Birth, Decline, and Rebirth of the Second Mises Revolution

0:00Welcome to our last lecture in the seminar on the lifetimes and work of Ludwig von Mises. We are dealing here with the birth, decline and rebirth of the second Mises Revolution. Now, why second Mises Revolution? I mentioned in one of my previous talks already that there was in the German speaking world in the late 1920s The first Mises revolution that had been sparked by Mises' works, most notably on socialism, his critique of socialism, but also by his writings on monetary economics. And how this first Mises revolution was steamed under by Hitler's ascension to power would have remained a fact of the history of thought without no relevance for us today, had it not been for the fact that Hitler survived, excuse me, that Mises survived, that Mises survived and could spend, hibernate the 1930s in Geneva and then eventually went to the United States.

1:07By the late 1940s, Mises was well integrated in the emerging network of American libertarians. His NYU seminar, his lectures at Mont Pelerin Society meetings and other conferences, and his writings had established his impact on the rising generation. In 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 its prominence and impact. Overnight, Mises turned into a central intellectual figure of the entire American right, an event that was unparalleled during the next decade and was then paralleled finally only in the case of Atlas Frugged, the novel that catapulted Ayn Rand to even greater fame, at least among the general public.

2:15Mises 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 the science to offer a new way of looking at social processes and relationships. Human action was a success without precedent. His 1922 Treaties on Socialism had been a sensation too. But only because of the general recognition that theoretical socialism offered no help with the problems of post-war 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 into a political one when the socialist governments drastically aggravated conditions rather than improving them.

3:10Mises' comprehensive analysis in Gemeinwirtschaft, socialism, 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 new generation. It had not become the rallying banner of a new 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 after 1949 was more fertile. It had been prepared by a long tradition of individual liberty and a recent reorientation toward the tradition.

4:00That's what we've been talking about this morning. 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 finance his subsequent work. Supporters now came in droves, asking Mises to give lectures and seminars. Mises now became the true spiritist 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 Mises as 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 his author.

4:56at 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, Attacking Rent Control Laws. Leonard Lee Reed had printed 500,000 copies of this paper. The authors 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, two years later, the future pillar of the Misesian Renaissance had never even heard of something called Austrian economics.

5:51It appears that neither Leonard Reed nor Phi, nor for that matter any other emerging libertarian organization, had placed any special emphasis on Mises or the tradition that he represented. Then Human Action came in one mighty blow and rendered Phi devotedly Misesian. And another consequence was that they suddenly were Misesians. Now here was the textbook from which you could learn all of economics systematically, step by step, as a system. And so a new breed of intellectuals came into being that Mises did not exist before, neither in Vienna, at the University of Vienna in the 1920s, nor at the Geneva Graduate Institute for International Studies in the 1930s.

6:40In the 1930s, this breed is Misesian, somebody who starts off from Mises and critically tries to develop economic science from there. Criticizing Mises, of course, but taking this as the point of departure, going on from there just as Mises had gone on from Menger and from Boehm-Bawerk. The two first Misesians, the most important ones were Hans Zennold, but especially Murray Rothbard. Murray Rothbard had come in touch with Mises before Zennold in 1948. Zennold arrived in 1949 in the US. There were restrictions on German immigration prior to 1949.

7:29And so he was among the first wave of those who arrived once these restrictions had been abolished. But Rothbard had known Mises already since 1948. And in 1949, several of the executives of FEED, most notably Richard Cornwell, we have already mentioned, were convinced that Rothbard was an extremely gifted student who could be a future pillar of the libertarian movement. And so they entrusted him with a mission of writing a popular version of Human Action. And they did so before Human Action even appeared.

8:16So they approached Rothbard with this idea in the summer, in the early summer of 1949. in 1949, Human Action was to appear in September 1949, and this idea was born out of the little concern that Human Action might be too intellectual. Nobody had anticipated the success of the book sales of Human Action. Human Action sold, there were 4,000 copies that had been sold in the first three months after publication. or consider this, a 900 page treatise on the theoretical social sciences and economics and sells 4,000 copies of a professor who is not one in the limelight of the profession, who is out of step methodologically, is not a positivist, not a mathematician, he is out of step politically, is not a socialist nor an interventionist.

9:12That's an amazing success, nobody anticipated this. So, even Mises' friends who admired him, supporters at the Fokker Fund, Fee and so on, well, they did not at all expect this. And so, they thought, well, but still, the ideas that are expressed in this book should reach a wider audience. So, they said, we need somebody who can write in a popular style that can reach the masses. And they thought to have found this person in Murray Rothbard, he had a very fluent style, and those of course, well, all of us I guess today who have read something about Rothbard know that that's actually the case here. He's a wonderful writer and very accessible in contrast to Mises who might be too difficult.

9:58So, Rothbard talked about this project with Mises. Mises was very open to the idea and liked Rothbard. And Rothbard then produced a first specimen of popular rendering of the ideas expressed in Human Action in a chapter dealing with money and monetary interventionism. This specimen was ready by January 1959, so some 16 months after the publication of Human Action. And Mises' reaction was, well that's wonderful, I mean you should go on, but first get a PhD. Now that was his general policy, you do first things first. First you get your degree and then you do all this other stuff.

10:43and probably also he didn't want to stay in the way of the professional intellectual development of this very talented young man, absorbing all his energies into a project for which he would have been interested himself, but he thought for Rothbard personally it's more important that he first get his PhD. Rothbard did then in fact get his PhD only somewhat later in 1956, So five years later, some difficulties were producing a dissertation, and then finally followed a recommendation by Hans Zenners who said, well, you just submitted. Don't try to please 100% your supervisor, you just submitted. Then they either rejected or accepted. Well, they did accept it. So it worked.

