[On Freedom and Free Enterprise (1956)]
Ludwig von Mises is a rara avis in this 20th century of ours, for he considers reason a valid and efficacious instrument even in the study of questions that concern economics. According to him, "any given social order was thought out and designed before it could be realized … any existing state of social affairs is the product of ideologies previously thought out … action is always directed by ideas."2
The very title of his great book, Human Action, is in and of itself both an affirmation and a denial. It indicates what, for its author, constitutes the real economic problem, which is raised by the behavior of men with respect to the things they desire — the things called wealth. And it shows that the real economic problem is completely encompassed within the study of such behavior; that it does not consist only in an analysis "of objective processes taking place quite independently of human will."3
Mises considers social organization to be dependent upon and in conformity with the very ideas that inspire it. It is merely a system of ways and means for attaining certain ends. He is convinced that the vast majority of people concur on the ends. Hence the economic problem is only that of choosing the means by which men can achieve, effectively and at the lowest cost, the results desired.
This problem constitutes an object of science and is open to only two kinds of solution — those which are effective, and those which are not. Reason — and only reason — enables us to choose between them. "Man has only one tool to fight error: reason."4
It is the task of the economist to tell the politician which system he must set up in order to give men what they want, and not the very opposite.
Such an attitude on the part of Mises sets him apart from other economists. Most of his colleagues take the social structure as a fact that cannot be changed in any respect by the will of men. The Marxists explain it as a revelation of history. The non-Marxists look upon it as the inevitable product of a technical evolution which has given rise to a capitalism of large units, and to monopolies, cartels, and trusts. Marxists and non-Marxists alike ascribe to our modern economies a rigidity which makes them almost completely immune to the price mechanism.
For both groups any doctrine basing the establishment and maintenance of economic equilibria on price movements is false, fruitless, and outdated. According to them, it is the task of the economist to discover the proper processes that guarantee economic order without resorting to spontaneous regulation. The sum total of these processes constitutes the new science of economics, which is required by the actual state of the world in which we live.
It is true — nor does Mises deny it — that our contemporary economy is more rigid than that which existed before employers' associations and labor unions had regimented a large part of the forces of production.
The essential thing, however, is that the present inelasticity of our societies is far more the result of their institutional character than it is of the nature of the techniques applied.
It is institutions established by men and wanted by them that immobilize prices, salaries, and rates of interest. It is the same institutions that lend their protection, without which the oligopolies or monopolies in their quasi-totality could never exist.
If, then, such institutions are wanted by men, it is because the economists have failed to convince them that these institutions are leading and must lead to results diametrically opposed to the ones desired and expected to be attained.
In actual fact, the characteristic rigidity of most contemporary economies, and particularly of several economies, has been made possible only by the silence of the economists. Had they but shed a revealing light on the social consequences that such rigidity could not fail to bring about, and on the privations and sufferings which it was bound to engender, the rigidity could have been neither established nor maintained.
French legislation on rents, for example, has been inspired by laudable social considerations. And yet, it has been a tremendous source of unhappiness and disorder. Anybody of good faith and with the slightest knowledge of the price mechanism could have foreseen these tragic social effects. But no! The few warnings that did foretell the ill-fated consequences have always been denied by the chorus of complacent men anxious above all not to oppose the solutions wanted by public opinion and accepted by governments.
It would be cruel to insist on learning the reasons for the practically universal renunciation of thinking. Leibnitz already indicated that "if geometry conflicted with our passions and interests as much as morality does, we would no less question and violate its laws. And this despite all the proofs offered by Euclid and Archimedes, which we would then treat as flights of fancy and believe to be full of fallacies. And in that case Joseph Scaliger, Hobbes, and others who attacked Euclid and Archimedes, would not be so bereft of supporters as they now are.5
What this philosopher said of morality applies with even more validity to political economy.
But though there may be but few minds in the field of economics who have remained loyal to Euclid and Archimedes, Ludwig von Mises undoubtedly is the most pronounced, the most efficient, and the most determined. With an indefatigable enthusiasm, and with courage and faith undaunted, he has never ceased to denounce the fallacious reasons and untruths offered to justify most of our new institutions.
He has demonstrated — in the most literal sense of the word — that those institutions, while claiming to contribute to man's well-being, were the immediate sources of hardship and suffering and, ultimately, the causes of conflicts, war, and enslavement.
No consideration whatever can divert him in the least from the straight steep path where his cold reason guides him. In the irrationalism of our era he has remained a person of pure reason.
Those who have heard him have often been astonished at being led by the cogency of his reasoning to places whither they, in their all-too-human timorousness, had never dared to go. His person and ideas have always brought to my mind the story of Mr. Teste
In the following words, one of Mr. Teste's listeners reports the sensations experienced while listening to him.
He shatters my mind with a word, and I feel like a defective vase that the potter has discarded. He is as hard, sir, as an angel. He is unaware of his own strength; he finds unexpected words that are all too true, that overwhelm people, that awaken them in the midst of great folly confronting them, all ensnared in being what they are, in the meshes of living, in foolishness. We live in comfort, each in his own absurdity, like fish in water, and we never become aware, except by chance, of how much stupidity is contained in the life of a reasonable person.6
And the same listener goes on to say,
There is in him some appalling purity, detachment, undeniable strength and light. Never have I observed such complete absence of confusion and of doubt in an intelligence that is so deeply industrious. He is awfully quiet! There can be ascribed to him no uneasiness of soul, no shadow in his heart.7
If we compare the guile of economic irrationality with the imperturbable intransigence of his lucid thinking, Ludwig von Mises has safeguarded the foundations of a rational economic science, the value and effectiveness of which have been demonstrated by his works. By his teachings he has sown the seeds of a regeneration which will bear fruit as soon as men once more begin to prefer theories that are true to theories that are pleasing.
When that day comes, all economists will recognize that Ludwig von Mises merits their admiration and gratitude. For it is he who, amidst the confusion of a science which tends to belie the reasons for its own existence, has indefatigably affirmed the rights of reason, its supremacy over matter, and its effectiveness in human action.
This article is excerpted from On Freedom and Free Enterprise: Essays in Honor of Ludwig von Mises (1956). Translated from the French by George D. Huncke.
