14. Booms

THE YEAR 1923 WITNESSED a political paradigm shift in Austria and Germany. Previously, socialism had been an almost nondebatable ideal and inflation an uncontested means of economic policy. After 1923, most Central European intellectuals were disillusioned with the former and outright opposed to the latter. Policy debates had not only shifted topics: they had changed orientation.¹ More and more economists and other social scientists recognized that the use of government to improve social affairs was problematic. A young generation arose that learned to think more critically than their elders about government interventionism and socialist schemes. This burgeoning anti-statist movement was still a minority when it crumbled under the ascent of Hitler in early 1933, but to the very end, it had been a vigorous and growing movement. And there is no doubt that its protagonist was Ludwig von Mises.²

The year 1926 brought another improvement in Mises's good fortune. He started cooperating with the Rockefeller Foundation and established an Austrian Institute for Business Cycle Research, which allowed his young political allies—most notably Friedrich Hayek—to earn a living in economic research. In the following years, Mises also became involved with various European free-trade organizations and used the International Chamber of Commerce as a platform for networking and for promoting classical-liberal policies. But because none of his major writings had been translated into French or English, his primary influence remained limited to Germany and Austria. What could be called the first Mises Revolution took place between 1929 and 1932, during which time he became a board member of the Verein für Sozialpolitik, his works were discussed in all major economics textbooks, and more and more young economists were pursuing Misesian themes in their research.

It was also in these years that Mises completed his system of thought—at least in broad strokes—with a series of path-breaking essays on value theory and on the epistemology of economics. Had it not been for the rise of Hitler, this quiet revolution would have had a significant impact on the German world. Instead, these ideas had to wait for another place and time—the United States in the 1950s—to become the basis of a second Mises Revolution.