11:35So there were certainly Misesians, but there was another multiplier, another leverage for Mises' impact in the form of a new Journal of Opinion, namely The Freeman, a journal that was first published in October 1950 and for the next four years or so had a major impact on public opinions, The Free Man was an initiative of several businessmen who stood ready to finance suitable intellectual ventures such as this, in particular, a project called the Free Man. Freeman was an initiative of several businessmen who stood ready to finance suitable intellectual ventures such as this, in particular a businessman named Kohlberg from New York City, a businessman named Crane from Pennsylvania, And another businessman called Pugh, Howard Pugh, now that's an important figure, Howard Pugh was the president of the Sun Oil Company, which had been established by his father, he was a very successful businessman in his own right, convinced Christian, of the Christian and the main sponsor among other things of several journals of an institution called the Christian Freedom Foundation, CFF and of Grove City College which still exists today and which would come also to play an important role in the propagation of Mises' views.

13:26So, Pugh, Crane and Kohlberg financed the establishment of this new journal, The Freeman, with three established editors, John Chamberlain, Suzanne Lafollette and Henry Hazlitt. Henry Hazlitt whom we know already, Suzanne Lafollette had been a long-time associate of Albert J. Nock in the 1930s and had already collaborated in a journal with the title The Freeman in the 1930s when it had been edited by Baalbert J. Nock. Chamberlain had been the chief editor of a journal called Plain Talk. The Freeman was to succeed Plain Talk as from 1952.

14:121952, sorry 1950. So the Freeman provided an idea and that was the intention of its sponsors, provided a forum for the ideas especially of Mises and the Austrian School, that was the idea. It was not necessarily the idea shared by the entire editorial staff, so this mission was in the forefront of the intentions of Pew and Crane and their men in the editorial board was Hazlitt. On the other hand, Kohlberg was not necessarily interested in Austrian economics and his affiliated editors were Chamberlain and La Follette.

15:01Their orientation was rather anti-communist, so they were not necessarily interested in putting forth economic knowledge, educating the public in the light of Austrian economics, but combating socialism and in particular communism. So we're also very convinced of Cold Warriors. And this conflict of views later on led also to the, very quickly in fact, led to the decline of the journal. Before we come to this decline of the journal, let me briefly speak about one other interesting aspect.

15:48So it not only provided a forum for articles being authored by Mises and similar Austrians, but also the Freeman also sponsored Mises seminars. So in particular there were two week long seminars, one in 1951 at New York University and one in 1952 at the Plybrook Library in San Francisco, which was very successful attracted around 50 participants and so also were a factor in this propagation process. Then eventually the conflict of views reached within the editorial team reached its cataclysm in the fall of 1952. Profound disagreements about the style of writing that should be promoted in the Freeman and also the kind of subjects that should be addressed as I've said before.

16:39and the problem of the Cold War entirely anti-communist faction Chamberlain Lafollette was that they did not have the backing of the sponsors. So they organized a fundraising dinner that was scheduled for October 1952 and this effort was crushed by the Mises-Haslett Pew faction. And then Chamberlain Lafollette resigned in January 1953 and from then on the journal went downhill.

17:24In 1952, two years later it was taken over by FI and from then on has been published by the Foundation for Economic Education as it still is the case today. 1952 also marks the first publication of the journal that should step into the place of the freemen, namely National Review. Suzanne Lafollette and Chamberlain joined the editorial team of National Review. Its main editor was of course William Buckley, who is still around today. Okay, and we have here, so we have an interesting coincidence of events, so we have at the high point of the impact of Human Action, 1955-1956, we have also already the beginnings of the decline, right, national review takes over, there is the conservative rather than the libertarian elements come into focus.

18:21Mises publishes in 1953 a new edition of The Theory of Money and Credit, a fourth edition in which he adds a fourth part. So we've talked already about the book in one of the first lectures. I've told you the first part deals with the nature of money, the second part with the value of money and the pricing process, the third part with fiduciary media, and now the fourth part deals with monetary reform. and so on. That's the new thing that comes into being and here we, Mises then and therefore it's interesting for us, states the new convictions to which he had come in the course of the 1930s, The new conviction that it was necessary that any monetary reform should aspire at the establishment of a full-bodied metallic circulation.

19:29In his monetary reform plans that he had presented in the early 1920s, he had stressed the need to revert to a gold standard, Not necessarily gold coin circulation or metallic circulation, but a gold standard that is, would still have a circulation of paper bank notes, but these would have to be substitutes for underlying gold. Now he thinks one would have to be more ambitious in one's plans. He said the following, gold must be in the cash holdings of everybody. Everybody must see gold coins changing hands.

20:20I'll find my page again, don't worry, bear with me. So gold must be in the cash holdings of everybody. Everybody must see gold coins changing hands, must be used to having gold coins in his pockets, to receiving gold coins when he cashes his paycheck and to spending gold coins when he buys in a store. Of course, Mises had not become a gold bug. He could have said the same thing probably also about silver. He had no fetish about the yellow metal or any other metal. The point was that only a commodity currency made the citizens sovereign in monetary matters. As long as they had real money in hand, they were truly in charge of it and they would immediately notice any departure from sound policies.

21:20Any bank or government refusal to redeem checks would immediately be recognized as fraud, says Mises. What is needed is to alarm the masses in time. The working man in cashing his paycheck should learn that some foul trick has been played upon him. The President, Congress and the Supreme Court have clearly proved their inability or unwillingness to protect the common man. The Voter, from being victimized by inflationary machinations, the function of securing a sound currency must pass into new hands, into those of the whole nation." At the end, Mises noticed there were no arguments against the gold standard, there was only the cynical claim that reintroducing it was a utopian undertaking.

22:12He replied very much along the same lines by which he had concluded his critique of socialism. Quote, we have only the choice between two utopias. The utopia of the market economy not paralyzed by government sabotage on the one hand and the utopia of totalitarian all-round planning on the other hand. The choice of the first alternative implies the decision in favor of the gold standard. So this was another element that added to Human Action. And so it was this kind of use that radicalized. So Mises had in this fourth part of The Theory of Money and Credit radicalized his former stance, just as he had radicalized his former positions also in Human Action.

