In his monetary theory, Mises revived the long forgotten British Currency School principle, prominent until the s, that society does not at all benefit from any increase in the money supply, that increased money and bank credit only causes inflation and business cycles, and that therefore government policy should maintain the equivalent of a percent gold standard. The problem is that inflationary bank credit, when loaned to business, masquerades as pseudo-savings, and makes businessmen believe that there are more savings available to invest in capital goods production than consumers are genuinely willing to save.
Hence, an inflationary boom requires a recession which becomes a painful but necessary process by which the market liquidates unsound investments and reestablishes the investment and production structure that best satisfies consumer preferences and demands.
The policy prescriptions for business cycles of Mises-Hayek and of Keynes were diametrically opposed. During a boom period, Mises counseled the immediate end of all bank credit and monetary expansion; and, during a recession, he advised strict laissez-faire, allowing the readjustment forces of the recession to work themselves out as rapidly as possible. Not only that: for Mises the worst form of intervention would be to prop up prices or wage rates, causing unemployment, to increase the money supply, or to boost government spending in order to stimulate consumption.
For Mises, the recession was a problem of under-saving, and over-consumption, and it was therefore important to encourage savings and thrift rather than the opposite, to cut government spending rather than increase it.
Ludwig Von Mises and the Human Action Shift in Economics
It is clear that, from on Mises was totally in opposition to the worldwide fashion in macroeconomic policy. Mises developed the article into his book Socialism , a comprehensive philosophical and sociological, as well as economic critique which still stands as the most thorough and devastating demolition of socialism ever written. Matthews, to a Misesian position and to opposition to all forms of socialism.
In adition to setting himself against all the political trends of the twentieth century, Mises combated with equal fervor and eloquence what he considered the disastrous dominant philosophical and methodological trends, in economics and other disciplines.
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Published in an era when economists and governments generally were totally dedicated to statism and Keynesian inflation, Human Action was unread by the economics profession. Finally, in Mises published his last major work, Theory and History , which, in addition to refutations of Marxism and historicism, set forth the basic differences and functions of theory and of history in economics as well as all the various disciplines of human action.
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In the United States as in his native Austria, Mises could not find a paid post in academia. New York University, where he taught from until until his retirement at the age of 88 in , would only designate him as Visiting Professor, and his salary had to be paid by the conservative-libertarian William Volker Fund until , and after that by a consortium of free-market foundations and businessmen.
Ludwig von Mises Facts
Indeed, Mises was politically a laissez-faire radical, who denounced tariffs, immigration restrictions, or governmental attempts to enforce morality. On the other hand, Mises was a staunch cultural and sociological conservative, who attacked egalitarianism, strongly denounced political feminism as a facet of socialism. In contrast to many conservative critics of capitalism, Mises held that personal morality and the nuclear family were both essential to, and fostered by, a system of free-market capitalism.
His students of the s, even those who later became Keynesians, were permanently stamped by a visible Misesian influence. In the United States, Mises was scarcely as influential. Sennholz, William H. Peterson, Louis M.
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Spadaro, Israel M. But Mises was able to build a remarkably strong and loyal following among businessmen and other non-academics; his massive and complex Human Action has sold extraordinarily well ever since the year of its original publication. Books by Mises have been reprinted and collections of his articles translated and published. Courses and programs in Austrian Economics have been taught and established throughout the country. Undoubtedly, the collapse of socialism and the increased attractiveness of the free market have greatly contributed to this upsurge of popularity.
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