Ludwig Von Mises and Twentieth Century Economics A Retrospective Assessment

We shall, in the chapters ahead, be devoting attention to each of the areas in which Mises made significant contributions. In this chapter we have provided an outline or overview of his life's work as an economist. In concluding this chapter it is appropriate that we attempt to sum up that life's work and contrast it with the course that mainstream economics has taken during the twentieth century.

At the outset of this chapter we set forth die various schools of thought that were prominent in the economic profession at the start of the twentieth century. Mises' first works as an economic theorist were contributions to mainstream neoclassical economics as it was broadly understood and practiced at that time both on the continent and in the U.K. His work constituted a continuation of the Austrian tradition pioneered by Menger and Bôhm-Bawerk. While some of the policy prescriptions that Mises drew from his theoretical work were certainly unfashionable at the time, it would be fair to describe the ova-

all character of his work as original, yet solidly within the mainstream of contemporary professional theorizing.

But during the concluding decades of Mises' career his work was thoroughly at odds with mainstream economics, not only in substance and methodology, but in terms of policy implications. Mises' work had led him steadily in one direction—the direction which he saw as implicit in the Menger-Bohm-Bawerk tradition; mainstream economics, which had appeared so congenial to the Austrian tradition at the start of the century, had taken an entirely different direction. Hie years in which these crucial, diverging steps were taken—by Mises on the one hand, and by mainstream economists on the other—were primarily the decades between 1920 and 1950.

During these decades, which encompass the remarkably vigorous doctrinal developments of the interwar years, mainstream economics took a turn that led it to prize technical mathematical technique over conceptual clarity and depth, to value empirical predictability over theoretical "Verstehen," to rank the reliability of well-intentioned proactive and regulatory government economic policy ahead of dm of the regularities to be expected from the free market's spontaneous invisible hand. It was precisely in these decades during which Mises completed his own system, a system consistently broadening the applicability of the principles lad down by Menger and Bohm-Bawerk and consistendy deepening their epistemological foundations.

The economic system that he articulated during those decades offered a comprehensive view of the capitalist system, a view which differed in just about every conceivable respect from the view provided by the mainstream economics which dominated the immediate postwar economics profession. As a result, Mises' work in economics during the concluding decades of his career was seen by the profession at large as obscurantist doctrine, evidence of an obstinate refusal to accept the advances achieved by economics in its most fruitful years.

It is noteworthy that, when the century ended more than a quarter century after Mises' death, the perception in the economics profession concerning his economics had changed to a significant, if modest, degree. While Mises' methodological position was still treated as unacceptable, his substantive doctrinal positions, as well as his practical policy recommendations, had come to be treated with far more respect and interest than they had enjoyed during his own lifetime. The consistency and integrity with which Mises pursued his scientific work, what Jacques Rueff termed his "intransigence,"23 had, by the close of the twentieth century turned the perception of his work from contemptuously dismissed obscurantism into a respected—if unconventional and even somewhat eccentric—point of view.

Perhaps the central element in Mises' point of view, the element which has recendy been successful in capturing the interest of younger economists, is his radical subjectivism, the insight that economic phenomena express the way in which economic agents see the world. Many years ago, in an oft-quoted passage, Hayek put his finger on this central element. Hayek remarked that "it is probably no exaggeration to say that every important advance in economic theory during the last hundred years was a further step in the consistent application of subjectivism."24 In a note, Hayek observes that this development of subjectivism "has probably been carried out most consistently by L.v. Mises Probably all the characteristic features of his theories, from his theory of money (so much ahead of his time in 1912.!) to what he calls his a priorism, his views about mathematical economics in general and the measurement of economic phenomena in particular, and his criticism of planning all follow...from this central position."251

This subjectivist point of view is, in fact, stimulating the curiosity and attention of many younger economists who have found themselves to a greater or lesser degree repelled by what they see as the aridity and unrcalism of die mainstream tradition in which the profession is still for the greater part enveloped. It is to this curiosity and attention that we can attribute the resurgence of interest in the Austrian (and in particular to the Misesian) tradition in economics, which has, somewhat surprisingly, occurred in die economics profession during the past two decades.

chapter three

0 0

Post a comment