23:04This kind of views were now propagated, especially through the funding from institutions such as the Volker Fund, which we have talked this morning, the Earhart Foundation, which still exists today, National Association of Manufacturers and Howard Pugh. So these people in particular would pay for Mises travel expenditure, organize lectures and conferences for him. They would pay for scholarships for his students. For example, he had an annual scholarship for a particularly gifted doctoral student from 1955 to 1969. Senorts benefited from this, Kirzner, Riesman, various other luminaries.

23:54They granted him an additional budget for tutoring students. Israel Kirzner was hired as a tutor for some time and taught them smaller classes from Human Action and so on. and he had an impact through these sponsors also on research that was being conducted, so he was a referee and people wanted to do research, an important example is, two important examples are Raymond de Rouva, Okay, research on banking history in the Middle Ages. Another important example is Helmut Schöck, well-known sociologist, who one of his major works is a study on envy.

24:43There's this book, Envy. Anybody know this? Okay. Who has not read this book? Raise your hands. Confess. Okay, so as you see there's always something to do. First you read of course the Mises biography and then you turn to Schöck. Okay, so Schöck's studies and anthropological, sociological studies too were financed by the Volker Fund, who asked Mises his opinion about this and then Mises was actually monitoring Schöck. So Mises had a significant impact in those years and then the following 15 years or so, And this impact was mediated by one sociological factor that we should not neglect, namely that Mises was the only Misesian in his generation.

25:33So in the next generation, these were his students or people who had been students in the 1920s and 1930s. Well, there was no Misesian among them. All the Misesians that now came into being, this new breed, they were in their 20s or in their 30s. So these people were not ripe for leadership as from the 1960s when Mises was quite old and frail. So it was only because of this fact that other people then stepped into the play and came to be supported to a similar extent by these institutions because there was no one there to follow up on Mises. And here we have one of the reasons, not the only reason, but one of the reasons why people like Hayek and Friedman came to be promoted, sponsored as from the 1960s.

26:25The most important vehicle or training ground for Misesian Economics was of course the New York University Seminar. Here we can distinguish four subgroups of participants, just a rough subdivisional classification of participants. First of all, we have New York University students, those who had signed up as a student at New York University and then came to take part for various reasons in the seminar and stayed on, continued their studies with Mises. Here we have Hans Zennholz, Israel Kirzner and George Riesman most notably. Here there were others as well, but these are the big three.

27:14A second group are the professionals or businessmen, people like Henry Hazlitt or George Coulthard, Coulthard of, we have already mentioned, Christian Freedom Foundation of the early 1950s and then later on moved on, worked as a journalist and also as a businessman, other activities. Then we have a group coming from Fee, Foundation of Economic Education, Education. Not necessarily Leonard Reed. Leonard Reed would also take part in these meetings. I have a photo here. Oh, maybe something like this. Yep. See the names under it. Frederic, Mises, Reed and Hazlitt. So that was not an after seminar photo session.

28:09Hazlitt would regularly take part in the seminar, Fertig occasionally, but Fried read very rarely. Okay, he had many other obligations, many other activities. Fried was president himself, very sought after speaker, prolific writer. But there were other representatives from Fried, in particular the Greaves, Bettina Greaves and Percy Greaves, about whom we'll talk a little bit later on. Bettina Greaves and Percy Greaves very loyally attended virtually every single session, and they took notes in every single session.

29:02So both of them took notes and later on they could compare the notes and create a synthesis or something. And now, when I first met Bettina Greaves about 12 years ago or so, she showed me all these records and said, well, what do I do with this? And I said, well, it would be great to have this published and so on. But yeah, she was already an old lady at the time and she didn't necessarily have the energy and the funds to do this. The Foundation for Economic Education has recently released at least one, possibly two, volumes with lecture notes from the Mises seminar in the 1950s. And they can do this for every single semester. There's more to come.

29:49And of course, well, since it's lecture notes, there's always an element in the expression, we cannot be quite sure, is this actually the way Mises framed it and so on, but at least it's a very precious source of information to know what was going on, what did they talk about in these seminars. Percy and Bettina Greaves would also take care of Mises and his spouse when they became very frail at the end of the 1960s and difficulties taking care of themselves, so then they stood ready and driving them around, doing groceries for them, various other things, brought them to the hospital, to the doctor and so on. and so on. Mises died in 1973 and they would continue taking care of Margit von Mises. So they were very true loyal friends.

30:38The fourth subgroup of the Mises seminar at New York University was the Bastiat circle. This was an offshoot in a way of fee. It was a group that crystallized around Murray Rothbard and included other young men of his age, usually a little bit younger, who were the radicals. So we know of course Murray Rothbard as the creator of Austro-libertarianism or anarcho-capitalism and well the people who were in this group were not necessarily all anarcho-capitalist but they were, yeah, they found much pleasure in being more radical politically than Mises himself.

31:28So we have here people like George Reisman was there, Ralph Reiko, Robert Hessen, I have to look at the photo again. Well, in any case, we have a group of five or six young men. There's no female companions there. And they met, okay, so they were taking part in the visa seminar, but they also met, well, usually in Murray Rothbard's apartment to continue the discussions that had started in the visa seminar and it also covered other subjects, political interests and so on.

32:26Okay, here we have something like a photo.

32:40Okay, can you see it? Not really, right?

32:56Okay, some vague photos. All right, that's somewhat better. So, Ralph Reiko, Rothbard, Riesman, Ligio, was today at the Atlas Research Foundation and Robert Hessen. So very important figures for the subsequent propagation of libertarian views of the postwar era, well and this so that their formative experience, formative training here at the New York University seminar and then in their own meetings. So we have here again this new breed the Misesians and the first The first important product, until today we might say the most important intellectual product coming out of this area was the treatise that Murray Rothbard would eventually write, Man Economy and State, on sale next door at the bookshop.

