Mises and Economics The Early Years

The year 1902 marked the appearance of Mises' first published work in economics. That work, a history of the 1772 to 1848 developments in the relationship between lord of the manor and peasant in Galicia (the part of the Austro-Hungarian empire where Mises was born), was, as Mises has explained (nr, 6), written under Professor Karl Griinberg—himself an adherent of the Historical School.1 But Mises has reported that at the aid of die following year, he read Mengers Grundsätze. Clearly that work made a most significant impact on Mises. In his own words: "It was the reading of this book that made an 'economist' of me" (nh, 33). We can surmise that Menger's book taught Mises that there exist chains of economic causation that are generated systematically by the human preferences of market participants. No doubt it was this which impelled Mises to become a regular participant in Böhm-Bawerk's seminar in the years after he had been awarded his 1906 doctorate.

Böhm-Bawerk's seminar is famous both for the quality of its participants and the quality of their discussions. Schumpeter, whose first book (1908) created something of a sensation, was prominent among the seminar participants.2 Others were the pro-Marxist economists Rudolph Hilfeiding, Otto Bauer, and Nikolai Bukharin. All of these were to make names for themselves in one way or another. It is easy to see why a substantial volume of seminar time was devoted to debates concerning Marxist theory (nr, 39 f)- Böhm-Bawerk had, as noted above, published a penetrating critique of central ideas in Marx's value theory, and Hilferding and Bauer were concerned to defend Marx from Böhm-Bawerk's "Austrian" criticisms. It is not surprising that, some years later, Bukharin was to write that "it is weil known that the most powerful opponent of Marxism is the Austrian School."3 And it was, no doubt, his observation of the debates between Böhm-Bawerk and his Marxist challengers that helped lead Mises toward his broader analysis of socialism after the end of World War I.

Although we do not have any systematic records of the topics discussed in Bohm-Bawerk's seminar, they almost certainly included various controversial elements of Bohm-Bawerk's classic theories of capital and interest. No doubt a number of the chapters now collected as volume 3 of Capital and Interest emerged as a result of such seminar discussions. In some of these discussions, it seems clear from that volume, several seminar members, such as Schumpeter and Cuhel, stood out. Mises' name does not appear in that volume, but we need not doubt his lively participation in seminar debates. Mises has reported that the last two winter semesters during which he was able to attend the seminar (before he himself began lecturing at the university in 1913) were devoted (one gathers, entirely) to discussion of his own 191a work, The Theory of Money and Credit (the original German title of which was Theorie des Geldes und der Umlaufimittel) (nr, 40). During these discussions significant differences of opinion emerged between Mises and his eminent teacher (nk, 40, 59), and these differences were to be further developed in Mises' later work.4

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