Mises and Keynes; W. H. Peterson

Springs remembered, winters for gotten. Do I betray an onrush of years? For I look back, with special plea sure and reverence, at those verdant springs and golden summers when that giant of our age, Ludwig von Mises (1881-1973), walked and talked in our midst, when he shone in our lives and minds, when he gently schooled us on the meaning of praxeology and the pain of inter ventionism. Today we remember Lu Mises, we honor his name, we celebrate his Dr. Peterson is the director of the Center for Eco nomic Education and the Scott L. Probasco, Jr., Pro fessor of Free Enterprise at The University of Tennes see at Chattanooga. This article is reprinted and extended from a paper delivered at the September 10 and 11, 1981, confer ence at Hillsdale College, Hillsdale, Michigan, com memorating the centenary of the birth of Ludwig von Mises. 142 birth, we glory in his truth, we mar vel at his lonely and courageous struggle against heavy odds. The question remains, however, will the world remember? And in that ques tion, I have, if you will, a charge for you, his successors here on this earth.

Let me defer that charge to the end of my remarks. And let me borrow some lines from the 18th-century English poet, Wil liam Cowper, so as better to express my feelings at this moment: What peaceful hours I once enjoy'd! How sweet their mem'ry still! But they have left an aching void, The world can never fill. Our world is a perilous placeas much, I believe, as any time in hu man history. Look about you. Record high interest rates. A crime rate that has more than tripled in the last two decades. Federal transfer payments at some $400 billion yearly. Eight MISES AND KEYNES 143 million unemployed. Abroad, the French vote in socialism ... the Thatcher government in Britain contends with the IRA, rioting in the streets and three million unem ployed ... The Soviet Union men aces Poland ... Soviet advisers and Cuban troops infect Angola and Ethiopia ... Iran disintegrates. We Shapethe Future Still, there lives the spirit of Mises, this defender of human liberty and free enterprise, this leader of the Austrian School of economics, this foe of communism and intervention ism. So the die is not cast. Weare not, after all, prisoners of the future.

The future is what we, all of us, each of us, make it. I am reminded of the opening lines of Charles Dickens' Tale of Two Cities: It was the best of times, It was the worst of times, It was the age of wisdom, It was the age of foolishness ... It was the spring of hope, It was the winter of despair. So I repeat my question: Will the world remember Mises and what he stood for? Or will it continue to em brace, more or less,· the philosophy of that other, if misperceived, colos sus in this century, that purveyor of inflationism and interventionism, John Maynard Keynes? Let me couch these reflections, then, in the framework of the world that lies behind and before us, for Keynes pushed credit expan sion or his more formalistic con cept of the~ump-priming multi plier that wo~ld furnish national income suHicient to yield full employmentl my remarks iIljvolveboth retrospect and prospect. I speak of t~o revolutions: the Keynesian Revplution, which you all know about, ~ith its handiwork of inflation and o~her political and eco nomic trauma all about us; and the Misesian Revolution, which I hold is incipient but gtpwing, which may yet win for us a new birth of freedom and free enteJl>rise. Straws in the wind: Of late t~e American, South ern and Western Economic Associa tions hold-u:Q.precedentedly-pan els on Austrian economics at their annual meetings.

