Ludwig von Mises (1881-1973), an Austrian economist and social philosopher, was the leading exponent, in the 20th century, of the Austrian school and a conservative in matters of economic and social policy.

Ludwig von Mises was born September 29, 1881, in the city of Lemberg which was located in the former Austria-Hungary. He was born the son of a highly successful and respected engineer. By the time von Mises was 19 he had already entered the prestigious University of Vienna, studying under Eugen von Böhm-Bahwerk and Eugene von Philippovich. Ludwig von Mises earned his doctorate degree in Both (Canon and Roman) Laws by the time he was 27 years of age.

After receiving his advanced degree, von Mises wrote the first of what would be a long list of phenomenal works, The Theory of Money and Credit (1912). Von Mises was revolutionary in his thinking. He would successfully argue that money had a price, not unlike any other commodity. The theory was based on the economic notion that all things were priced according to supply and demand. Von Mises theorized that money would have the same effect, therefore, its "price" would rise and fall as well.

Von Mises was privatdozent of economics at Vienna (1913-1934) and professor of international relations at the Graduate Institute of International Studies in Geneva, Switzerland (1934-1940). In 1945 he became visiting professor of economics at the Graduate School of Business Administration of New York University; he retired in 1969. Between the years of 1909 and 1934 he held various economic advisor positions with the Austrian Chamber of Commerce.

Von Mises was known throughout his career as an uncompromising champion of laissez-faire, arguing in Socialism: An Economic and Sociological Analysis (1922) and Human Action: A Treatise on Economics (1949) that a socialist system cannot function because it lacks a true price system. It has been written that Socialism was a prediction of the fall of communism. Von Mises argued that socialism could not sustain an economy, because under socialism there is no market for goods or services. Von Mises projected that without an industrial economy, there would be no price system. It is the price system which determines profit and loss. In the same book, von Mises also theorized that mixed economies would fare no better, because of the distortion involved. He also held that lesser types of intervention, such as minimum-wage laws, are equally futile. In his writings on the epistemology of economics, he maintained that the only approach to economics is a deductive system based on self-evident axioms stressing the individual's purposive choice of means to arrive at preferred ends.

A theory of the business cycle grew out of Von Mises's theory of money and was developed by him in detail by 1928. This theory emphasized the role of the banking system in the expansion of the money supply, the consequent artificial lowering of the interest rate, and the resulting overinvestment. When the money supply reaches the limits of its ability to expand, a depression inevitably follows. The theory aroused considerable interest among economists in the early 1930s but was lost sight of with the advent of the "Keynesian revolution," which began in 1936. Later in the century, economists reconsidered the role of overinvestment as a factor in business fluctuations.

Von Mises's publications include almost 20 books as well as numerous articles and other, shorter pieces ranging from economic theory and the history of economic thought to methodology and social and political philosophy. In 1969 he was named distinguished fellow of the American Economic Association in recognition of his valuable contributions to economics.

Due to von Mises's critical views on socialism he remained in exile from the National Socialists in Geneva until his death in 1973. Von Mises's most highly regarded work was his 900-page Human Action which was not published until 1949. The book had been written in early 1940; however, amidst the effects of the war, it was placed on hold.

Further Reading

• Mary H. Sennholz, ed., On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (1956), contains considerable information on von Mises and his work. A chapter on him is in the excellent study by Ben B. Seligman, Main Currents in Modern Economics: Economic Thought since 1870 (1962). Additional material on Von Mises is in Howard S. Ellis, German Monetary Theory, 1905-1933 (1934), and lsrael M. Kirzner, The Economic Point of View: An Essay in the History of Economic Thought (1960). Information regarding Ludwig von Mises is also accessible at http://www.mises.org.