What Philosophers Are Doing Now

The Philosopher Between Theory and Practical or Economic Life

Contemporary philosophy emerges more frequently in discussions than in treatises or expositions. Recently, a book on Ludwig von Mises was published, likely the most fascinating economist of the twentieth century. This work by Hülsmann serves as one of the finest introductions to the "life of economists" in the twentieth century, revealing not only the circumstances of their scholarly careers but also the landscape of possibilities for political and managerial action in a rapidly changing world. Economists of the twentieth century faced a dilemma: should they be economic philosophers, theorists crafting their Metaphysics of Money or Principles of Economic Relations, or should they transform into consultants for governments and creators of new institutions? In other words, should they become masters in the field of economics, or dedicate their lives to planning and organizing a new reality—the reality after World War I, after the Great Depression, after World War II? Ludwig von Mises was both an "economic theorist" and an "economist": this duality marks the unique essence of his figure, now deserving of a detailed biography.

The intellectual roots of Mises's theory are diverse, but Hülsmann particularly highlights the work of the most experienced individual from the Austrian School of Economics, Eugen von Böhm-Bawerk. This finance minister of the Austro-Hungarian state—a cold "imperial and royal" bureaucrat and a congenial professor—developed his own theory of costs, which stood in opposition to the Marxist framework. According to Böhm-Bawerk, when assessing production costs, and thus labor and capital relations, one must consider not only actual production but also the potential costs associated with reorienting production, attracting new investments, or altering pricing structures. Beyond the realm of surplus value exists a broader and freer world of multifaceted production, generating simultaneously profit, social effects, technological progress, and opportunities for the utilization of new technologies. One can sell a product separately or as part of a bundle, one can create custom products with prepayment; it is the characteristics of the product, rather than those of capital, that will be of paramount importance in shaping social relations.

Mises essentially attributed the same qualities to money. Money exists not only in its real forms but also in potential forms, and these surrogates of money—unsecured obligations—can facilitate market development just as much as actual money can. Throughout his life, Mises fought on multiple fronts: against the "veil theorists," for whom money was merely a veil obscuring commodity relations, and against the "monetarists," who viewed money as mere fuel for an economy disconnected from commodity substance. Mises argued that money is indeed a thing, and just as a thing is multifaceted, so too is money. Just as a thing can be put to use or left on a shelf, improved or left as is, money can be either usable or virtual. Importantly, even if money represents "fiduciary media"—that is, not backed by gold or goods—it remains as useful as an object in a cupboard that can be brought forth at any moment. Mises constantly debated with proponents of inflationary demand management and advocates of state regulation of production. One notable episode in his theoretical work occurred when many economists, following Mill, asserted that capitalism would suffer a crisis due to hourly wages not leading to increased productivity, and thus capitalism was gradually losing its advantages over socialism. An enemy of socialism, Mises contended that hourly wages do not exclude an employee's career aspirations; a worker becomes diligent when aspiring for better treatment, career advancement, and a secure old age. Consequently, people work conscientiously when they expect social rewards, which are possible when all forms of "money," whether cash or individual social guarantees, are substantial and meaningful.

Mises's biography is thus aligned with his journey toward a philosophical theory of the substantiality and tangibility of money. His character is formed from the minutiae of his life. Here is a Jewish family that received a noble title from Franz Joseph; his mother, sending him not only socks but also his favorite cigars and cognac while he was in the trenches of World War I. Here is socialist Austria, briefly joining socialist Germany, and Mises, no longer "von" ("those whom Charlemagne ennobled have had their titles taken by Karl Renner [Chancellor of Austria]"), personally seeking paper and ink for printing new Austrian money. Here he recalls his classical education in Vienna—had he not read Thucydides or Grotius, he would not have taken a critical stance against stifling bureaucracy. Here he is in Switzerland in 1938, earning a professor's salary sufficient to buy a luxury car within months. Here he escapes from Switzerland by bus, navigating rural roads around occupation checkpoints in France, while his former lover, now the professor's lawful wife, scolds the elderly Jews in the front seat for not closing the window. Here he delivers his first lecture in America, earning fifty dollars for it, while everyone before him had lectured for free. Here he travels confidently around the world, reanimating the Austrian School on American soil.