I remembet Lu Mises in three courses I tooki under him at New York University's Graduate School of Business Administration in the early 1950s. The courses were "So cialism and~he Profit System," "Government Control and the Profit System," and "Seminar in Economic Theory." (l attended the seminar many times af~er I was graduated.) In each cour,e he carefully estab lished, in a M~ngerian methodolog ical sense, the iprimacy of the indi144 THE FREEMAN March vidual and the indispensability of freedom in the marketplace. His fo cus was ever on social cooperation springing from individual human action, in turn springing from sub jective ends and limited means. He denied the concept implied in much of modern macroeconomic theory, that of standardized, homogenized human beings, of human beings amounting to so many mindless in terchangeable units. He concurred with Adam Smith's put-down of that universal omnipresent, omnipotent economic policy maker, who "wise in his own conceit," seems ... to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board; he does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, ev ery single piece has a principle of motion of its own, altogether different from that which the legislator might choose to im press upon it.1 Thus Mises started with the prax eological premise that man is a being unique in the animal kingdom, a being who alone has a vision of the future, a being possessed of abstract reasoning power and a broad range of subjective values, a being whose ends and means, whose thought and' action, are tightly integrated into cause and effect, a being whose human action is therefore always pur poseful and rational if not always logical and effective, a being who therefore belies the simplistic no tion of homo oeconomicus, of "eco nomic man," of a being driven to make the greatest possible material or monetary profit. All this was sub sumed under the title of his 900-page magnum opus, Human Action, first published in 1949.2 A Man of Influence I remember Mises the man in his tastefully decorated apartment on West End Avenue. There Margit and Lu kindly had Mary and me to din ner and occasionally our children, Mark and Laura. There we enjoyed the company of people like the Fer tigs, Hazlitts, Reads, Cortneys, Petros, Koethers and others. The parties were always sparkling af fairs, ever graced with the enchant ing beauty of Margit and the courtly charmofLu.

I remember the Mises seminar, first in the Wall Street area and later on Washington Square. I remember some of the Mises seminarians like Henry Hazlitt, Lawrence Fertig, Is rael Kirzner, Murray Rothbard, Ralph Raico, Robert Anderson, Hans Sennholz, Laurence Moss, George Reisman, George Koether, Sylvester Petro, Toshio Murata, Edward Fa cey, Leonard Liggio and Bettina and Percy Greaves. I remember Mises at meetings of 1982 MISES AND KEYNES 145 the Foundation for Economic Edu·· cation in Irvington, New York, with such FEE people as Leonard Read, Ben Rogge, Charlie Curtiss, Paul Poirot, Frank Chodorov, Ed Opitz, Bob Anderson and George Roche. 1 remember Mises at meetings of the Mont Pelerin Society with such stalwarts-some of them Mises' own students-as Friedrich Hayek, Fritz Machlup, Gottfried Haberler, Mil·· ton Friedman, John Van Sickle, Wilhelm Ropke, Bill Hutt, Phil Cortney, Albert Hahn, Jacques Rueff, Jim Buchanan, Frank Knight, George Stigler, Arthur Shenfield, Arthur Seldon, Ralph Harris, Gor·· don Tullock and John Davenport, among many others.

Again, I remember Mises the man and very much the individual. 1 re·· member his poise, his bearing, his European graciousness, his world view of things, his tremendous com·· mand of history and philosophy. I remember his kindliness and under·· standing to graduate students, even when they put inane questions to him. One such question in the 1960B followed his discussion of the infla tionary implications of deficit fi·· nance. He was then asked why Pres· ident Lyndon Johnson couldn't have both "guns and butter." But he can have both, replied Mises, adding with a twinkle in his eye, "ifhe is willing to pay for them."3 Yet I also remember as part of my intellectual development anothe:r name, another figure, a figure writ large by the: media and intelli gentsia, but one 1 never met, one whose thinking was ofa genre wholly alien to Lu's-Uohn Maynard Keynes (1883-1946). ] remember the name of Keynes first cropping up during the Great DepJressionin an econom ics course at the William L. Dickin son High Schbol in Jersey City in the late 1930s'and more often in my undergraduat¢ economics courses at New York Un~versity and graduate courses at Columbia University. The references wete reverential. Keynes was a savior. i He saved capitalism from itself-don't you see!

John MaynardKeynes Keynes was a sometime prophet, too. In 1935, he sent a note to George Bernard Shaw saying, "I believe myself to be writing a book on eco nomic theory Whichwill largely rev olutionize-not, 1 suppose, at once but in the course of the next ten years-the w~y the world thinks about econom~c problems."4 This is one Keynesian prediction that was right on the mark. Keynes the man is also of interest. Roy Harrod, his biographer, partly attributes Keynes' personal success to his lifelong "abounding and un failing enthusiasm."5 He made a for tune speculat~ng in financial mar kets, a lot ofit!on behalf of his school, King's College at Cambridge Uni versity. He i was a flamboyant 146 THE FREEMAN March kingpin in that snobbish, elitist, literary-intelligentsia group-the Bloomsbury Set. He married Lydia Lopokova, a prima ballerina of Di aghilev's Russian Ballet. He took pleasure in art, opera, drama and literary works. He enjoyed bridge.

