Our Intellectual Debts 111 WILLIAM HAROLD HUTT: 1899–1988

On June 19, William Harold Hutt, one of the most productive and creative economists of this century, died in Irving, Texas, at the age of 89. Born in London, Hutt served in the Royal Flying Corps in World War I, and then went to the London School of Economics, where he studied under the great free-market and hard-money economist Edwin Cannan. Hutt was graduated in 1924, and spent several years in publishing.

His first important scholarly publication remains virtually unknown today: an excellent and penetrating annotated bibliography, The Philosophy of Individualism: A Bibliography, which he wrote, aided by the eminent laissez-faire liberal Francis W. Hirst. The book was published anonymously by the Individualist Bookshop of London in 1927. The Philosophy of Individualism served, 30 years later, as the core of Henry Hazlitt’s annotated bibliography, The Free Man’s Library (Van Nostrand, 1956).

From 1928 to 1965, Hutt taught economics at the University of Cape Town in South Africa. In his mid-60s, he came to the United States, taught at several universities, and then settled at the University of Dallas in 1971, where he taught for ten years, until the age of 82, an inspiration to a legion of students and colleagues. He continued to be an emeritus professor at Dallas until his death.

The shameful neglect of Hutt’s great contributions can be attributed to two main factors: (1) the fact that he taught in the intellectual backwater of South Africa, far from the great intellectual controversies in the profession; and (2) that he stood like a rock against the major fashions of our time, in particular interventionism, Keynesianism, and the general enthusiasm for labor unions.

Hutt’s first great contribution to economics was his concise and lucid The Theory of Collective Bargaining (P.S. King, 1930), which remains to this day the best book on the theory of wage determination. In this book, Hutt criticized many of the classical economists, and showed conclusively that unions cannot increase general wage rates, and that particular wage increases can only come at the expense of a dislocation of labor and a fall in wage rates of other workers. Ludwig von Mises wrote in the preface to the first American edition of Hutt’s book:

Professor Hutt’s brilliant essay is not merely a contribution to the history of economic thought. It is rather a critical analysis of the arguments advanced by economists from Adam Smith down and by the spokesmen of the unions in favor of the thesis that unionism can raise wage rates above the market value without harm to anybody else than the exploiters.

In addition to his notable work in the theory of labor, Professor Hutt wrote two brilliant works in applied labor economics, i.e., labor history. His was the outstanding essay in the remarkable volume edited by F.A. Hayek, Capitalism and the Historians (University of Chicago, 1954). Here Hutt discussed the Factory Acts restricting child labor in early nineteenth-century Britain, demonstrating that these acts were based on mendacious testimony, and that the condition of children had been greatly improved by the Industrial Revolution.

In 1964, furthermore, the Institute of Economic Affairs in London published Hutt’s innovative work, The Economics of the Colour Bar, in which he demonstrated that, contrary to myth, the South African system of apartheid was originated not by rural Afrikaners, but by Anglo unions, anxious to suppress the competition of Africans who were rising into the ranks of the foremen and skilled craftsmen. Indeed, he showed that industrial apartheid was imposed by a successful general strike in 1922 led by William H. Andrews, head of the Communist Party of South Africa under the slogan “Whites Unite and Fight for a Workers’ World”! For his opposition to apartheid and advocacy of a free labor market, Professor Hutt’s South African passport was withdrawn by the Department of Interior, in 1955, but was returned after criticism was raised in Parliament.

In his further scholarly work on trade unions after World War II, Hutt emphasized the crucial empirical fact about labor unions: that they rest on the use and the threat of violence, particularly against replacement workers during strikes (universally smeared in the supposedly objective news media as “scabs”). If Professor Hutt sometimes went too far and advocated outlawing unions as monopolistic per se, as well as removing their enormous governmental privileges and licenses to commit violence, he was at least far closer to the mark than the Chicago School, who persist in regarding unions as legitimate if sometimes inefficient employment agencies hired by workers.

William Hutt’s other notable area of contribution was his defense of hard money and the free market’s tendency to full employment, and his brilliant and superb critiques of Keynesian economics. In particular, we might cite his noteworthy The Theory of Idle Resources (Jonathan Cape, 1939) where he showed that Keynesian idle resources—unemployment and “excess capacity”—were simply cases of capacity withheld from the market by resource-owners, and not the result of insufficient market demand. Capacity can be withheld, furthermore, either because of government restrictionism holding up prices or wage rates, or because of expectations that restrictionist or inflationist policies will soon raise market prices.