34:04And this is the work that had resulted from his initial mission of popularizing human action. So what in 1949 started as a project of popularizing, creating a human action for the men on the street, for college kids, a little bit dumb or whatever, turned into a full-blown treatise in its own right. A treatise that in many ways goes beyond human action and covers ground that is not covered in human action. For those of you who study economics, that's of course a text that you can hardly avoid and one cannot fail being impressed by the scholarship.

34:53We find, for example, in the footnotes, so it's clear that Rothbard had read virtually every accessible source and had not only digested this, but in virtually all cases, each case developed it even further. So he went beyond Mises in his positive contribution to economic analysis in several respects. The most famous one is his theory of monopoly, in which he criticizes the so-called neoclassical theory of monopoly to which Mises had contributed in his 1922 treatise on socialism and then also presented in Human Action. Then we have another member of the New York University Seminar who would play an important role.

35:49So the biggest, the main figures for the propagation of Mises views after World War II, out of this initial nucleus group at the New York University Seminar were Rothbard, Rothbard, Zennholz and Kirzner. Kirzner would become a professor at New York University. Now we've talked about Rothbard. Let me say a little about Hans Zennholz. So Zennholz got his PhD a little bit later than Rothbard. He got it in 1955. He was one of only four doctoral students that Mises had at New York University. and he got the year after a position at Grove City College, so the Pew outfit was obviously Howard Pew who got the position there, was immediately appointed the chair of the department, it was of course a small school and from there on well trained undergraduates in Austrian of Austrian Economics for the next 35 years or so.

36:57So here we have a very important factory, we might say, a factory of Austrian Economics, which produced many professors who are still today teaching. For example, Hamel, Duttke, Philippe Natarff, a friend of mine in France, and others. And of course, Grove City is still today a training ground for, even after the departure of Hans Zenners from his active teaching duties, is still a training ground for Austrian economics. Today, so there's Professor Herbiner and Professor Rittenauer in the economics department and they use Austrian texts, Human Action, but especially Man Economy and State for their classes at Grove City College.

37:48So we have each year at our summer university, as you will see next week, those of you who will stay on, we have always students from Grove City College, some of whom also continue and go on with their doctoral studies and so on. Okay, before we come to talk about the decline and the rebirth of the second Mises revolution, I'll add that Mises, we need to talk at least a little bit about one important book that Mises published in the late 1950s, In the 1950s, so we've mentioned already, so it was Human Action of course, but then it was the fourth edition of The Theory of Money and Credit, and in 1957 then he publishes another book with the title Theory and History.

38:37Now, that book is also important, not only from a purely scientific point of view, but also from a political point of view, because in a way Mises here makes a second case for capitalism and laissez-faire policies. In Human Action, he had made an economic case for laissez-faire, and this case was centered around the theory of economic calculation, the general theory of economic calculation. The whole book was organized around this principle. First you talk about human action in those cases where calculation is not relevant, are relevant, then you talk about the theory of economic regulation in general, and then you proceed to the various contexts in which this can play out, the market economy, interventionism and socialism.

39:27And so the thesis of the book is of course the same as the one that he had in principle developed in the 1920s, capitalism is the only viable system of social organization, socialism is necessarily less efficient, reduces the welfare of mankind, and interventionism is even worse, it's positively destructive. So only capitalism is really viable. Now in theory and history, Mises sets out to explain that only economics and praxeology are truly scientific disciplines. Only economics and praxeology can make scientific claims, whereas the main rival doctrines are based on metaphysical postulates, metaphysical beliefs.

40:16They're not grounded in fact, but they are grounded in speculation, in hypotheses, sometimes also fictions. I'll spare you the details but let me briefly talk about one other aspect that's also present in this book and that I mentioned already this morning in response to a question that has been asked about Mises' revision of his views about the relationship between libertarianism and Christianity. Then I said that in his publications, book publications of the late 1950s and early 1960s, while he comes to address such views, let me therefore briefly quote from this book.

41:15First a quote from this 1962 book, The Ultimate Foundation of Economic Science. I'll say a word or so later on about this, but here's this quote. According to the fundamental doctrine of Christian theology and philosophy, God has created the human mind in endowing man with his faculty of thinking. As both revelation and human reason are manifestations of the Lord's might, there cannot be ultimately any disagreement between them. God does not contradict himself. It is the object of philosophy and theology to demonstrate the concord between revelation and reason. Such was the problem, the solution of which patristic and scholastic philosophy tried to achieve. So he recognizes here that in Christian civilization, rationality is at center stage.

42:06The Christian theologists and philosophers did not try to contradict, reason does not count or it's somewhat wrong, even though there seems to be something wrong with logic, but they took logic and facts as their starting point and now try to show how this could be reconciled with Christian theology, because there could be ultimately no contradictions. The creator of the universe had made all things, the observable things in our environment, but he had also made our own thinking, so logic, so there could ultimately be no contradiction. So the task of philosophy and theology is to explain how the facts that were verifiable by science, by reason, could be reconciled with what has bequeathed to us through revelation, for example.

42:59So that's in 1962 and is of course a significant development from his earlier thought. I've also quoted to you from his 1922 edition of book socialism. One intellectual influence that seems to have contributed to the formation of Mises' mature judgment on the relationship between economic science, liberalism and the Christian faith was apparently Carl Barth. from Barth, whose work he probably started reading in the 1950s. In Barth's theology, God is the holy other, that's his famous expression, the holy other, who could not possibly be grasped in terms of human reason.

43:45Barth made a passionate case for revealed theology and against the intellectualist presumptions of natural theology. This line of argument apparently appealed to the extreme rationalist in Mises who must have been intrigued to find in Barthes a brother in spirit when it came to pointing out the contradictions of the notion of an acting god. Mises acknowledged this in the following words. Quote, the repudiation of naive anthropomorphism that imagined a supreme being either as a dictator or as a watchmaker was an achievement of theology and of metaphysics. So not of any of, does it say, it was the theologists who refuted this, it was not the physicists for example, it was not the scientists from the natural sciences, it was the theologists themselves.