He delighted in taking issue with professional economists and prime ministers, needling them left and right. In 1942 he was raised to the English peerage by King George VI. What a name to conjure with, this Keynes, this global architect, this messiah who, like Julius Caesar, did bestride the world and shook it to its very foundation and shakes it still with his legacy of tremendous infla tion and political trauma. Witness the plight of Western Europe today. Of America. Of Western Civilization itself. Keynes, you recall, from his Gen eral Theory of Employment, Interest and Money, published in 1936, had the answer to the Great Depression. The answer was, in a phrase, de mand-management, which really amounted to - eureka! - demand creation, Le., income-creation. MacroEconomics Keynes dwelt on macro-demand, on the aggregate national demand for goods and services that deter mines, supposedly, the level of na tional employment and, conversely, unemployment. He further sup posed that central governments could henceforward fine-tune demand to the level of "full employment"

through the magic dial of a "contra cyclical budget." That is, central governments were to run surpluses in good times and deficits in bad times. In short, government was to become the great equalizer, the bal ancing wheel when demand was de ficient, the knight in shining armor who would neatly banish joblessness forever. Keynes and government had to come to the rescue of unplanned capi talism, for-he reasoned-are not the act of saving and the act of investment two entirely different and dangerously unrelated activities, with oversaving, underinvestment and consequent mass unemploy ment likely developments?6 But of course. So to kill off over saving, heavy death duties and pro gressive income taxes were just the thing for wealthy countries like En gland and America. Keynes wrote that economic growth, "far from being dependent on the abstinence of the rich, as is commonly sup posed, is more likely to be impeded by it."7 Consumer and capital de mand would also have to be con trolled by the wise men in Whitehall or Washington: "The State will have to exercise a guiding influence on the propensity to consume" and achieve "a somewhat comprehensive social ization of investment."8 To bring off his call for govern1982 MISES AND KEYNES 147 mental demand-management, for his reconstitution of the nature of in come, Keynes sought to destroy Say's Law, the idea behind today's supply side economics, the idea that supply creates its own demand, the idea that goods and services are ulti mately paid for by other goods and services, the idea that consumption is strictly a function of production, the idea that a general overproduc tion of all commodities is simply im possible.

Pump-Priming How, then, would any deficiency in "full employment" income be met? No, not through sweaty production, nor through grubby capital forma tion, nor through that outworn prin ciple, Say's Law. Instead, Keynes pushed credit expansion or his more formalistic concept of the pump priming multiplier that would fur nish national income sufficient to yield full employment. So let the printing presses roll. In his puckish way, perhaps reflecting his admira tion for his friend and wit, George Bernard Shaw, Keynes wrote: If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enter·· prise on well tried principles of laissez·· faire to dig the notes up again ... there need be no more unemployment and, with the help of the repercussions, the real in·· come of the community, and its capitaJl There lives the spirit of Mises, this defender of human liberty and free enterprise, this leader of the Austrian School of eco nomics, this ifoe of communism and interventionism.

wealth also, would probably become a good deal greater than it actually is.9 Wonderment emerges from this reading of Keynes: Is income, at least initially, only pieces of fancy colored paper, greenjn this-country, orange in Britain? Can government print wealth? Why not? Yet more wonderment: Is capital ist efficiency really the road to sur vival? Why ndt make-work? Public works? Lofty ipublic monuments? Listen to Keynes again in his wag gish tongue: Ancient Egypt was doubly fortunate, and doubtless owed to this its fabled wealth, in that it possessed two activities, namely, pyramid-building as well as the search for precious metals, the fruits of which, since they could not serve the needs of many by being consumed, did not stale with abundance:. The Middle Ages built cathedrals and ,sang dirges. Two pyra mids, two mass~s for the dead, are twice as good as one; jbut not so two railways from London to ¥ ork. 10 Obviously in such a scheme of things there i$ not much room for a typical effici¢ncy-minded, profit seeking capitalist. Clearly this par148 THE FREEMAN March asite would have to be shipped off to Siberia or at least put out to pas ture. Thus Keynes proceeded to call for "the euthanasia of the rentier"