In 1963, Hutt published a comprehensive if difficult critique of Keynesianism, Keynesianism, Retrospect and Prospect (Regnery, 1963), which, among other riches, contains the best criticism of the spurious “acceleration principle” ever written. A decade and a half later, a revision entitled The Keynesian Episode, A Reassessment (Liberty Press, 1979), which turned out to be largely a new book, presented a more easily accessible and updated critique of Keynesian doctrine.

Finally, one of Hutt’s great contributions to the history and the clarity of economic thought was his correctly titled A Rehabilitation of Say’s Law (University Press, 1974), which rescued that great critic of underspending notions from Keynes’s deliberate misrepresentation in The General Theory as well as from Say’s inconstant friends in the economics profession.

While he was not a full-fledged Austrian, Professor Hutt’s methodology and analysis were very close to the Austrians, and he rightly considered himself a close sympathizer and supporter of the modern Austrian revival. Certainly he was closer to Misesian economics than the nominally “Austrian” nihilism of the later Professor Lachmann and his younger followers. But above all, Bill Hutt shall be remembered and honored for the unflagging kindliness and cheerfulness of his personality. All who came into contact with Bill Hutt admired and loved him, and all of us are poorer for his passing.

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First published in September 1988.

112

FRIEDRICH AUGUSTVON HAYEK: 1899–1992

The death of F.A. Hayek at the age of 92 marks the end of an era, the Mises-Hayek era. Converted from Fabian socialism by Ludwig von Mises’s devastating critique, Socialism, in the early 1920s, Hayek took his place as the greatest of the glittering generation of economists and social scientists who became followers of Mises in the Vienna of the 1920s, and who took part in Mises’s famed weekly privatseminar held in his office at the Chamber of Commerce. In particular, Hayek elaborated Mises’s brilliant business cycle theory, which demonstrated that boom-bust cycles are caused, not by mysterious defects inherent in industrial capitalism, but by the unfortunate inflationary bank credit expansion propelled by central banks. Mises founded the Austrian Institute for Business Cycle Research in 1927, and named Hayek as its first director.

Hayek proceeded to develop and expand Mises’s cycle theory, first in a book of the late 1920s, Monetary Theory and the Trade Cycle. He was brought over to the London School of Economics in 1931 by an influential English Misesian, Lionel Robbins. Hayek gave a series of lectures on cycle theory that took the world of English economics by storm, and were published quickly in English as Prices and Production.

Remaining at a permanent post at the London School, Hayek soon converted the leading young English economists to the Misesian-Austrian view of capital and business cycles, including such later renowned Keynesians as John R. Hicks, Abba Lerner, Nicholas Kaldor, and Kenneth E. Boulding. Indeed, in two lengthy review essays in 1931‒32 of Keynes’s widely trumpeted magnum opus, the two-volume Treatise on Money, Hayek was able to demolish that work and to send Keynes back to the drawing-board to concoct another economic “revolution.”

One of the reasons for the swift diffusion of Misesian views in England in the 1930s was that Mises had predicted the Great Depression, and that his business cycle theory provided an explanation for that harrowing event of the 1930s. Unfortunately, when Keynes came back with his later model, the General Theory in 1936, his brand new “revolution” swept the boards, swamping economic opinion, and converting or dragging along almost all the former Misesians in its wake.

England was then the prestigious center of world economic thought, and Keynes had behind him the eminence of Cambridge University, as well as his own stature in the intellectual community. Add to this Keynes’s personal charm, and the fact that his allegedly revolutionary theory put the imprimatur of “economic science” behind statism and massive increases of government spending, and Keynesianism proved irresistible. Of all the Misesians who had been nurtured in Vienna and London, by the end of the 1930s only Mises and Hayek were left, as indomitable champions of the free market, and opponents of statism and deficit spending.

In later years Hayek conceded that the worst mistake of his life was to fail to write the sort of devastating refutation of the General Theory that he had done for the Treatise, but he had concluded that there was no point in doing so, since Keynes changed his mind so often. Unfortunately, this time there was no demolition by Hayek to force him to do so.

