[The following is an excerpt from Jeff Deist's talk at the Mises Institute's recent summit in Los Angeles] Introduction Those of us who read and enjoy Mises, and he wrote so much about so many things, might well wonder what he would have to say about the state of America and the West in 2019. ...
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[The following is an excerpt from Jeff Deist's talk at the Mises Institute's recent summit in Los Angeles]
Those of us who read and enjoy Mises, and he wrote so much about so many things, might well wonder what he would have to say about the state of America and the West in 2019. After all, he was a sociologist and philosopher and political theorist as well as an economist. Surely we could use his perspective today, and so much of what he wrote was prescient and still relevant.
Of course It is always dangerous to imagine what any departed intellectual or thinker would think about today's world and today's events, and this is certainly true of Mises too. We all love to do this, though. We all want to use Mises to make our points about topic X, Y, or Z today, to confirm our own biases or bolster our arguments—and why not? I'm always mystified by facile objections to "appeal to authority"— I recognize Mises may in fact be wrong, and you, Mr. Arguer on Facebook, may in fact be right. But I doubt it.
Two problems present themselves. First, we know how difficult it is to compare eras in sports. How do we measure Babe Ruth and Mickey Mantle against Barry Bonds or Mike Trout? Mises was a man of Old Europe, born before the Great War and the fall of the Habsburgs. Even the world of New York in 1973 when he died is a long way from Woke America 2019.
Second, if we think of scholars like artists or musicians, how do we weigh their work as a whole? Do we accord more weight to his later work, representing a more developed worldview? Or do we approach his work like a rock band, where The Theory of Money and Credit was his promising freshman album and Human Action was his best and biggest seller? What were his greatest hits?
It's a very fraught question, considering his bibliography consists of nearly 20 full length books, hundreds of articles and monographs, and millions of words written over nearly six decades. It's daunting to draw simple conclusions from such a varied body of work because people change over time. And of course while brilliant and prolific thinkers should be read as authorities, as Mises certainly was regarding socialism, no mortal has the dispositive last word on any issue or topic.
But of course we should apply Mises's counsel to the world today. After all, what's the point of learning from him? He's someone you can spend a lifetime reading and learning from, someone whose work never feels dated or irrelevant. He is someone we still have to grapple with.
So we do wonder what Mises might think about all kinds of things, like the Nobel prize his protege Hayek won just after Mises's death. Or about Austria today, a shadow of its late 19th century glory. Or the collapse of the Soviet Union and the Eastern Bloc. Or about the European project, especially the Eurozone, the creation of the ECB, and the Euro itself, and the political state of Europe today. About European immigration and the Schengen Agreement. About negative interest rates and QE and crazed central bank policies in the decades since his death. About business cycles busts in 1987 and 2000 and 2008. About gold and cryptocurrency. About Trump and the current crop of Democrats, and Brexit and Merkel and Mario Draghi. About democracy as a mechanism for peaceful transfers of political power. About renewed calls for socialism in the west. About the state of Austrian school economics. And we might especially wonder about what Mises would think about the current state of the liberal project he laid out 100 years ago.
Mises the Neoliberal?
Is Misesean liberalism in retreat across the West, or has it triumphed? I suspect he would be shocked to discover he is now viewed as a central figure today's dominant ideology of neoliberalism, which we are assured has taken over everything. It's an ersatz form of liberalism, certainly, that nobody has a precise definition for. But we might take a stab at it:
Neoliberalism is loosely the basic program of late 20th century western governments (social democracy, public education, civil rights, entitlements, welfare, feminism, LGBT rights, and a degree of global governance by supra-national organizations), coupled with at least grudging respect for the role of markets in improving human life. This vision of course includes western interventionism (military, diplomatic, and economic) in all world affairs, led always by the US. Neoliberals are left-liberals who accept the role of markets and the need for economic development as part of the larger liberal program, coupled with unwavering belief in neoconservative foreign policy. Think U2's Bono, or Hillary Clinton.
In other words, neoliberalism is a mixed bag. Property— what Mises considered the distillation of the entire liberal program—certainly is not the animating force in the neoliberal world. But let us not gloss over the tepid acknowledgement by neoliberals that markets work. This was in no way established in the first half of the 20th century, when western academics told us socialism was scientific and inevitable. This alone is a huge achievement—and who in the 20th century did more to make the case for markets than Mises?