44:38With regard to the doctrine that God is holy other than man and that his essence and nature cannot be grasped by mortal man, the natural sciences and the philosophy derived from them have nothing to say. Completely different grounds. The transcendent is beyond the realm of which physics and physiology convey information. Logic can neither prove nor disprove the core of theological doctrines. All that science apart from history can do in this regard is to expose the fallacies of magic and fetishistic superstitions and practices, which meant probably superstition of the socialist state. Government interventionism and socialism clearly fell into the latter category.

45:26Mises argued the following, again quote, A conscientious moralist or churchman would not consider meddling and controversies concerning technological or therapeutical methods without having sufficiently familiarized himself with all the physical, chemical and physiological problems involved. Yet many of them think that ignorance of economics is no bar to handling economic issues. The truth is that those fighting capitalism as a system, contrary to the principles of morals and religion, have uncritically and lightheartedly adopted all the economic teachings of the socialists and communists. Like the Marxians, they ascribe all ills, economic crisis, unemployment, poverty, crime and many other evils, to the operation of capitalism and everything that is satisfactory, the higher standard of living in the capitalistic countries, the progress of technology, the drop in mortality rates and so on.

46:30This they ascribe to the operation of government and the labor unions. They have unwittingly espoused all the tenets of Marxism minus its merely incidental, or so it is held to believe, atheism. This surrender of philosophical ethics and of religion to the anti-capitalistic teachings is the greatest triumph of socialist and interventionist propaganda. It is bound to degrade philosophical ethics and religion to mere auxiliaries of the forces seeking the destruction of Western civilization. So he had come, as I said also this morning, to a synthesis, to an answer as far as himself was concerned, that reconciled the case for religion, not necessarily Christianity.

47:21It was not a Christian, but the case for religion with scientific outlook on life that is based, well, on the natural sciences, but also praxeology and economics. There was no contradiction from the outset, but precisely because these were different grounds and complementary grounds, theologians, moralists and so on had to familiarize themselves with the facts. with the facts. They would not pose as experts in medicine or physiology and so on, while they should not pose as experts in economics when it comes to dealing with monetary systems or labor issues or whatever. So here we have the main elements, Mises is still vibrant and vigorous, still contributes to the literature.

48:15He has a group of dedicated, interested at any rate, students and even disciples, Misesians, and there are institutions in place that sponsor his work and there are institutions in place that propagate his views, Grove City College and others. But then comes the decline, the decline that we can date with some difficulty but roughly speaking from 1960 onward and to the late 1970s early 1980s. The factors that come here into this decline are, well, we can mention four factors.

49:01First of all, we have here the age gap that I already mentioned. So all of Mises' main students and followers are young. They're in their 20s or 30s. So they're not yet ripe for leadership positions. Leadership falls naturally on those who have sufficient maturity. And maturity, well, the closest one who had the sufficient maturity was Hayek, and the closest one to Mises, but he was not a Misesian, as we know. And then, otherwise it fell to Friedman, within the libertarian campus, as far as economics is concerned. And then also to people such as Ayn Rand and Nathaniel Brenton, in a slightly different group, not necessarily economics, and a different group involving artists, philosophers and so on.

49:54Then we have the emergence of the second factor in this decline is the emergence of a so-called conservative movement crystallized around national review and similar institutions. And Mises saw this clearly as something different, a different animal from classical liberalism or libertarianism. He did not like the word conservatism. He found it was alien to the American tradition. The word conservative comes from the European intellectual context in which it referred to the ancient regime, so feudal privileges and so on. So he did not at all like this word. He found it was a misrepresentation and brought the American rising generation, brought it on wrong tracks.

50:44But the fact is it had this impact until the present day. A third factor that came here into play were inner divisions within the nascent Misesian movement and we may point here most notably to the divisions within the circle Bastiat or the Bastiat circle that broke out in the late 1950s. And the cause of these divisions were personal conflicts between Murray Rothbard and the Randians. The Circle Bastiat, the group around Murray Rothbard, had very enthusiastically welcomed the publication of Atlas Shrugged and then they had taken part in a meeting, common meetings with the Randians and so on.

51:31Now, the Randians were a very special type of person, not necessarily Ayn Rand herself, but some of her followers who cherished a very religious reverence to her and her writings, and whatever deviated, the slightest jota was expelled from the group, all brainwashed. And so the brainwashings started with Murray Rothbard. Murray Rothbard actually had, at first, I believe, psychoanalysis sessions with Nathaniel Branton. And then Branton used some of the information he had gathered there to pressure him and so on. And it was quite nasty. And then Rothbard very quickly realized what was going on. And well, so they fell out. And unfortunately, this had repercussions on the Bastiat circle itself.

52:19itself. So two members in particular, Hessen and Riesman, sided with the Randians in this conflict and the rest of the group with Murray Rothbard, but in any case it split up. And so, as always, in such cases, much energies are used on rather superfluous, how shall we say, activities. In any case, there's no more cooperation taking place. I know of a division of labor, at least not as much as it could have been otherwise. always especially ridiculous in relatively small movements to spend one's time beating one another on the head if the main problem is interventionism and socialism.

53:12In any case, it was a fact that these divisions existed and weakened the Misesian movement and contributed to its at least relative decline. And then there were similar fragmentations also within the Mont Pelerin Society, which we have already mentioned, which did not necessarily have something to do with Mises, but which contributed to greater prominence of the Chicago School of Economics. In the Montpellierian society there was a looming conflict, a long-standing conflict between Hayek and the general secretary of the society in those years, a man from Switzerland by the name of Hunald.