If the business cycle theory was swamped by the Keynesian model, so too was the Mises-Hayek critiques of socialism, which Hayek had also brought to London, and to which he had contributed in the 1930s. But this line of argument had been brought to an end, in the late 1930s, when most economists came to believe that socialist governments could easily engage in economic calculation by simply ordering their managers to act as if they were participating in a real market for resources and capital goods.

During World War II, at a low point in the fortunes of human freedom and Austrian economics, in the midst of an era when it seemed that socialism and communism would inevitably triumph, Hayek published The Road to Serfdom (1944). It linked the statism of communism, social democracy, and fascism, and demonstrated that, just as people who are best suited for any given occupations will rise to the top in those pursuits, so under statism, “the worst” would inevitably rise to the top. Thanks to promotion efforts funded by J. Howard Pew of the then Pew-owned Sun Oil Company, The Road to Serfdombecame extraordinarily influential in American intellectual and academic life.

In 1974, perhaps not coincidentally the year after his mentor Ludwig von Mises died, F.A. Hayek received the Nobel Prize. The first free-market economist to receive that honor, Hayek was accorded the prize explicitly for his elaboration of Misesian business cycle theory in the 1920s and ‘30s. Since both Mises and Hayek had by that time dropped down the Orwellian memory hole of the economics profession, many economists were sent scurrying to find out who this person Hayek might be, thus helping give rise to a renaissance of the Austrian School.

Hayek’s receipt of the Nobel at this time was deeply ironic, since after World War II his ideas began to diverge increasingly from those of Mises and thus acquire acclaim from latter-day Hayekians who are scarcely familiar with the work which had made Hayek eminent to begin with. To the extent that Hayek remained interested in cycle theory, he began to engage in shifting and contradictory deviations from the Misesian paradigm—ranging from calling for price-level stabilization, in direct contrast to his warning about the inflationary consequences of such measures during the 1920s; to blaming unions instead of bank credit for price inflation; to concocting bizarre schemes for individuals and banks to issue their own newly named currency.

Increasingly, Hayek’s interests shifted from economics to social and political philosophy. But here his approach differed strikingly from Mises’s ventures into broader realms. Mises entire lifework is virtually a seamless web, a mighty architectonic, a system in which he added to and enriched monetary and cycle theory by wider economic political and social theories. But Hayek, instead of providing a more elaborate and developed system, kept changing his focus and viewpoint in a contradictory and muddled fashion. His major problem, and his major divergence from Mises, is that Hayek, instead of analyzing man as a rational, conscious, and purposive being, considered man to be irrational, acting virtually unconsciously and unknowingly.

Since Hayek was radically scornful of human reason, he could not, like John Locke or the Scholastics, elaborate a libertarian system of personal and property rights based on the insights of human reason into natural law. Nor could he, like Mises, emphasize man’s rational insight into the vital importance of laissez-faire for the flourishing and even survival of the human race, or of foregoing any coercive intervention into the vast and interdependent network of the free-market economy.

Instead, Hayek had to fall back on the importance of blindly obeying whatever social rules happened to have “evolved,” and his only feeble argument against intervention was that the government was even more irrational, and was even more ignorant, than individuals in the market economy.

It is sad commentary on academia and on intellectual life these days that Hayek’s thought, possibly because of its very muddle, inconsistency, and contradictions, should have attracted far more scholarly dissertations than Mises’s consistency and clarity. In the long run, however, it will be all too obvious that Mises has left us a grand intellectual and scientific system for the ages whereas Hayek’s lasting contribution will boil down to what was acknowledged by the Nobel committee—his elaboration of Misesian cycle theory. In addition, Hayek must always be honored for having the courage to stand shoulder to shoulder with his mentor, in the dark days of the interwar and postwar years, against the twin evils of socialism and Keynesianism.

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First published in June 1992.

113

V.ORVAL WATTS:1898–1993

V. Orval Watts, one of the leading free-market economists of the World War II and post-war eras, died on March 30 this year. When I first met him, in the winter of 1947, he was a leading economist at the Foundation for Economic Education (FEE), the only free-market organization and think-tank of that era. He was a pleasantly sardonic man in his late forties. Born in 1898 in Manitoba, Vernon Orval Willard Watts was graduated from the University of Manitoba in 1918, and went on to earn a master’s and a doctor’s degree in economics from Harvard University in its nobler, pre-Keynesian era.