and consequently for "the euthana sia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital."ll Keynes went on in this let's-expropriate-the expropriators vein to declare, bra zenly if not logically: "Interest today rewards no genuine sacrifice ... [for] there are no intrinsic reasons for the scarcity of capital."12 With such notions at large, I think there's no question that Keynes greatly helped launch this age of economic planning and the Welfare State. Interestingly, he even looked on the rise of totalitarian states as countries lending themselves more readily to the application of his principles. According to his fore word to the German edition of the General Theory, he wrote on Sep tember 7,1936: The theory of aggregate production, which is the point of the following book ... can be much easier adapted to the conditions of a totalitarian state [eines totalen Staates] than the theory of pro duction and distribution of a given· pro duction put forth under conditions of free competition and a large degree of laissez faire. This is one of the reasons that jus tifies the fact that I call my theory a gen eral theory. 13 As you know, the General Theory was a roaring success around the world. Somehow, though, theory and experience didn't jibe. In the ensu ing 45 years of the Keynesian Rev olution, worldwide central govern ment deficits-and inflation prolifera ted as never before. As I previously observed, political tor ment or painful economic tradeoffs have become commonplace the world over, today as much as ever, or more so. This is the legacy of Keynes.

Yet, as I noted earlier, there is a ray of hope and the highest intelli gence in the thinking of the man whose lOOth birthday we celebrate today. As Keynes stood to the left, so Mises stood to the right-and for the right. While Keynes would arm the government with extraordinary peacetime powers-oblivious to the Actonian principle that power cor rupts-Mises called for limited, non interventionistic government. Mises wrote: "In stark reality, peaceful so cial cooperation is impossible if no provision is made for violent pre vention and suppression of antiso cial action on the part of refractory individuals and groups of individu als."14 The Role of Government Mises took exception to the oft-re peated phrase that government is an evil, although a necessary and in dispensable evil. In The Ultimate Foundation of Economic Science, he reminded us: "Government as such is not only not an evil but the most 1982 MISES AND KEYNES 149 necessary and beneficial institution, as without it no lasting social coop·· eration and no civilization could be developed and preserved. "15 Even so, in the face of modern ten·· dencies toward greater empower ment and even deification of govern·· ment and state, Mises noted: "It is good to remind ourselves that the old Romans were more realistic in symbolizing the state by a bundle of rods with an ax in the middle than are our contemporaries in ascribing to the State all the attributes of God."16 In like manner, Mises opposed Keynes' attempted overthrow ofSay's Law, pointing out that with regard to ever-scarce economic goods there can be only relative overproduction"

Surpluses and shortages are short·· lived, savings and investment con·· verge-thanks to the sensitivity of the price mechanism, including in·· terest rates. Commodities are ulti .. mately paid for, not by money, but by other commodities-by, in other words, work, production, the erea·· tion of wealth. Money is, yes, a com.. monly used medium of exchange; it plays-or ought to play-only an in-· termediary if vital role; but it is not a tool or plaything of governments. Mises accordingly excoriated the Keynesian mentality denying Say's Law so that nearly all "governments are now committed to reckless spending, and finance their deficits by issuing additional quantities of unredeemable paper money and by boundless credit expansion."17 He derided "the p.ew prophet of infla tionism" that people saw in Keynes.18 He thought li~tle of the Keynesian "miracle" of ~urning "a stone into bread," as Keynes himself described credit expansipn on AprilS, 1943 in his Paper of the British Experts. 19 Courage and ~ntegrity The courage!and integrity of Mises can be seen in an incident during a meeting of the, Mont Pelerin Society in Seelisberg,·, Switzerland in 1953.

