Speeches and Papers

Encouraged by the success of Human Action, Mises turned again to fighting the prevailing ideology of interventionism. On April 18, 1950 he attended a reception of New York's University Club held in honor of the author of Human Action, and addressed the audience in an after-dinner speech on “The Economics of the Middle-of-the-Road Policy”.³⁶ Two weeks later, the lecture was printed in the Financial and Commercial Chronicle, and at the end of the year, Frederick Nymeyer printed one thousand copies of it as a pamphlet for his campaign to counter the growing socialism among his fellow Calvinists.

Mises went on to write a series of articles on various aspects of interventionism, which he published mainly in three journals: Commercial and Financial Chronicle, Plain Talk, and The Freeman. These pieces both drew on the success of Human Action and spurred further interest in the book within the grassroots libertarian movement. Yet Mises certainly harbored no illusions about their short-run impact. The libertarian tradition was old in America, and it was still strong, but he was well aware that current trends were eroding it relentlessly: “If interventionism continues to be the policy of the U.S., this country will before long go outright totalitarian.”³⁷ This concern was soon confirmed by the policies adopted in the wake of the Korean War. When war broke out in the fall of 1950, the U.S. government immediately reinstituted the wartime regime of price controls and regulations.

In the spring of 1950, Mises attended a conference dedicated to analyzing the impact of the current Korean War mobilization on the American economy. The conference took place on April 5–8 in White Sulphur Springs, West Virginia and was sponsored by the William Volker Fund.³⁸ He then wrote a lengthy paper for the 1951 Mont Pèlerin Society meeting in Beauvallon. Its subject was the nature of entrepreneurial profit and loss, which, Mises explained, resulted exclusively from the relative quality of entrepreneurial decision-making and therefore could not possibly be abolished through legislation or any other form of government intervention. He also demonstrated the social utility of profit and loss: profits direct resources into those hands that use them in the way most desired by consumers; losses help eliminate incompetent entrepreneurs, thus preventing a waste of resources. The work was ready by early June and Mises sent it to Nymeyer.³⁹ His Calvinist friend immediately recognized its suitability for widespread dissemination. Even before the Mont Pèlerin Society meeting began, Nymeyer had agreed to publish the paper and set out to print 5,000 copies, of which the Volker Fund immediately ordered 1,500 copies.⁴⁰

In his renewed effort to combat interventionism, Mises began by writing on such topics as middle-of-the-road policies, inflation, and profit and loss rather than free trade or direct foreign investments. He believed that it was important to target domestic interventionism. To one correspondent in Sweden, who sought to launch a campaign for free trade, Mises explained why this campaign could only be based on a preceding campaign focused on domestic policies:

One could take into consideration the abolishment of protectionism in the time of Cobden and Chevalier, as freedom of commerce existed within each state, or it was at least on its way toward being established.

Things are very different in the age of interventionism. Each country has a system of varying privileges for individual interest groups (pressure groups). None of these measures would work if foreign countries were to freely supply the domestic market of this country. Keeping away foreign competition is for this reason an indispensable complement to domestic economic policy.

U.S. representatives occasionally indulge in talk of free trade. This is pure illusion. American agricultural policies—parity prices, subsidies, limitation of crop surfaces, destruction of supplies (potatoes!), among other things—would collapse overnight if foreign imports were freely allowed into the country. Can you imagine a present-day England or present-day France with a regime of free trade?

The more a country proceeds toward comprehensive control of all business activities, the more it must close itself to foreign countries. The battle for free trade must therefore first attack domestic protectionist measures.⁴¹

Of course this does not mean that he would now downplay the importance of free trade. He discussed it in his lectures and occasionally also in correspondence. A master of concision, Mises sometimes addressed the point better in correspondence than in his books. For example, in response to the perennial question of whether free trade would cost American jobs, he replied:

Wages are cheaper in almost all foreign countries than they are in this country. But total costs of production are for most commodities—practically for all manufactured goods—lower in this country than they are abroad. What counts in competing on the market is not the height of one item of the total bill of costs, but total costs of production.

There are, of course, some minor and less important branches of manufacturing which under free trade would lose a part of their customers to foreign competition. But such an increase of imports can, other things being equal, only occur if there is to some extent an increase in American exports. If the Swiss are “flooding” America with watches, America must “flood” Switzerland with some other goods as payment for the increased amount of Swiss watches received. For the Swiss do not give the watches away as gifts. They are selling them.⁴²