After teaching economics at various colleges, Orval was hired by Leonard Read in 1939 to be the economist for the Los Angeles Chamber of Commerce, of which Leonard was executive director. Watts thereby became the first full-time economist to be employed by a chamber of commerce in the United States.

Leonard Read had built up the Los Angeles Chamber into the largest municipal business organization in the world, and Read himself had been converted to the libertarian, free-market creed by a remarkable constituent of the Chamber: William C. Mullendore, head of the Southern California Edison Corporation.

During World War II, Read, assisted by Watts, lent his remarkable organizing talents to making the Los Angeles Chamber a beacon of freedom in an increasingly collectivist world. When Read took the bold step of moving to Irvington-on-Hudson in New York to set up FEE in 1946, he took Orval with him as his economic adviser.

During World War II, Orval published his book Do We Want Free Enterprise? (1944). In his FEE years, he published several books, as well as writing numerous articles for free-market publications. His books included Away From Freedom (1952), a critique of Keynesianism; his pungent critique of unions, Union Monopoly (1954), and his perceptive attack on the United Nations, United Nations: Planned Tyranny (1955). He also served as economic counsel to Southern California Edison and several other companies in the Los Angeles area.

In 1963, at an age (65) when most men are thinking seriously of retirement, Orval resumed his teaching career, moving to the recently established Northwood University (then North-wood Institute), a free-market center of learning in Midland, Michigan.

Orval, bless him, served as director of economic education and chairman of the Division of Social Studies at Northwood for 21 years, until he retired in 1984 at the age of 86. While at Northwood, he published an excellent anthology of free market vs. government intervention articles, Free Markets or Famine? (1967), as well as his final book Politics vs. Prosperity (1976).

Orval Watts died in Palm Springs, California, this March, having just turned 95. He is survived by his wife Carolyn, a son, three daughters, nine grandchildren, and two great-grandchildren.

We can see in the present world how vitally important history is for the values and self-definition of a family, a movement, or a nation. As a result, history has become a veritable cockpit of contending factions. Any movement that has no sense of its own history, that fails to acknowledge its own leaders and heroes, is not going to amount to very much, nor does it deserve a better fate.

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First published in July 1993.

114

LUDWIGVON MISES: 1881–1973

For those of us who have loved as well as revered Ludwig von Mises, words cannot express our great sense of loss: of this gracious, brilliant and wonderful man; this man of unblemished integrity; this courageous and lifelong fighter for human freedom; this all-encompassing scholar; this noble inspiration to us all. And above all this gentle and charming friend, this man who brought to the rest of us the living embodiment of the culture and the charm of pre-World War I Vienna.

For Mises’s death takes away from us not only a deeply revered friend and mentor, but it tolls the bell for the end of an era: the last living mark of that nobler, freer and far more civilized era of pre-1914 Europe.

Mises’s friends and students will know instinctively what I mean: for when I think of Ludwig Mises I think first of all of those landmark occasions when I had the privilege of afternoon tea at the Mises’s: in a small apartment that virtually breathed the atmosphere of a long lost and far more civilized era. The graciousness of Mises’s devoted wife Margit; the precious volumes that were the remains of a superb home library destroyed by the Nazis; but above all Mises himself, spinning in his inimitable way anecdotes of Old Vienna, tales of scholars past and present brilliant insights into economics, politics and social theory, and astute comments on the current scene.

Readers of Mises’s majestic, formidable and uncompromising works must have been often surprised to meet him in person. Perhaps they had formed the image of Ludwig Mises as cold, severe, austere, the logical scholar repelled by lesser mortals, bitter at the follies around him and at the long trail of wrongs and insults that he had suffered.

They couldn’t have been more wrong; for what they met was a mind of genius blended harmoniously with a personality of great sweetness and benevolence. Not once has any of us heard a harsh or bitter word escape from Mises’s lips. Unfailingly gentle and courteous, Ludwig Mises was always there to encourage even the slightest signs of productivity or intelligence in his friends and students; always there for warmth as well as for the mastery of logic and reason that his works have long proclaimed him.

