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Our Time Is Now

Mises Daily: Friday, December 27, 2013 by

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Forty years ago, Ludwig von Mises passed away. I believe he would be happy with what you have helped the Mises Institute accomplish.

Looking back on his career, we find so much that deserves comment. His work in Austria that helped avert hyperinflation. His flight from Europe just ahead of the Nazis, who confiscated his papers in Vienna. His struggles within a statist academia. His total reconstruction of economics. His brilliant defense of liberty. And so much more.

This year is also the 100th anniversary of the Federal Reserve’s founding in 1913. But one year earlier, when only 31 years old, Mises was already developing what would become the Austrian theory of the business cycle, which explains how government intervention and central banks like the Federal Reserve cause the boom-bust cycle.

Mises’s theory earned a respectful hearing in European circles before the Keynesian revolution of the 1930s swept the academic boards, but was all but forgotten in the Depression-fueled stampede to blame the free market for economic convulsions.

Even some of his own students surrendered to the Keynesian onslaught. From that moment on, someone like Mises would be forever an outsider.

The status of Keynesianism itself affords an interesting comparison between 1973, the year of Mises’s death, and today. After the boom of the 1960s, Washington’s central planners claimed to have used the Fed and spending to create permanent prosperity, and to have abolished the business cycle. That seemed plausible to some people in 1970.

It didn’t seem plausible in 1973. Recession had hit the United States. The Keynesian intellectuals had rather a difficult time accounting for the stagflation of the 1970s. High inflation and high unemployment were not supposed to occur simultaneously.

The Keynesians held that high price inflation called for cutting government spending and the money supply. High unemployment, by contrast, called for the opposite: more government spending and more money-printing.

But what was the Keynesian policymaker to do when faced with high price inflation and high unemployment? It was obviously impossible to do both at the same time. Keynesianism had suffered a terrible blow. The decline in Keynesian influence became evident in the economics textbooks that appeared over the next several decades.

Fast forward to the Panic of 2008, and Keynesianism was suddenly back. The economics profession had been blindsided by the financial crisis, and lacking any answers or solutions, fell back on the crudest forms of Keynesian “stimulus.”

The return of Keynesianism is one area in which conditions have worsened since Mises’s death, when it seemed Keynes had been defeated. But there is ample reason for hope. The word “Keynesian” is now used as a term of abuse by a great many informed people, and the rising generation of young scholars are looking with skepticism at the Keynesianism of their professors.

Moreover, Keynesianism is visibly failing. The unprecedented fiscal and monetary expansion that has taken place around the world should have been followed by rapid and robust recovery. It wasn’t. Unemployment remains high across the Western world. If the Keynesians are right, this should not be happening.

They have their excuses, to be sure. The stimulus hasn’t been big enough, they say. But as time goes on and recovery remains elusive, who will believe them? More and more voices will be heard suggesting that an inadequate dose of the proposed medicine is not the problem. The problem is the medicine itself.

In Mises’s day, the central bank was not the subject of debate. Americans were hardly aware of the existence of the Federal Reserve; much less did they understand how it operated, or what its effects on the economy might be.

Today it has become almost chic to oppose the Fed, both from the left and the right. The Fed’s defenders increasingly sound like the crony apologists for the old order that they are.

Much of the history of the Mises Institute, I might note, took place during the Fed chairmanship of Alan Greenspan and the period some economists called the Great Moderation. Greenspan, they said, had shown that well-considered Fed intervention would yield robust growth, low price inflation, and overall economic stability.

At that time, you could have counted on one hand, with fingers to spare, how many organizations were actively opposed to central banking. If libertarians had once opposed central banking, the vast bulk of them had long since made their peace with the creature from Jekyll Island. They gave awards to Fed officials. We were being unreasonable, they said: why, the results speak for themselves!

Indeed they do, though not in the way our erstwhile critics supposed. With our criticism of the Fed now vindicated many times over, it’s become fashionable again to oppose the central bank.

Although it is his scholarship that distinguishes Mises above all, we should also admire and attempt to emulate his tenacity in standing behind the free market and the gold standard, at a time when nothing could have been less fashionable, and when so many other defenders of the market wound up compromising or apologizing.

Today we hear people who say that the unvarnished libertarian message is too radical, too extreme for public consumption. We need to temper our statements so we will be more likely to win converts, they say.

Yet Mises was always direct, and everyone knew where he stood. And today, Mises’s influence is greater than ever, with a new generation of rising Austrian scholars eager to make use of his enormous scholarly output.

The same goes for Murray Rothbard. While the libertarians of the Beltway urge students to study and imitate economists who supported the Fed, or who proposed various programs designed to make government more efficient, the army of young libertarians that has grown up since the Ron Paul revolution wants the real thing.

They want Rothbard: his cutting analysis, his vast knowledge, his devastating prose. And, of course, the more they’re told to avoid Rothbard in favor of economists more in fashion in DC, the more they want to read him.

Mises said the causes of freedom and Austrian economics had to be advanced by a dual program. On the one hand, we need advanced scholarly work in defense of our position. Thus our work with professors, and students, too.

On the other hand, we can’t neglect business and professional leaders, indeed everyone interested, to whom we also must convey the compelling case for the Austrian School. The Mises Institute has been doing both for more than 30 years.

Many people know us for the popular work we do: our Daily Articles applying Austrian economics to the news of the day, our Mises View video series, our large social media presence, and our seminars and conferences for the general public.

But in our scholarly publishing, as with many of our books as well as our Quarterly Journal of Austrian Economics, we are advancing and developing the Austrian School itself. Our annual Austrian Economics Research Conference brings together hundreds of scholars from around the world who are working in the Austrian tradition.

Our Mises University and Rothbard Graduate Seminar for summer students continue to produce some of the brightest lights in the ever-expanding Austrian world. Our Mises Circles reach out to supporters and students.

When I started the Mises Institute more than three decades ago, I promised Mises’s widow, Margit, that I would devote the rest of my life to this important work. What I didn’t know then was that we would one day have the ability to spread the work of the Austrian School throughout the U.S. and around the world on an undreamed-of scale.

Anyone who has visited Mises.org knows what we’re doing: not only are the great Austrian classics now available to the world for free, but we also have hundreds of other books, the entire print runs of important scholarly journals, many thousands of articles applying Austrian theory to a great many important issues, and the audio and video of all the seminars and conferences we conduct at the Institute and around the world.

With the Mises Academy, we offer online teaching in a host of areas. I see it as the model for future, free-market higher education amidst the ruins of the old ways.

But we need your help to keep going.

Mises lived his most academically productive years in relative obscurity, as an unpaid visiting professor at NYU. Had he been willing to please the establishment, a man of his intellect could have chaired the department at Harvard. But he considered the cause of truth more important than the cause of his own career. The same can be said for Rothbard, and for a great many of the Austrian professors working today.

Mises was a great scholar, but he was also a great man. On the 40th anniversary of his passing, I hope you will join me in helping to carry on his legacy, thus ensuring that his sacrifices were not in vain. His work grows more significant every day, as the state continues to make inroads on our prosperity and on our liberty.

We live at a historic moment. The state’s lies are believed by a smaller percentage of the public than ever before. The Mises Institute, with our technological know-how, an unbeatable network of scholars, and the great body of work that constitutes the Austrian School, is uniquely poised to take advantage of this crucial opportunity.

I hope you will commit to help us spread the message of Mises, and train the next generations to carry forth the great edifice of truth that is Austrian economics.