Mises express~d concern that some of the MPS members themselves were becoming inadvertently in fected by the virus of intervention ism-state ownership of transport, social insurance, minimum wages, contracyclical fiscal policy, etc. "But what would you do," a mem ber asked hilIl, "if you were in the position of our French colleague, Jacques Rueff/' who was present at the meeting a~d at the time respon sible for the fiscal administration of Monaco. "Suppose there were wide spread unemployment and hence famine and nevolutionary discon tent in the pr~ncipality. Would you advise the. goternment to limit its activities to police action for the maintenance of order and the pro tection of priv~te property?" Mises stood fast. He replied: "If the policies of nonintervention pre vailed-free trade, freely fluctuat150 THE FREEMAN March ing wage rates, no form of social in surance, etc.-there would be no acute unemployment. Private char ity would suffice to prevent the ab solute destitution of the very restricted hard core of unemploya bles."20 Again, Mises had no taste for the Keynesian notion of a "contracycli cal budget" so as to maintain "effec tive demand" and hence "full em ployment." He regarded the "G" in the Post-Keynesian "full employ ment" formula of Y = C + I + G (National Income = Consumption Spending + Investment Spending + Government Spending) as about the most unstable, inflationary, politics ridden, and unscientific balancing wheel that the economic managers could employ. For one thing, the for mula ignored the political propen sity to spend and spend, good times or bad. Moreover, it assumed the "pretense of knowledge," the statis tical or mathematical measurability of the unmeasurable, for how much consumers and businessmen will spend in year X is not given to the mind of man. Most grievously, it ig nored myriad market-sensitive cost price relationships, especially the proclivity of trade unions and mini mum wage laws to price labor out of markets-i.e., into unemployment.

Thus Mises held that Keynesian theory in practice leads, through fits of fiscal and monetary expansion, to inflation, controls, and ultimately stagnation. Further, "G" so used, generally meant the secular swell ing of the public sector and shrink ing of the private sector-a trend that spelled trouble for human lib erty. The Theoryof Money In a way, Mises anticipated and rebutted the 1936 Keynesian "gen eral theory" a quarter-century ahead of Keynes: In his 1912 work, The Theory of Money and Credit, Mises contended that forced-draft credit expansion, not so-called "mature capitalism," carried the seeds of boom and bust. 21 Here Mises praxeologi cally tied individual subjective val ues to price determination and to the quantity theory of money (but in ways much less mechanistic than in other schools of thought).22 In other words, he integrated· the supply of and demand for money to marginal utility theory. And he saw that gov ernment, Keynes to the contrary, has no magical money save what it taxes or borrows from the people. As he said in Human Action: At the bottom of the interventionist ar gument there is always the idea that the government or the state is an entity out side and above the social process of pro duction, that it owns something which is not derived from taxing its subjects, and that it can spend this mythical some thing for definite purposes. This is the Santa Claus fable raised by Lord Keynes to the dignity of an economic doctrine and 1982 MISES AND KEYNES 151 Long before Ralph Nader made consumerism a household name for Big Business supposedly bossing and doing in the con sumer, Mises propounded the doctrine of consumer sover eignty.

enthusiastically endorsed by all those who expect personal advantage from govern·· ment spending. 23 Of course Mises covered the world of human action, saying much out-· side of critiques of Keynesian doc-· trine. For example, long before Ralph Nader made consumerism a house·· hold name for Big Business suppos·· edly bossing and doing in the con·· sumer, Mises propounded the doctrine of consumer sovereignty, declaring: The direction of all economic affairs is in the market society a task of the entre·· preneurs. Theirs is the control of produc·· tion. They are at the helm and steer the ship. A superficial observer would be,· lieve that they are supreme. But they are not. They are bound to obey uncondition· ally the captain's orders. The captain is the consumer. Neither the entrepre·· neurs nor the farmers nor the capitalists determine what has to be produced. The· consumers do that. If a businessman does not strictly obey the orders of the public as they are conveyed to him by the struc ture of market prices, he suffers losses, he goes bankrupt, and is thus removed from his eminent position at the helm.