And always there as an inspiration and as a constant star. For what a life this man lived! Ludwig Mises died soon after his 92nd birthday, and until near the end he led his life very much in the world, pouring forth a mighty stream of great and immortal works, a fountainhead of energy and productivity as he taught continually at a university until the age of 87, as he flew tirelessly around the world to give papers and lectures on behalf of the free market and of sound economic science—a mighty structure of coherence and logic to which he contributed so much of his own creation.

Ludwig Mises’s steadfastness and courage in the face of treatment that would have shattered lesser men, was a never-ending wonder to us all. Once the literal toast of both the economics profession and of the world’s leaders, Mises was to find, at the very height of his powers, his world shattered and betrayed. For as the world rushed headlong into the fallacies and evils of Keynesianism and statism, Mises’s great insights and contributions were neglected and scorned, and the large majority of his eminent and formerly devoted students decided to bend with the new breeze.

But shamefully neglected though he was, coming to America to a second-rate post and deprived of the opportunity to gather the best students, Ludwig Mises never once complained or wavered. He simply hewed to his great purpose, to carve out and elaborate the mighty structure of economics and social science that he alone had had the genius to see as a coherent whole; and to stand four-square for the individualism and the freedom that he realized was required if the human race was to survive and prosper. He was indeed a constant star that could not be deflected one iota from the body of truth which he was the first to see and to present to those who would only listen.

And despite the odds, slowly but surely some of us began to gather around him, to learn and listen and derive sustenance from the glow of his person and his work. And in the last few years, as the ideas of liberty and the free market have begun to revive with increasing swiftness in America, his name and his ideas began to strike chords in us all and his greatness to become known to a new generation.

Optimistic as he always was, I am confident that Mises was heartened by these signs of a new awakening of freedom and of the sound economics which he had carved out and which was for so long forgotten. We could not, alas, recapture the spirit and the breadth and the erudition; the ineffable grace of Old Vienna. But I fervently hope that we were able to sweeten his days by at least a little.

Of all the marvelous anecdotes that Mises used to tell I remember this one the most clearly, and perhaps it will convey a little of the wit and the spirit of Ludwig von Mises. Walking down the streets of Vienna with his friend, the great German philosopher Max Scheler, Scheler turned to Mises and asked, with some exasperation: “What is there in the climate of Vienna that breeds all these logical positivists [the dominant school of modern philosophy that Mises combatted all his life]?” With his characteristic shrug, Mises gently replied: “Well, after all, there are several million people living in Vienna, and among these there are only about a dozen logical positivists.”

But oh, Mises, now you are gone, and we have lost our guide, our Nestor, our friend. How will we carry on without you? But we have to carry on, because anything less would be a shameful betrayal of all that you have taught us, by the example of your noble life as much as by your immortal works. Bless you, Ludwig von Mises, and our deepest love goes with you.

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First published in Human Events, October 20, 1973, p. 7

115

MARGITVON MISES: 1890–1993

Margit von Mises died on June 25, just a week short of her 103rd birthday. While physically frail the last few years, Margit remained mentally alert until a few months before her death. Indeed, such a conventional phrase as “mentally alert” scarcely begins to describe Margit: down nearly to the end, she was sharp as a tack, vitally interested in the world and in everyone around her. It was impossible to put anything over on her, as people often try to do with the elderly. Indeed, since the death of her husband Ludwig von Mises 20 years ago, one had the impression she could out think and outsmart everyone with whom she came into contact.

After the death of her beloved Lu, Margit swung into action, to become an indefatigable one-woman “Mises industry.” She dug up unpublished manuscripts of Lu’s, had them translated and edited, and supervised their publication. She also supervised reprints and translations of Mises’s published work. She was chairman of the Ludwig von Mises Institute. And she was fervent in pressing the cause of her late husband, as well as the ideas of freedom and free markets to which he had devoted his life. She refused to let any slighting or denigration of Mises by his genuine or less-than-genuine admirers or disciples go unremarked or go unchastised.

Margit’s greatest achievement in the Mises industry was her wonderful memoir of her life together with Lu, a touching and romantic, as well as dramatic, story, on which she embarked after Lu’s death in 1973, and which she published three years later (My Years with Ludwig von Mises, Arlington House 1976; CFE 1984). It is notable that, unlike necessarily stiff and formal biographies from outside observers, the memory of both Lu and Margit will be kept eternally alive in this lovely valentine to a devoted marriage.

