectacularly proved wrong by later events.
Most of these doctrines were characterized by reference to a state of perfection in human affairs. They placed this perfect state either at the beginning of history or at its end or at both its beginning and its end. Consequently, history appeared in their interpretation as a progressive deterioration or a progressive improvement or as a period of progressive deterioration to be followed by one of progressive improvement. With some of these doctrines the idea of a

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