53:57And Hunald had ambitions to become himself. One day the president of the society, Hayek didn't like him, and some other people liked Hunald. And again, I saw this personal rivalries, personal conflicts that led to fallout of Hayek and his secretary and the entire executive team of the MPS fell apart. And so it came that, as from the mid-1960s on, the Mont Pérignon Society was mainly controlled by economists of a Chicago orientation, for about 20 years. So again, at least a relative decline of the importance and prominence of Mises and his economics to the benefit of Chicago School economics.

54:50This decline continued, of course, into the last years of Mises life. The flame lingered on in the form of those individuals that had already been trained. Again, the big three, Reynolds, Rothbard and Kirzner. But it was lingered on, it was not institutionally very strong and so it was in a weak position. So let's talk a little bit about Mises in the last years of his life. Oh, here's a wonderful photo that I'll show to you. It has nothing to do with the last years of his life. It's from the last years of his life. It is...

55:36Isn't that nice? Mises laughing. The person next to him is Henry Hazlitt. It says that Mises had just said, The Communist Sensor bends bad books, my books. Okay, that was a good laugh.

56:05Okay, Mises' last years. Mises remained vigorous until about 1962. In the early 1960s he completed four major writing projects and gave several public lectures per year. At his public appearances the frailty of his condition became increasingly obvious. More and more his feeble voice and his virtual deafness weighed against his legendary reputation. He had become a living icon of liberty, he had a fading icon after all. I think we have a tape to which we will now listen a little bit.

56:49Okay, that's probably this here.

57:07Mostly in talking about economics in Vienna and Austria, one uses the term Austrian School, Many people misunderstand the meaning of the term, believing that there was a special economic school in Vienna, an organized institution, in the way in which we have a law school, for instance.

57:52Now the fact is that the term school, in connection with the Austrian economics, means merely a certain trend in the doctrines. It is a doctoral program and it was given originally to these economists, in part to this small group of Austrian economists.

58:41Yeah, that's no longer there, it's okay, but the point is, so you see, he spoke already very hesitatingly, very slowly, it was increasingly becoming death, it was difficult to communicate with him, and so the weight of his age kicked in, in 1961 he turned 80, and so we can forgive him for not being no longer entirely competitive with youngsters such as Hayek and Friedman who were just about 50 or 60 at the time. And still he had a substantial number of speaking engagements addressing for example the Remnant, it was a religious group with a hundred or a hundred fifty student audience at the Nathaniel-Brandon Institute, so you cooperated with the Randians too.

59:32The Young Americans for Freedom at Madison Square Garden, The Coast, Federal Savings and Loan Associations and others. In the same year, on the night of May 16, Mises' frail voice was heard for the first time in a long while at Harvard University. As one might guess, it was not the university who had invited him. He was not even physically present. The United States Steel Corporation had sponsored a series of radio shows featuring six-minute taped speeches on economic subjects. Mises spoke on the conflicts of interest between workers and employers. He was on the air simultaneously at Harvard Brown and Cornell University and then later on also at Yale. After 1962, his public appearances became less frequent and And Mises focused on his regular teaching activities. Until May 1969, he taught his NYU seminar. He lectured at fee seminars until 1972.

1:00:34In these very last years, only his most faithful friends and admirers, most notably Percy Greaves and Bettina Greaves, continued to take part in his regular seminar sessions. They had become used to the shortcomings of his presentation and still wrote diligent notes of each meeting. Graves always sat right next to Mises to facilitate all communication between the old master and his seminar. When a student asked a question, Graves would shout this into Mises' ear, receive an answer from the old man's feeble lips, and then repeat Mises' word with his own booming voice to the audience. It's a rather strange seminar. New people showed up from time to time out of curiosity but did not stay because it was difficult to follow the lectures follow the lectures and impossible to engage the speaker.

1:01:24Such newcomers often wondered why the seminar had such visible success with the regular participants. Some had the impression of a prayer meeting involving a bunch of fervent disciples around an enigmatic guru with Percy Greaves as the high priest and Bettina Bean as the devoted abbess of a Mises cult. Mises preserved his health almost until the end of his long life. He slowed down smoothly and was still around after many of his younger American friends and associates had already gone. Nye Maia died in 1967, Courtney, about whom we didn't talk, so another reason to read the book, died in 1971, F. A. Harper, the founder of the Institute for Humane Studies, died in 1973, Harper before worked for Fee.

1:02:15Just when Mises was starting to feel really old and somehow left over, it was time to congratulate Richard Schiller on the letter's 100th birthday. The last habitant of Carl Menger was still around. During a 1971 summer vacation in Manchester, Vermont, Ludwig fell ill with a serious infection. Even though he recovered physically, he had lost his ability to concentrate and was incapable of doing any work from then on. His wife recalled him saying, the worst is that I still have so much to give to the people, to the world, and I can't put it together anymore. It is so tormenting. During the last two years of his life, Mises was no longer himself and needed assistance and supervision.

1:03:02In this critical phase, again, as I've said, Bettina Bean and Percy Graves were ready to provide this assistance. In July 1973, Margit took Ludwig for a last trip to Europe, to a spa up in the mountains above the Swiss town of Lucerne. of Lucerne. Upon their return to New York, Mises' condition deteriorated and the very next day he was brought to St. Vincent's Hospital. There he died on the morning of Wednesday, October 10, 1973. A memorial service was held at Universal Funeral Chapel, 52nd Street and Lexington Avenue in New York City on Tuesday, October 16 at noon. In these last years, he also contributed four major writing projects.

1:03:53There was Ultimate Foundations of Economic Science, which I've already mentioned, which continued the line of argument that he had developed in Theory and History, his 1957 book. He continues the epistemological case for capitalism. and in particular this book, Ultimate Foundations, contains an all-out attack on positivism, so much more comprehensive discussion of the shortcomings of positivism. He published a book on the historical setting of the Austrian School. The Austrian School, the tape to which we listened just before is in fact the speech that he gave, the paper was based on this.