It is a blessing that Margit was able to spend her last days and months in her beloved apartment in Manhattan’s Upper West Side where she and Lu had lived since 1942. It was a cozy and elegant flat, filled with mementos, and, in recent decades, with a marvelous bust of Mises sculpted by a lady who became a family friend. For all friends of the Miseses, it is an apartment arousing memories of charming conversations, being plied with tasty sandwiches and cakes at tea parties, and of visits with Lu in his study.

Margit was a remarkable woman, who inspired great devotion in friends, neighbors, doctors, and nurses alike. For Margit, her physician, a distinguished cardiologist, thought nothing of making repeated house calls; indeed even her dentist, whom she went to for half-century, made house calls replete with drilling equipment. But although Margit was mostly bedridden the last couple of years, she had been hardier than most people around her. Like most Viennese, the Miseses were inveterate walkers and mountain-climbers; into her nineties, Margit could outwalk (or out-sprint!) people a half or a third her age. Indeed, at Margit’s memorial service, her granddaughter talked with wonder about Margit’s rapid walks that virtually put the granddaughter (“used to buses”) under the table.

One time, Margit was telling me that someone had asked her if there was anything in common between Lu, her first husband Ferdinand Sereny, and other men she had admired. “They were all elegant,” she said. And elegance is a term that springs to mind about Lu, Margit, and other products of the courtly and marvelous age of Vienna before World War I. It applies to Lu, whom Margit says in her memoir would never allow himself to be caught without his jacket, even in the hottest and muggiest weather. And to Margit herself, an actress in her youth, who when I first met her in the 1950s, was so stunningly beautiful that I was convinced that Mises had married a child bride.

Margit von Mises was the last of the Austrians, the last vestige of Old Vienna. And now Hayek is gone, and Margit is gone, and gone is that apartment on West End Avenue that held so many memories, and that held together and fostered so many of the luminaries of the Misesian movement: Larry and Bertha Fertig, Harry and Frances Hazlitt, J.B. and Ruth Matthews, Philip Cortney, Alfred and Ilse Schütz. It is vital that we keep faith with them, and honor their lives, lest they and their work and their cause be forgotten.

Margit and Ludwig von Mises were a magnificent team. In contemplating their lives, all the fuss about “family values” and “feminism” seems absurdly banal. Those who knew Margit know that she was one of the strongest-minded women they have ever met. And yet, despite or perhaps because of that fact, Margit was unsurpassed in devotion to Mises the person in life and in perpetuating his memory and his ideas after his death.

We live in an age where everyone seems to be bending to the latest wind, anxious to maintain his status as “politically correct.” Lu and Margit were of a different and far nobler cloth and of a different age. They followed their own convictions and their own star without even a thought of compromise of principle, let alone of surrender. The death of Margit von Mises, yes even at age 102, leaves us all poorer and diminished in spirit.

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First published in September 1993.

116

THE STORY OF THE MISES INSTITUTE

The Mises Institute comes at both economic scholarship and applied political philosophy from a very different perspective. It believes that “policy analysis” without principle is mere flim-flam and ad-hocery—murky political conclusions resting on foundations of sand. It also believes that policy analysis that does not rest on scholarly principles is scarcely worth the paper it is written on or the time and money devoted to it. In short, that the only worthwhile analysis of the contemporary political and economic scene rests consistently on firm scholarly principles.

On the other hand, the Mises Institute challenges the all-too-prevalent view that to be scholarly means never, ever to take an ideological position. On the contrary, to the Mises Institute, the very devotion to truth on which scholarship rests necessarily implies that truth must be pursued and applied wherever it may lead—including the realm of current affairs. Economic scholarship divorced from application is only emasculated intellectual game-playing, just as public policy analysis without scholarship is chaos cut off from principle.

And so we see the real point underlying the uniqueness of the Mises Institute’s twin programs of scholarship and application: the artificial split between the two realms is healed at last. Scholarly principles are carried forward into the analysis of government and its machinations, just as contemporary political economy now rests on sound scholarly research. From first axioms to applications, both scholarship and applied economics are an integrated whole, at long last.

And now, too, we see the real point behind the title of the Mises Institute. It is no accident that the Institute is the only organization in the United States that honors Ludwig von Mises in its title. For Ludwig von Mises, in his life and in his work, exemplified as no other man the fusion, the integration, of scholarly principle and principled application. Mises, one of the greatest intellects and scholars of the twentieth century, scorned any notion that scholarship should remain content with abstract theorizing and never, ever apply its principles to public policy.

