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The Last Knight of Liberalism

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MISES

The Last Knight of Liberalism

JÖRG GUIDO HÜLSMANN

Photos:

Bettina Bien Greaves, cover, 1, 8, 9, 18, 20, 32, 40, 76, 77, 98, 99, 210, 255, 324, 404, 446, 447, 473, 519, 521, 522, 562, 563, 567, 610, 681, 758, 787, 809, 817, 825, 829, 835, 836, 847, 851, 882, 889, 890, 923, 934, 945, 986, 988, 1011, 1012, 1014, 1034, 1042, 1050

Archival Repository of the Center for Advanced Research in Phenomenology, University of Memphis, 365

David Jarrett photographs, 946

George Koether photographs, 888, 988

Harvard University Archives, 163

Hazlitt Photo Archive, Mises Institute, 795, 840, 852

Herbert Hoover Presidential Library, RWL #22, 840

Institut für Sozialforschung, 68

John Chamberlain Papers, Syracuse University, 840

Macmillan Publishers, 571,

Mises Archive at Grove City College, 833, 989

Mises Institute Photo Archive, 13, 94, 99, 111, 143, 145, 182, 253, 268, 365, 564, 840, 943, 928, 1036

Mont Pèlerin Society, 587, 679, 869, 870, 872

Moscow Archives, Mises, 262, 463

Österreich Lexikon, 83, 328, 366

Rothbard Photo Archive, Mises Institute, 840, 893, 929, 936, 939

Rubbettino Publishers, 476, 631

Ruprecht-Karls-Universität Heidelberg online, 336

University of Vienna, 99, 453

Warren J. Samuels Portrait Collection, Duke University, 99, 102, 109, 139, 118, 155, 424

Wikipedia, 23, 113, 128, 137, 335, 396, 840

All rights reserved. Written permission must be secured from the publisher to use or reproduce any part of this book, except for brief quotations in critical reviews or articles. For information write: Ludwig von Mises Institute, 518 West Magnolia Avenue, Auburn, Alabama 36832; mises.org

Copyright © 2007 by the Ludwig von Mises Institute

ISBN: 978-1-933550-18-3

The Ludwig von Mises Institute dedicates this volume to all of its generous
donors and wishes to thank these Patrons, in particular:

The Lowndes Foundation, Douglas E. French and Deanna Forbush,
Hugh E. Ledbetter, Frederick L. Maier

Christopher P. Condon, R.E. Fox, Mr. and Mrs. Michael L. Keiser,
Richard J. Kossman, M.D., Mr. and Mrs. R. Nelson Nash,
Dr. and Mrs. William H. Peterson, Sheldon Rose,
Chris Rufer, Art Schumer

Lloyd Alaback, Wesley and Terri Alexander, Ross K. Anderson,
Anonymous, Robert G. Beard, Jr., JD, CPA, Elsie K. Beekley,
Mr. and Mrs. William M. Benton, Professor Walter Block,
John Hamilton Bolstad, Herbert Borbe, Mr. and Mrs. J. Robert Bost,
Philip G. Brumder, Aubrey T. Carruth, Dan H. Courtney,
Professor Jim Cox, Mr. and Mrs. Jeremy S. Davis,
Mr. and Mrs. Charles F. de Ganahl, Michael H. and William E. Denyer,
Dr. and Mrs. George G. Eddy, Dr. Larry J. Eshelman,
Clyde Evans, Robert S. Ferguson, Mr. and Mrs. Willard Fischer,
James W. Frevert, Henry Getz, Stewart B. Gillespy, Brian J. Gladish,
Charles C. Groff, Charles F. Hanes, Keith M. Harnish,
Mr. and Mrs. John A. Hayes, Jule R. Herbert, Jr., Dr. Frederic Herman,
Dr. James M. Herring, Adam L. Knott, David M. Kramer,
Sylvio O. LeComte, Arthur L. Loeb, James Mahannah,
Ronald Mandle, Mr. and Mrs. William W. Massey, Jr.,
Wesley G. McCain, Joseph Edward Paul Melville, A. Minis, Jr.,
Dr. Dorothy Donnelley Moller, Karlheinz Muhr,
The Orcas Bay Foundation, George A. Peterson,
Professor and Mrs. Stanley E. Porter, Mr. and Mrs. Wilfried A. Puscher,
T. James Reynolds, David L. Richards, Willard A. Richardson,
Thomas Ross, Mr. and Mrs. Joseph P. Schirrick, Conrad Schneiker,
Norman K. Singleton, Andrew Sirkis, Henri Etel Skinner,
Carlton M. Smith, David M. Smith,
Mr. and Mrs. Warren C. and Georgia M. Spatz,
Mr. and Mrs. Dennis A. Sperduto, William V. Stephens,
Richard and Alicia Stephenson, Byron L. Stoeser, Charles A. Strong,
James E. Tempesta, M.D., Kenneth S. Templeton,
Mr. and Mrs. Reginald Thatcher, top dogTM,
Chris and Carolyn Tormey, Polly J. Townsend,
Lawrence Van Someren, Sr., Guy M. Binx Walker,
Dr. Thomas L. Wenck, Brian J. Wilton, Malcolm F. Wittig,
Mr. and Mrs. Walter Woodul III,
Dr. Steven Lee Yamshon, Robert S. Young

Contents

Preface

Acknowledgments

PART I YOUNG LUDWIG

1. Roots

2. School Years

Vienna

Viennese Jews

Akademisches Gymnasium

Austria-Hungary

Socialisms, Austrian Style

Which Career?