Even a cursory search of The New York Times and Washington Post—someone would have to show him how to Google this— reveals his name mentioned in dozens and dozens of articles just since 2015. These mentions usually come in the context of how economists took over politics, and thus public policy is completely captured by free-market radicals who got their crazy ideas from Mises. Just this year a University of Alabama history professor published a book titled The Marginal Revolutionaries: How Austrian Economists Fought the War of Ideas which is a leftwing homage to the continuing influence of the Austrian school among the (supposedly) anti-socialist upper echelons of business and government—with Mises as its leader.
Mises, as much as Hayek, is now one of the Left's favorite avatars for market liberalism. His name is far better known today, and his work far more widely read today, than it ever was during his lifetime. What more could any intellectual hope for? And most of the big names in economics who dominated the 20th century, men like Arthur Burns who enjoyed comfortable positions at Columbia and later chaired the Fed, are footnotes today. Mises's name and legacy, by contrast, have been elevated. Even his worst critics now see him not only as a giant not only of economics, but a hugely influential figure in western capitalism. This was not the case when he died in 1973.
The Health of Austrian Economics
Mises's posthumous renaissance reflects an upswing in the broader fortunes of Austrian economics generally. It's easy to look at the central bankers of the world and think economics is hopelessly lost, but this would miss a very strong subcurrent in the profession.
A few years ago Professor Walter Block had an email exchange with the late Dr. Gary Becker, the Nobel Prize winner at the University of Chicago. Block, a former student of Becker, lamented the treatment of Austrian scholars in certain academic journals. In response, Becker argued that much of what is good and groundbreaking in Austrian theory already has been incorporated into mainstream economics.
Becker reminded Walter that Austrians already made huge advancements by explaining the impossibility of socialist calculation, presenting a theory of entrepreneurship, and pioneering the role of time in capital and interest theory. All of this came from such a famous economist who viewed the Austrian school from an impartial and somewhat skeptical vantage point. Becker did not mention, though he hardly needed to, how the earthquake known as the Marginal Revolution was in good part Mengerian. The point is that we often underestimate the impact Austrians have had on both economics and society. It’s baked into the modern cake, so to speak, so we take it for granted.
Imagine Mises's reaction to having virtually every important Austrian treatise, book, paper, and article available free and instantly online, often translated into multiple languages. Imagine his reaction to the number of Austrian and Austrian-friendly professors teaching in economics departments and business schools across the world. And imagine his reaction to organizations like the Mises Institute dedicated to advancing his work. Certainly the Austrian school is in far better shape today than he could have imagined, even with the degradation of academia.
That's not to say he would think very highly of economics generally today. He might wonder why people like Thomas Piketty, Paul Krugman, Binaymin Appelbaum, and Noah Smith at Bloomberg are viewed as economists at all, given their lack of substantive work. He would lament the hyperspecialization of economists, none of whom are faintly equipped to write treatises. He certainly would be dismayed by the abandonment of theoretical work for mathematical and statistical modeling, and the conflation of trendy disciplines like behavioral economics with real academic work.
Central Banks and Money
What about monetary economics? I suspect he would be amazed by the sheer force of central bank money creation in the 1980s, 1990s, 2000s, and 2010s. He didn't live to see Paul Volcker's Fed Funds Rate of 20%, and he undoubtedly would view today's near-zero and negative central banks rates as un-economic forms of monetary alchemy, a central bankers' version of animal spirits. Undoubtedly he would see figures like Greenspan, Bernanke, and Draghi as untethered radicals who made things up as they went along. He would not see programs like quantitative easing as banking at all, but purely as political machinations.
Ours would not be a rational central bank world to Mises, who perhaps never foresaw how long fiat currencies could operate as political money— if powerful enough governments back them up. I also suspect he would see the business cycle theory he helped develop has not been further developed by economists who recognize its broad brush strokes as correct but lacking in detail. Yes, inflation is a monetary phenomenon, and yes central banks create cycles of malinvestment, boom, and bust-- but understanding the timing and duration is where I think Mises would want Austrians to focus today.