On the contrary, Mises always combined scholarship with policy conclusions. A man of high courage, a scholar with unusual integrity, Ludwig von Mises never knew any other way than pursuing truth to its ultimate conclusions, however unpopular or unpalatable. And, as a result, Ludwig von Mises was the greatest and most uncompromising champion of human freedom in the twentieth century.

It is no wonder, then, that the timorous and the venal habitually shy away from the very name of Ludwig von Mises. For Mises scorned all obstacles and temptations in the pursuit of truth and freedom. In raising the proud banner of Ludwig von Mises, the Mises Institute has indeed set up a standard to which the wise and honest can repair.

The Mises Institute is expanding and flourishing as never before. The Review of Austrian Economics, a high level journal in the theory and applications of Austrian economics, is also the only journal in the field. It serves to expand and develop the truths of Austrian economics. But it also nurtures Austrians, encourages new, young Austrians to read and write for the journal, and finds mature Austrians heretofore isolated and scattered in often lonely academic outposts, but who are now stimulated to write and submit articles.

These men and women now know that they are not isolated, that they are part of a large and growing nationwide and even international movement. Any of us who remember what it was like to find even one other person who agreed with our seemingly eccentric views in favor of freedom and the free market will appreciate what I mean, and how vitally important has been the growing role of the Mises Institute.

The Institute’s comprehensive program in Austrian education also includes publishing and distributing working papers, books, and monographs, original and reprinted, and holding conferences on a variety of important economic topics, and later publishing the conference papers in book form. Its monthly policy letter, the Free Market, provides incisive commentary on the world of political economy from an Austrian perspective.

Furthermore, the Mises Institute now has its academic headquarters at Auburn University, where M.A. and Ph.D. degrees in economics are being granted. The Mises Institute also provides a large number of graduate fellowships, both resident at Auburn University, and non-resident to promising young graduate students throughout the country.

Last but emphatically not least, the Institute sponsors a phenomenally successful week-long summer conference in the Austrian School. This program, which features a remarkable faculty, has attracted the best young minds from the world over, and gained deserved recognition as the most rigorous and comprehensive program anywhere. Here, leading Austrian economists engage in intensive instruction and discussion with students in a lovely campus setting. Participants are literally the best, the brightest and the most eager budding Austrians. From there they go on to develop, graduate, and themselves teach as Austrian scholars, or become businessmen or other opinion leaders imbued with the truth and the importance of Austrian and free-market economics.

In addition, the Institute is unique in that instructors avoid the usual academic practice of giving a lecture and quickly retiring from the scene; instead, their attendance at all the lectures encourages fellowship and an esprit de corps among faculty and students. These friendships and associations may be lifelong, and they are vital for building any sort of vibrant or cohesive long-run movement for Austrian economics and the free society.

The basic point of this glittering spectrum of activities is twofold: to advance the discipline, the expanding, integrated body of truth that is Austrian economics; and to build a flourishing movement of Austrian economists. No science, no discipline, develops in thin air, in the abstract; it must be nurtured and advanced by people, by individual men and women who talk to each other, write to and for each other, interact and help build the body of Austrian economics and the people who sustain it.

The remarkable achievement of the Mises Institute can only be understood in the context of what preceded it, and of the conditions it faced when it began in 1982. In 1974, leading Mises student F.A. Hayek won the Nobel Prize in economics, a startling change from previous Nobel awards, exclusively for mathematical Keynesians. 1974 was also the year after the death of the great modern Austrian theorist and champion of freedom, Ludwig von Mises. Hayek’s prize sparked a veritable revival in this long-forgotten school of economic thought. For several years thereafter, annual scholarly week-long conferences gathered the leading Austrian economists of the day, as well as the brightest young students; and the papers delivered at these meetings became published volumes, reviving and advancing the Austrian approach. Austrian economics was being revived from 40 years of neglect imposed by the Keynesian Revolution—a revolution that sent the contrasting and once flourishing school of Austrian economics down the Orwellian memory hole.