Other men who.did better in satisfying the demand of the consumers replace him. 24 Again, Mises held that censorship and drug control flow from the same interventionistic mentality. From Human Action: Opium and morphine are certainly dan gerous, habit-forming drugs. But once the principle is admitted that it is the duty of government to protect the individual against his own foolishness, no serious objections can be advanced against fur ther encroachments. A good case could be made out in favor of the prohibition of alcohol and nicotine. And why limit the government's benevolent providence to the protection of the individual's body only? Is not the. harm a man· can inflict on his mind and soul even more disas trous than any' bodily evils? Why not prevent him from reading bad books and seeing bad plays, from looking at bad paintings and statues and from hearing bad music? The mischief done by bad ideologies, surely, is much more perni cious, both for the individual and for the whole society, Uian that done by narcotic drugs. 25 To be sure,! many contemporary economists felt Mises was entirely too impolitic, ~oo adamant, too pure, too uncompromising with the real world on its ~erms and values. He lived in an i~ory tower, they said, and was simpj~y not attuned to the way the worlp works. In contrast, Keynes was seen as not only the Great Redee:mer but as a hard152 THE FREEMAN March headed realist, the pragmatist who knew how to translate politics and economics into practical action.

Unheraldedand Unsung The world did not take kindly to Ludwig von Mises, at least not while he was alive. Hayek reminds us that Mises never held an important chair of economics while he remained in his native Austria. A full professor ship at the University of Vienna was always denied to him. 26 As so it was in America that the greatest aca demic distinction that Mises could obtain was to have been a "visiting professor" at New York University. In fact, Mises "visited" that univer sity for 24 years-just under a quar ter of a century-with his salary never originating from the univer sity but from foundations and friends. Worse, his prolific writings and sub stantial contributions to the history of thought were, for the most part, ignored by the economics profession. Yet here was a man who made momentous discoveries in the field of economics. These included his pulling together monetary theory and marginal utility theory, his log ical proof that without market-de termined "economic calculation" so cialism was doomed to failure, and his insight that economics is a sub set, albeit a very large subset, of the broader field of praxeology, the sci ence of human action. Momentous contributions these, yet little recognition or stony silence from his professional peers or the world at large. As Henry Hazlitt comments: Anyone of these contributions, taken singly, would have entitled him to a high place in the history of economic thought; taken together, they made him the fore most economist of his generation. 27 To be sure, in 1969, thanks in large measure to Fritz Machlup, the American Economic Association named Mises a "distinguished fel low." In 1963 New York University awarded him an honorary doctorate of law, thanks in large measure to Lawrence Fertig, then a trustee of the university. And earlier Oskar Lange, then of the Universi ty of California and later chief economic planner in Poland's Politburo, even proposed a statue of Mises for hav ing directed socialist attention to the problem of economic calculation-a still very much unsolved problem in socialism, by the way. So here and there fame flickered for Mises.

Keynes, on the other hand, was lionized the world over and even el evated to the nobility-Lord Keynes. Doctoral dissertations and text books galore, literally in dozens of languages, echo his theories. In this country, Nobel Laureate Paul A. Samuelson's thoroughly Keynesian ized Economics, first published in 1948, translated into many lan guages, and now in its 11th Ameri can edition, is still going strong. 28 Samuelson has molded the thinking 1982 MISES AND KEYNES 153 of generations of Americans and non Americans, many of them now in positions of influence and power. LookingAhead But what of the future? Let's take a leaf from Edward Bellamy's Look ing Backward: 1887-2000. Let's suppose all of us here today achieve the turn of this millennium, that we reach New Year's Day in the year 2000, that we then look backwards. Will we, at that point in time, be able to say that the world perceived two giants on the stage during the 20th century-one, if you will, to the right, the other to the left, one a genuine giant, a genius of the rank of Aristotle, Shakespeare, Newton and Adam Smith, the other a pseudo giant, a messianic inflationist?

One giant speaks of the dignity of the individual, the ethic of work, the concept ofpersonal responsibility, the sanctity of contract, the sovereignty of the consumer, the limitation of the state, the necessity of a gold stan dard, the cooperation of society through individualism, the idea of world peace through. world trade, the efficacy and democracy of the mar ket, the bond between freedom and free enterprise-the fact that they are inseparable, that one without the other is impossible. The other giant-the pseudo giant-speaks of the thrift of the rich as aggravating the distress of the poor, the antisocial· nature of the hoarding of money, gold as a "bar barous relic," the stock market as a gambling casiI1o, the job of govern ment to control and direct invest ment, the duty 'Ofthe state to reduce the inequality of income and wealth, the source of real value as labor con tent, the idea that public debt is of no consequence since "we owe it to ourselves. "