Academia and Socialism
But beyond economics and banking he might be appalled to see how universities in general have become what he termed "nurseries of socialism" even more today than in his time. Because today socialists don't organize in union halls or loading docks, they organize in university sociology departments. The working class failed them, so today they've turned to woke intersectional academics as the vanguard. The animating spirit of Bernie and Elizabeth Warren and Antifa lives on campus, and I think Mises would deplore this very much. I think he would especially shake his head at the rising amount of support for socialism among young people, nearly 100 years after he wrote the definitive case against it, and against the backdrop of the 20th century's collectivist failures. Surely it would be hard for someone who believed so strongly in using arguments instead of bullets to see the West today backsliding politically toward collectivism and bloodshed.
Immigration and Nationalism
Regarding immigration and the aforementioned Schengen Agreement, Mises might well wonder what the fuss is all about. Lew Rockwell points out how in Mises's young life a businessman could take a train from Vienna to London and disembark without ever showing or needing a passport. But of course early 1900s Austria was a very different time and place, before two world wars with all their dislocations, mass immigration into and across Europe, and centralized bureaurcratic welfare states
We can say with certainty he worried about the idea of polyglot countries and the plight of ethnic or linguistic minorities. That is precisely why both Liberalism and Nation, State, and Economy were radically decentralist in their approach, making the case for a liberal nationalism rooted property, self-determination, and laissez-faire at home; peaceful nonintervention abroad; and free flowing. international trade to deter the bellicose expansionism of autarky.
Our world today is not exactly full of Misesean liberal states; obviously the opposite is true. And in fact Mises was concerned about migration into illiberal states, where recent arrivals seek to change existing institutions for the worse. But don't take my word for it: Professor Ben Powell of Texas Tech University, himself a vocal advocate for completely open borders, recently wrote a paper titled "Solving the Misesean Migration Conundrum."
The problem, for Mises, lies in the fact that states, in his time and ours, are not liberal. They are interventionist. Once states interfere with economic activity, some people are able to use the state to secure economic gains for themselves at the expense of others living under that same government. Once different nations are living under the same government, they come into conflict with each or, as Mises put it, 'Migrations thus bring members of some nations into the territories of other nations. That gives rise to particularly characteristic conflicts between people.
However, the institutions of freedom are not exogenously given. Among other factors,they depend on the ideology, political beliefs, and culture of the population controlling the state. immigrants often migrate from origin countries with dysfunctional institutional environments that lack economic freedom. If the immigrants’ own belief system, was, in part, responsible for that dysfunctional system, and they bring those beliefs with them to the destination country in too great of numbers, too rapidly, to assimilate to the beliefs in the destination country, they could erode the very institutions responsible for the high productivity that attracted them in the first place. Thus, immigration itself could, in principle, turn a relatively free destination country, where Mises wouldn’t see immigrants as a problem, into a more interventionist state where immigration does create the problems Mises fears.
So while Mises certainly understood migration restrictions just as surely as he understood trade restrictions, it's an outright mistake and not just an oversimplification to insist he would unequivocally support open borders in Europe today.
There is so much more to say about what Mises would tell us today. Most of all I know he would be thrilled by this event happening today, in his honor. Of course he knew Lew Rockwell from their Arlington House days, but he never imagined a Mises Institute. He never imagined a university in the American South would become a haven for studying his work and the broader Austrian school. He never imagined a digital world which would make much of his writing, his life's work, available online to anyone around the world, almost instantaneously and free of charge. And as mentioned, he never imagined his work would be more widely read, that he would be more famous, after his death.
Yes, liberalism-- the good and true version, has unraveled. It didn't hold. We shouldn't lie about this, or pretend it hasn't happened. The West is politically illiberal today, and getting worse. But that does not counsel despair. Whether we are gaining or losing ground, whether we are winning or losing, is a matter of perspective. Mises sometimes succumbed to pessimism, as evidenced by his memoirs. Anyone who lived through the Great War, who had to flee authoritarianism twice, can be excused for this. We don't have that excuse. We have the full body of Mises's work to read and enjoy, to guide us in our thoughts and actions today. And we should share his sense of élan vital, what he called the "ineradicable craving” that compels us to seek happiness, minimize discontent, and spend our lives “purposively struggling against the forces adverse to (us).”
What would Mises think of this gathering today, in this room? I think he would be thrilled to know, 75 years after speaking here, that an audience of people still find his ideas captivating and worth considering.