In this burgeoning Austrian revival, there was one fixed point so obvious that it was virtually taken for granted: that the heart and soul of Austrianism was, is, and can only be Ludwig von Mises, this great creative mind who had launched, established and developed the twentieth-century Austrian School, and the man whose courage and devotion to unvarnished, uncompromised truth led him to be the outstanding battler for freedom and laissez-faire economics in our century. In his ideas, and in the glory of his personal example, Mises was an inspiration and a beaconlight for us all.

But then, in the midst of this flourishing development, something began to go wrong. After the last successful conference in the summer of 1976, the annual high-level seminars disappeared. Proposals to solidify and expand the success of the boom by launching a scholarly Austrian journal, were repeatedly rebuffed. The elementary instructional summer seminars continued, but their tone began to change. Increasingly, we began to hear disturbing news of an odious new line being spread: Mises, they whispered, had been “too dogmatic . . . too extreme,” he “thought he knew the truth,” he “alienated people.”

Yes, of course, Mises was “dogmatic,” i.e., he was totally devoted to truth and to freedom and free enterprise. Yes, indeed, Mises, even though the kindliest and most inspiring of men, “alienated people” all the time, that is, he systematically alienated collectivists, socialists, statists, and trimmers and opportunists of all stripes.

And of course such charges were nothing new. Mises had been hit with these smears all of his valiant and indomitable life. The terribly disturbing thing was that the people mouthing these canards all knew better: for they had all been seemingly dedicated Misesians before and during the “boom” period.

It soon became all too clear what game was afoot. Whether independently or in concert, the various people and groups involved in this shift had made a conscious critical decision: they had come to the conclusion they should have understood long before, that praxeology, Austrian economics, uncompromising laissez-faire were popular neither with politicians nor with the Establishment. Nor were these views very “respectable” among mainstream academics. The small knot of wealthy donors decided that the route to money and power lay elsewhere, while many young scholars decided that the road to academic tenure was through cozying up to attitudes popular in academia instead of maintaining a commitment to often despised truth.

But these trimmers did not wish to attack Mises or Austrianism directly; they knew that Ludwig von Mises was admired and literally beloved by a large number of businessmen and members of the intelligent public, and they did not want to alienate their existing or potential support. What to do? The same thing that was done by groups a century ago that captured the noble word “liberal” and twisted it to mean its opposite—statism and tyranny, instead of liberty. The same thing that was done when the meaning of the U.S. Constitution was changed from a document that restricted government power over the individual, to one that endorsed and legitimated such power. As the noted economic journalist Garet Garrett wrote about the New Deal: “Revolution within the form,” keep the name Austrian, but change the content to its virtual opposite. Change the content from devotion to economic law and free markets, to a fuzzy nihilism, to a mushy acceptance of Mises’s ancient foes: historicism, institutionalism, even Marxism and collectivism. All, no doubt, more “respectable” in many academic circles. And Mises? Instead of attacking him openly, ignore him, and once in a while intimate that Mises really, down deep, would have agreed with this new dispensation.

Into this miasma, into this blight, at the point when the ideas of Ludwig von Mises were about to be lost to history for the second and last time, and when the very name of “Austrian” had been captured from within by its opposite, there entered the fledgling Mises Institute.

The Ludwig von Mises Institute began in the fall of 1982 with only an idea; it had no sugar daddies, no endowments, no billionaires to help it make its way in the world. In fact, the powers-that-be in what was now the Austrian “Establishment” tried their very worst to see that the Mises Institute did not succeed.

The Mises Institute persisted, however, inspired by the light of truth and liberty, and gradually but surely we began to find friends and supporters who had a great love for Ludwig von Mises and the ideals and principles he fought for throughout his life. The Institute found that its hopes were justified: that there are indeed many more devoted champions of freedom and the free market in America. Our journal and conferences and centers and fellowships have flourished, and we were able to launch a scholarly but uncompromising assault on the nihilism and statism that had been sold to the unsuspecting world as “Austrian” economics.

The result of this struggle has been highly gratifying. Thousands of students are exposed to the Austrian School as a radical alternative to mainstream theory. For the light of truth has prevailed over duplicity. There are no longer any viable competitors for the name of Austrian. The free market again has principled and courageous champions. Justice, for once, has triumphed. Not only is the Austrian economic revival flourishing as never before, but it is now developing soundly within a genuine Austrian framework. Above all, Austrian economics is once again, as it ever shall be, Misesian.

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First published in May 1988.