3. Alma Mater Rudolphina

The Grünberg Seminar

Military Service and Death of His Father

In the Philippovich Seminar

Birth of an Economist

Years with a Master

PART II THE AUSTRIAN SCHOOL

4. Fin de siècle Economic Science

Carl Menger—Pioneer of “Empirical Theory”

Menger's Work in the German Context

Methodenstreit

The Austrian School and the Gossen School

The Breakthrough of the Austrian School

Eugen von Böhm-Bawerk

Friedrich von Wieser

Joseph A. Schumpeter

5. Early Professions

Difficult Start in Professional Life

The Parallel Life

Kammer

Storm Clouds

Vienna Meeting of the Verein für Socialpolitik

Breakthrough at the Kammer

Theory of Money

6. Treatise on Money

The Nature of Money

Integration of Value Theory and the Theory of Money

Wieser's Theory of Money

Mises's Theory of the Value of Money

Money is Not Neutral: Cantillon Effects

Exchange Rate Determination: Purchasing Power Theory

Fractional-Reserve Banking and Business Cycles

PART III OFFICER, GENTLEMAN, SCHOLAR

7. The Great War

First Year in Battle

The Home Front

Back to the Front

New Life

A Last Mission

8. Nation, State, and Economy

Migrations, Mixed Populations, and Modern Imperialism

The Utilitarian Method of Social Analysis

The Fallacies of German Socialism in War and Peace

Political Economy of Language Communities

9. 1919

New Battlefields

Postwar Socialism and the Specter of Anarchy

Pro-Government Emergencies

Toward Sound Money

Vienna Circles

10. A Copernican Shift

The Argument

The Intellectual Context

Triumph

The Incomplete Revolution

11. A Treatise on Socialism

Benefits Derived from the Means of Production under Capitalism

The Utilitarian Case for Democracy

Political Economy of the Family

Implications of the Calculation Problem

Moral Hazard—The Other Nemesis of Socialism

The Feeble and Compromising John Stuart Mill

The Law of Association

Monopoly Theory

Christian Ethics versus the Market?

Socialism = Destructionism

PART IV MISES IN HIS PRIME

12. Winds of War

Hayek and the Bureau for Claims Settlements

Fighting Inflation

Seminars

Wieser's Long Shadow

The LSE Connection

Advent of the Gold-Exchange Standard

Hyperinflation, Currency Competition, and Monetary Reform

Theory of Money and Credit Reconsidered

German Economists Return to Classical Liberalism

Silver Linings on the Horizon

13. A System of Political Philosophy

First Outline of a Theory of Interventionism

Critique of the “Anti-Marxists”

Critique of the New Liberals

The Transformation of Economic Science

Liberalismus

14. Booms

1926 Journeys

Institute for Business Cycle Research

Austrian Politics at the Onset of the Gold-Exchange Standard

Free Trade, Monetary Stabilization, and Cyclical Policy

The New Theoreticians

The Theory of Value Reconsidered

Toward a New Epistemology of the Social Sciences

A Private Boom-Bust

15. Crises

The Causes of the Great Depression

A Lieutenant in London

Return to Foreign-Exchange Controls

Second Edition of Socialism

Dresden Meeting of the Verein fiir Sozialpolitik

Economic Theory Completed

Twilight in Vienna

PART V MISES IN GENEVA

16. The Geneva Years

Institut des Hautes Études Internationales

Academic Life

Alienation from Former Associates

Mises and the Neo-Liberals

Popular Fronts

Profound Transformations

The Walter Lippmann Colloquium

Plans for after the War

Escape from Europe

17. A Treatise on Economics

The System in an Overview

Anti-Psychologism

Capitalism and Liberalism are Rational

Equilibrium, Profit and Loss, and Entrepreneurship

Consumer Sovereignty and Interest

Business Cycle Theory Restated

Update of the Socialist-Calculation Debate

A Pure Cash Balance Approach

PART VI MISES IN AMERICA

18. Émigré in New York

Arrival in New York

National Bureau of Economic Research

Dark Hours and New Plans

Six Weeks in Mexico

The Austrian National Committee

New Friends

American Citizen

19. Birth of a Movement

Libertarian Seedbeds

The Long Visit at New York University

Leonard Read and the FEE

Frederick Nymeyer

Mises Debates American Libertarians

Planned Chaos

A Conference at Mont Pèlerin

Preparing the Counter-Revolution

A Neo-Liberal Coup in Germany

A New Yorker

20. Human Action and Its Consequences

First Reactions

Misesians

Speeches and Papers

The Freeman

The Nymeyer Connection

American Edition of Theory of Money and Credit

Grey Eminence and Itinerant Scholar

New York Circles

A Misesian Treatise

Sennholz at Grove City College

21. The Epistemological Case for Capitalism

The Argument in a Nutshell

Science and the Culture of Salutary Dissent

Heroic Elites in a Mass Democracy

The Study of History

The Anti-Capitalistic Mentality

Christianity Reconsidered

22. Fragmentation of the Movement

Conservative Movement and Libertarian Remnant

Demise of the Circle Bastiat

Against the Neo-Liberals

23. Last Years

Last Writings

Last Skirmishes with the Anarchists

Last Skirmishes with the Monetarists

Last Honors

Epilogue

Bibliography

Index of Names

Index of Subjects

Mises: The Last Knight of Liberalism

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