20. Human Action and Its Consequences

BY THE LATE 1940S, Mises was well integrated in the emerging network of American libertarians. His NYU seminar, his lectures at Mont Pèlerin Society meetings and other conferences, and his writings had established his impact on the rising generation. And even beyond the circles of organized libertarianism he had gained a nationwide reputation as an economist and social analyst of the first order, though for most academics his methods and political orientation smacked too much of times past.

The publication of Human Action in September 1949 produced a quantum leap in his prominence and impact. Overnight, Mises turned into the central intellectual figure of the entire American Right, an event that was paralleled during the next decade only in the case of Atlas Shrugged, the novel that catapulted Ayn Rand to even greater fame, at least among the general public. Mises now appeared to the public not merely as a scholar of the old school, but as one of the great minds of western civilization, a creative genius who had not only mastered all aspects of his science, but had completely transformed this science to offer a new way of looking at social processes and relationships.

Human Action was a success without precedent. His 1922 treatise on socialism had been a sensation too, but only because of the general recognition that theoretical socialism offered no help with the problems of postwar reconstruction. The socialist avant-garde had seized power in Germany and Austria, but then had no idea what to do. And this crisis quickly turned from a theoretical one to a political one when socialist governments drastically aggravated conditions rather than improving them. Mises's comprehensive analysis in Gemeinwirtschaft delivered a breathtakingly lucid explanation of this mess. But while the book provoked outrage and fury in the socialist camp and initiated a paradigm shift in the thinking of an entire generation, it had not become the rallying banner of a movement. Its author had been a relatively junior economist and no institutions were in place to concentrate and organize the readers the book had convinced.

American ground was more fertile. It had been prepared by a long tradition of individual liberty and a recent reorientation toward that tradition. There were, in effect, the makings of a movement just waiting for Human Action to form its intellectual nucleus. And just as important, there were institutions and individual promoters eager to accelerate it. Moreover, Mises himself was already one of the intellectual leaders of this grassroots movement. He knew writers and journalists who would promote his book, and there were men who stood ready to sponsor his subsequent work. Supporters now came in droves, asking Mises to give lectures and seminars. Wealthy businessmen sought his advice and often did what he recommended. And The Freeman, the first libertarian journal of a distinctly Misesian flavor, might never have seen the light of day without the glory that Human Action brought to its author.

Mises now became the true spiritus rector at FEE, which had previously featured him as one among several consultants. To get a taste of the pre-1949 character of FEE, consider the case of Murray Rothbard. The man who would become Mises's most important disciple had learned about FEE through a small brochure with the title “Roofs or Ceilings?”¹ attacking rent control laws. Leonard Read had printed 500,000 copies. The authors of the brochure were two young Chicago economists by the names of Milton Friedman and George Stigler. This was in September 1946. Rothbard continued to read FEE publications and attended their conferences; yet in the spring of 1948, the future pillar of the Misesian renaissance had never even heard of Austrian economics. It appears that neither Leonard Read's FEE nor, for that matter, any of the other emerging libertarian organizations, had placed any special emphasis on Mises or the tradition he represented. Then Human Action came in one mighty blow and rendered FEE devotedly Misesian.