Which of these two men will his tory accord the recognition of hero of this age? That is why I have reserved my charge to you. until now. Whether the remaining fifth of this century is to continue to l>e the age of Keynes or the beginning of the age of Mises remains to be s~en, but economic ed ucationas Leonard Read will tell you-is not a passive thing. It takes effort-very aetive effort. Capital ism does not destroy itself, Mises re minded us. Instead people attempt again and again to undermine or overturn it "because they expect greater benefits from socialism or interventionism. "29 Those attempts must be opposed. Yet opposition has been relatively reeble throughout this tumultuous cenjtury,especially on the part of the inteJligentsia, who by and large have e~hibited what Mises called an "anti -capitalist mentali ty."30 As Mises himself wrote in a somber mood in 1940: Occasionally I entertained the hope that my writings would bear practical fruit and show the way for policy. Constantly 154 THE FREEMAN I have been looking for evidence of a change in ideology. But I have never al lowed myself to be deceived. I have come to realize that my theories explain the degeneration of a great civilization; they do not prevent it. I set out to be a re former, but only became the historian of decline. 31 Hence my charge: I hold it as the duty of each and everyone of you to read, to think, to speak, to write, to realize that we are the descendants of, in Hayek's words, "a great radi cal,"32of a genius whose vision, whose light, whose torch should-indeed must-be passed on.

It is up to us, the living, not only to glory in the potential of man and reason but to stand up and speak out-as Lu Mises stood up and spoke out-for freedom and free enter prise, for the preservation of West ern Civilization itself. @ -FOOTNOTESIAs quoted by E. G. West, Adam Smith (In dianapolis: Liberty Press, 1976), pp. 118-119, from Adam Smith's The Theory of Moral Sen timents (1759). 2Available in a third revised edition from Contemporary Books, Inc.; 180 North Michigan Avenue, Chicago, Ill. 60601. 3Personal recollection. 4Quoted from Roy Harrod in his The Life of John Maynard Keynes (New York: Harcourt, Brace, 1951), p. 462. 5Ibid., p. 648. 6Cf. John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1954), pp. 64-65 and 84 85. 7Ibid., p. 373. 8Ibid., p. 378. 9Ibid., p. 129. lOIbid.,p. 131. llIbid., p. 376. 12Idem. 13From a translation by Robert H. Beebe and Mabel E. Na:rjes of the foreword to the German edition (Duncker & Humblot, Berlin and Mun ich, 1955).

140p. cit., p. 719. 15(Princeton, N.J.: Van Nostrand, 1962), p. 98. 160p. cit., idem. 17From the Mises contribution, "Lord Keynes and Say's Law" in Henry Hazlitt, ed., The Crit ics ofKeynesian Economics (Princeton, N.J.: Van Nostrand, 1960), p. 318. 18Ibid.,p. 306. 19Quoted by Mises, idem. 2°Paraphrased from the William E. Rappard contribution "On Reading von Mises," in Mary Sennholz, ed., On Freedom and Free Enterprise (Princeton, N.J.: Van Nostrand, 1956), pp. 18 19. 2ICf. Mises, The Theory of Money and Credit (New Haven: Yale University Press, 1953), pp. 14-15. 22Cf. Lionel Robbins in his 1934 introduction to the English ed., ibid., p. 13. 230p. cit., p. 744. 24Ibid.,pp. 269-70. 25Ibid.,pp. 733-34. 26See the Hayek contribution to Tribute to Mises, published by the Mont Pelerin Society at its Brussels general session, 1974, p. 5. 27Back cover, Mises, Notes and Recollections (South Holland, Ill.: Libertarian Press, 1978).

28New York: McGraw-Hill, 1980. 29Notesand Recollections, Ope cit., p. 115. 30Cf. The Anti-Capitalistic Mentality (Princeton, N.J.: Van Nostrand, 1956). 3INotes and Recollections, Ope cit., idem. 32See Hayek's tribute to Mises in Margitvon Mises, My Years with Ludwig von Mises (New Rochelle, N.Y.: Arlington House, 1976), p. 190.