1:04:42The historical setting of the Austrian School is a talk that he gave in 1962 at New York University. And then there were two editions of Human Action, the second edition and the third edition, the second edition in 1963 and the third edition in 1966. The second edition almost broke his heart, because Yale University press butchered the job. I mean, so they brought an edition with different shades of print, and they left out the title, the running page headings, and some paragraphs were double, one page was missing, one page was double, and all this thing. And Mises thought, okay, this cannot be by accident. I mean, they did this on purpose. And, okay, if they don't like my book, so why don't they just give it back to me, and I publish it with somebody else?

1:05:28He was really furious. He said, okay, I've delivered the argument since apparently there are some socialists there who don't find a counter argument so they rather butcher my book. Okay, well in any case, so he got the rights back and then published the third edition with Regnery, a very beautiful edition and so on. And at the Mises Institute we have a couple of years ago published the first edition, 1949 edition for various reasons that I explained in a good introduction to this book. to this book, which is by the way on sale next door in the bookshop. So here we have the four last writing projects and in other words various other activities that I also mention in the book. Well what then about the rebirth of the second Mises revolution?

1:06:18As I've said the Misesian movement lingered on throughout the 1960s when it was feeble and throughout the 1970s. in the 1970s. In the 1970s there was one or two important events that coincided in the same year of 1974. One year after Mises death, the first event was the Nobel Prize that was awarded to Friedrich August von Hayek, which has led to some speculation why the Nobel Prize to Hayek one year after Mises death. It would have been only natural to give me the prize to Mises. The Nobel Prize for Economics, by the way, exists only since 1969.

1:07:03In the very year in which this prize was awarded the first time, Mises was named Distinguished Fellow of the American Economic Association. So I had the impression that this was not a very real attempt to push the nomination of Mises for the Nobel Prize. It doesn't work out in the first few years, only Keynesians and quantitative economists obtained the prize. So then 1974, one year after Mises death, Hayek gets the prize, there was some speculation, well, we've got to hurry up, otherwise the other Austrian will die out too. There are also other explanations, Hayek received the prize conjointly with Gunnar Myrdal, Big Time Socialist, now Myrdal was the husband of Alva Myrdal, the Minister of Education in those days in Sweden and the Minister of Education appoints the members of the Nobel Prize committee.

1:08:10Now, how to get the Nobel Prize to an assessment in order not to make it appear so blatantly as an attempt of partisanship? Well, maybe they thought, okay, we give it to Gunnar and then to the opposite. They found it in Hayek, which at this time had the reputation. There are various theories around this. There was also a more amusing one, according to which Alvar had been Friedrich's mistress in the 1930s. So you see various fantasies and so on, but the basic fact is that certainly Hayek would not have gotten the prize unless he had delivered sound work, which he had did in the previous decades, and among other things he got the prize for his business cycle theory that he had developed based on the works of Mises, which was also mentioned by the committee, by the Nobel Prize Committee.

1:09:07So, Hayek gets the prize and gives, therefore, as we have said before, a second leave to life to the Visarium branch of Austrian Economics. This conjoins itself with the second event that I hinted at before in 1971, sorry, 1974, namely the South Royal Conference on Austrian Economics, which was the first in a series of conferences dedicated to the promotion revival of Austrian economics in the United States in particular. The main speakers at this conference were Murray Rothbard, Israel Kirzner, Ludwig Lachbarn, and Hayek also made a guest appearance I believe.

1:09:56Now, the South Royal Conference, not surprisingly, was not so much the sounding trumpet for the reinvigoration of the Mises revolution, but it rather was a sounding trumpet for the reinvigoration of the Vizierian branch. So suddenly the Misesian branch which had dominated the American scene until then was present side by side with this other branch even though the participants themselves were not necessarily conscious of this. and then there was also a third one, the backdoor introduction of some historical school economics in the form of Ludwig Lachmann, who had been a disciple of a student of Werner Sombart in Berlin in the early 1930s.

1:10:53The real push for the rebirth of the Mises Revolution in the United States came in 1982 with the establishment of the Mises Institute, which at that point was not yet in Auburn, Alabama. I believe they had a very small office here for some time, just below the seating of the football stadium. In a way everything in Auburn is in the shadow of the football team. But in the time they had this very small thing and only a few people were here, I believe, Julie Thomason and others. And the Mises Institute then for about 15, 13 years continued its operation from various locations throughout the country.

1:11:46in the world, the country, they had an office in Washington D.C. and one in San Francisco and one here in Auburn. Auburn, the location was chosen because there was a faculty, a department sympathetic to Austrian economics. So we had here, most notably Leland Jäger, now a retired professor, still living in Auburn, has been a Ludwig von Mises professor here at Auburn University, and Roger Garrison early on. Roger Garrison is still also with us and he will be teaching next week at the Summer University. And so it was this early connection that provided fertile ground for further cooperation. There was John Danson who was at the time on the board of the university and who actively promoted the hiring of Austrian economists Well, the move of the Mises Institute to Auburn is also still on the board of the Mises Institute.

1:12:48So, since 1995, the Mises Institute is here entirely in Auburn, Alabama. Still hold conferences elsewhere in the country. But, so for the first time since 1982, we have an institution starting very small. We have this wonderful facility since 1998. This part of the building actually only since 2001, relatively recently. So despite its weakness and lacking institutional implantation, we have since 1982, for the first time, an institution entirely dedicated to the promotion of Austrian economics. and that is still today the main vehicle, today there are of course many more groups as the Mises Institute does not have a monopoly on Austrian economics and Misesian economics and competition is always good as we know from economic theory so but it has inspired all these other groups that now exist most notably in Europe but also in Latin America and the main vehicle Of Misesian Economics are of course the journals published by the Mises Institute but especially the teaching program, seminars like this and also the Summer University which is personally my favorite conference, Mises Institute conference which will be held next week.