In essence, Mises transformed the social customs of economists. In Austro-Hungary, economists were often recruited to serve as bureaucrats, undertaking special assignments. Those not recruited lectured lethargically and monotonously, aware that they could not be dismissed from their positions as state officials, even if students ceased attending university and staged riots. Generally, there was an almost feudal atmosphere amid the rapid development of capitalist relations and investments. This combination of state contracts and the nationalization of the university, which had begun in the late eighteenth century in an effort to counter the influence of the Church and neighboring states, led to the unpopularity of informal circles: there were warm relations between teachers and students, who competed in scholarly pursuits, with home seminars resembling meetings in a ministry. Mises, in fact, established his circle, the Miseskreis, uniting friends, students, and like-minded individuals eager to debate day and night with both ministers and emerging market specialists.

Austro-Hungary, prior to World War I, rising as a state from the personal possessions of the Habsburgs (with symbolic succession from the Holy Roman Empire of the German Nation), was a land of investors—both domestic and foreign. Even the military bureaucracy operated not merely as a resource management office but as a bank and investment company, capable of allocating funds for the construction of new railroads. However, this bureaucratization, with its idiotic control over all aspects of life and utterly utopian attempts to forge a friendship of nations within a patchwork state, did not facilitate rational capital allocation. Thus, Austro-Hungary failed to become a global player on the political stage, wholly dependent on the German Empire, lacking the free capital that ensured stability on the world stage during the colonial era. Consequently, bureaucracy sought to impose something akin to colonial relations within the Empire, for instance, by instituting protectionist tariffs, thereby simulating the creation of free capital aimed at imperial grandeur, the construction of grand buildings in Vienna. Mises recognized how this was a dead-end path, and his entire theory constitutes a critique of state interference in the economy that simulates a form of sub-colonial sovereignty. In the "mad and roaring" 1920s, while remaining a philosopher of economics, Mises instructed his compatriots on how to work with foreign assets, developed mathematical demand models with his students, and mitigated the destructive consequences of credit by devising various currency standards. All of this enabled him to transform economic agents into a vast circle of Mises: everyone had to engage with his practices, yet no one became his enemy; on the contrary, bankers, industrialists, and bureaucrats absorbed his theory.

The impeccable Professor, even after his marriage, lived in his apartment as if it were a museum (the spirit of comfort was foreign to him), prone to outbursts over the most trivial matters, nervous yet diligent, and even chastising colleagues for the way light teaching loads corrupted everyone, became one of the foremost economists of the twentieth century precisely because he transformed economic theory from an art of war into an art of peace. Of course, he continued to fight: against socialists, against the welfare policies of the Marshall Plan (which he regarded as the ruin of Europe), and against Ayn Rand (Alisa Zinovyevna Rosenbaum, 1905—1982, the writer and founder of the ideology of "objectivism")—it is interesting that the agnostic Mises held a reverence for the mysteries of economics while despising Rand's pragmatic atheism. A humorous episode occurred when Mises emphasized in his lectures, "I never called Ayn Rand a little silly girl." Yet upon finding himself in New York, he became the architect of economics as a brilliant intellectual practice. Around him gathered not only individuals but also foundations: these foundations evolved from mere associations of volunteers into serious expert councils. If at the beginning of the century it was possible for individuals to warn about the consequences of misguided economic policies, now it was the foundations that emerged as the epistemologists of economics. This was especially crucial following the wars in Korea and Vietnam, which intensified state intervention in the economy: anti-war activism for the first time became a struggle not for socialism but for the free market. Mises opened a new epoch, one in which the activities of these foundations could not be stifled by any label: the ninth wave of history could not be contained.