1:14:19So, we are in the middle of this. When I first came in touch with the Mises Institute, 12 or 13 years ago, it was a very weak group, and there were not many individuals that I knew were affiliated with it, and its intellectual impact seemed to be small, but we were all very enthusiastic, and we are still very enthusiastic, and enthusiasm can move quite a few things. So, what I've seen in the past 13 years is an exponential growth movement. Okay, and I only hope it will continue this way, in case we will do our best thing to make this happen. And well, the main inspiration for this is Mises, it's an inspiration, it's a point of departure, it's not the last word, as he himself would always say.

1:15:12Science, and we need to develop social science, economics, praxeology, but whatever, finally, in order to nourish, maintain and develop the foundations of a free society. That's our task. I hope you like the seminar here. I'll be happy to answer a few questions we have some time.

1:15:42I was wondering, you know, Mises has a really good and specific promo style, but it kind of reminds me a little bit of Henry Hazlitt's promo style, so I was wondering if Hazlitt had anything to do with you working with Mises' quotes, and his own of the characteristics of the style that you used, or if I could make an ad for that.

1:16:12Mises' writing style and so on. Yeah, definitely. I believe Mises acknowledges this in the preface of Human Action, where he says that, okay, Henry Hazlitt worked with him through the entire manuscript, indefinitely, yeah. So this was an educational experience, certainly, for Mises. You remember the passage from the student evaluation that I read from the 1930s, where he says, well, it's often difficult to follow him, and it's very imperfect from a grammatical point of view, but it's always very clear. So this was exactly probably what Henry Hazlitt found when he started working with Mises on the Human Action manuscript around 1945, 1946. And yeah, he improved it and then of course Mises improved by himself but I suppose he had always people proofreading this.

1:16:58How are the words filed from that point on? It's fairly similar. Mises is also in German an exceptionally clear writer, especially for academics and the social sciences. The Germans have a reputation for nebulous expression and so on, which often is just a cover for emptiness. So you make a brouhaha out of the few things you have to say. And that was not at all Mises' case. His reviewers in the 1920s and 1930s always emphasized this point. Mises is particularly clear and unless his colleagues, he does not give such challenges to his readers.

1:17:43It's clear what he means. But still I would say probably he is even better in English than in German. And the reason is precisely that his linguistic abilities were limited here, so he had to do with more simple means, which is always to the benefit of the average reader. How is the Austrian school developing here in the U.S. as compared to in Europe? Well, here in the U.S. the big difference is the institutional presence of the Mises Institute.

1:18:33and Lew Rockwell has made it his policy not to support financially any groups outside so which would have been easy to do because many people are asking for this kind of support and also books and so on but so it doesn't do it and I think it's a very wise decision also because it well forces these people to be imaginative and creative on their own but still they are very weak And so there are a few groups. There's Mises Institute in Belgium, which does not have quite that strong emphasis on laissez-faire policies as the Mises Institute, or let's say anarcho-capitalism, which is very strong here. Although this is not a house maxim, we also admit classical liberals and so on. But still, these groups are weak, but they are solely emerging.

1:19:24It took 25 years for the Mises Institute to be what it is today, and in Europe most groups of this sort were inspired by the Mises Institute, so necessarily they started much later, still on the learning curve, still gathering forces, but there are notable groups in Madrid, in the Czech Republic, in Prague, the Prague group is very strong, and there are slightly weaker groups in other countries, among them France. In France we have a big organizational problem, which has to do with the national mentality. The French are very individualistic, so I always say to my friends over there, in France you need six think tanks for five individuals.

1:20:16What did they award the Nobel Prize for in year four? What was the Nobel Prize awarded for in the year before Hayek? What was the awarding for in the year before Hayek? Was it the business cycle?

1:20:51and so on. I don't remember who was the recipient in 1973. Most people don't remember who was the recipient of 1973. I know Mises wasn't alive, but did he ever comment on what his legacy was? Did Mises ever comment on his legacy, or what he believed his legacy was, or his students? No, not directly. I mean clearly Mises did never consciously aspire the formation of a Mises School.

1:21:37I mean there's something just that happened as a consequence of the presence of his work. But he was, he hoped of course that he would inspire, well people would be standing up for truly scientific analysis, Mises, continued there we had left off and he was very happy to see people like Hans Zenholz and certainly Israel Kirzner and Murray Rothbard, wrote a very favorable book review of Murray Rothbard's Man Economy and State even though he disagreed with him on several important questions, most notably anarcho-capitalism. Mises did not believe that that was possible, he thought that was just the moonshine. Well, he said to someone who asked him straight on this, he said, well, I agree fully with everything Murray Rothbard has written on this.

1:22:49I read fully with everything Murray Rothbard has written on this. Now this may come as a surprise, but if you look at this very carefully, I read to you a passage from a letter that Mises wrote on this question in which he addresses the very subtle nuance of his argument, which is not that evident in his writing actually, is writing actually, or you can easily overlook it. So I don't think that Rothbard actually addresses this point head on in his monopoly chapter, but again there's no contradiction between the two. I think, well, it would lead us so far to argue this through now, I think that Mises is wrong in his insistence of this nuance, There is a nuance, not that the nuance is irrelevant but he is wrong, there is this nuance but still the inference that he draws from is wrong.

1:23:49But I encourage you again to read this chapter, see this precisely what his argument is and indeed you will find there is not a contradiction between what Rothbard wrote and what Mises wrote. But Rothbard still went beyond Mises in being much more detailed. No more question? Well thank you very much for your attention, thank you for bearing with me.

1:24:12On behalf of the Ludwig von Mises Institute and all the attendees here this week and people who are watching it out on the web, I'd like to thank you for a very fine seminar. Thank you, Mark. I'd also like to thank our friends George and Joelle Eddy for sponsoring this event and making it possible for everyone to attend and see it out on the web. Thank you very much and also I do want to remind everybody that the Mises University is starting Sunday night so we'll be back here in the common classroom on Sunday night for the Mises University and of course you're all invited to attend. Thank you very much.