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Book Review: The Legacy of an Intellectual Giant

Book Review: The Legacy of an Intellectual Giant

9 Mins
March 15, 2011

May 2008 -- Jörg Guido Hülsmann, Mises: The Last Knight of Liberalism. (Auburn, Alabama: Ludwig von Mises Institute, 2007), 1143 pages (hardcover), $50.00.

Ludwig von Mises and Ayn Rand share the distinction of being the leading voices for individual freedom and the market economy during the twentieth century. Mises (1881–1973), the Austrian philosophical economist and social thinker, was one of the world’s most passionate, consistent, and intransigent intellectual defenders of laissez-faire capitalism. His ideas have had an enduring power and effect and his writings currently inspire a generation of free-market thinkers.

Although several books have been written about Mises’s life, Mises: The Last Knight of Liberalism by Jörg Guido Hülsmann, a professor of economics at the University of Paris, provides the most wide-ranging and inspirational intellectual biography of Mises to date. Hülsmann supplies a comprehensive account of the development of Mises’s ideas as revealed in his writings and private correspondence. This captivating but lengthy biography chronicles how Mises developed his revolutionary ideas in the context of his own time—a period when socialism, interventionism, and central planning appeared to be taking over the world. A great deal of the book (nearly 800 pages) is thus about Mises’s life in Europe prior to 1940.

The unprecedented scope of Hülsmann’s work is the result of his access to and study of Mises’s private papers and records. The author was able to employ documents stolen from Mises’s Vienna apartment by the Nazis in 1938. These papers ultimately fell into the hands of the Russian Army in 1945 and were discovered in a Moscow archive in 1991. The thousands of pages of archival material allowed Hülsmann and, now, the reader to learn a great deal more about this seminal thinker.


The book divides Mises’s life into six stages and begins by recounting his early days in Austria. Mises was born on September 29, 1881, in Lemberg, then part of the Austro-Hungarian Empire. This son of a newly ennobled Jewish family received a comprehensive early education at one of Vienna’s best academic high schools. That prepared him for his university studies at the University of Vienna, where he matriculated in 1900 and studied under Eugen von Böhm-Bawerk. In 1906, he received a doctoral degree in jurisprudence with an emphasis in economics.

Early in his academic career, Mises was a student of the historical method in the social sciences, which emphasized field studies and concrete-bound historical empiricism and which supported interventionist, mercantilist, and protectionist legislation. Mises’s enthusiasm for the historical approach waned when, at age 22, he read Carl Menger’s great polemic against the German Historical School, Principles of Economics. Whereas the historicists were preoccupied with detailed data and history and denied the existence of economic laws that are the same for all people at all places and times, Menger, the father of the “Austrian school” of economics, set forth the case for formal theoretical economics. From that point, Mises learned to be skeptical of the alleged benefits of government action.

From 1909 until 1934, Mises served as a salaried economic analyst in the finance department of the Vienna Chamber of Commerce, where he attempted to stop inflation and to contain socialist and interventionist legislation. In 1913, he received an appointment as an unpaid professor of economics at the University of Vienna—a position that he held for twenty years. During this period, he taught a celebrated private seminar at his office in the Chamber of Commerce for young scholars from Vienna and elsewhere. In 1926, he founded the Austrian Institute for Business Cycle Research and appointed Friedrich von Hayek its first director. Mises was instrumental in reconstituting the Austrian National Bank on a non-inflationary, gold-backed foundation, served as Austria’s representative to the European Free Trade Association, and convinced some socialist intellectuals to favor the free market, thus helping to keep Austria from nationalizing industry and commerce.


Hülsmann notes that Mises had written a revolutionary 1912 monetary treatise, The Theory of Money and Credit, and a devastating 1920 article, “Economic Calculation in the Socialist Commonwealth,” in which he argued persuasively that socialist central planning was inherently unworkable owing to the lack of market-generated prices. He followed up this article with four fine books: Socialism (1922), Liberalism (1927), Critique of Interventionism (1929), and Epistemological Problems of Economics (1933).

An inspired and inspiring teacher of free-market economics and philosophy, Mises was also a consistent and uncompromising opponent of all forms of collectivism. Foreseeing the inevitable Nazi takeover of Austria, he left Vienna in 1934 to assume a professorship of international economic relations at the Graduate Institute of International Studies in Geneva, Switzerland. While there, he wrote a magnificent economic treatise, Nationaloekonomie, which was published in 1940 and became the basis for his later magisterial work Human Action (1949).

Mises was a consistent and uncompromising opponent of all forms of collectivism.

Mises became a political refugee again, in the summer of 1940, when he fled Switzerland (and Europe) to avoid being captured by Hitler’s army. He arrived in the United States in poverty, then began to lecture and write. Mises did not gain an academic position in the United States until 1945, when he received a visiting professorship in the Graduate School of Business at New York University. He held this position until 1969, teaching a now-legendary seminar. While at NYU, he also wrote a number of influential books, including Human Action (1949), Planning for Freedom (1952), Theory and History (1957), and The Ultimate Foundation of Economic Science (1962).

Human Action integrated all of the lessons taught in Mises’s previous works. His magnum opus is one of the most uncompromising and vigorously reasoned arguments for capitalism that has ever appeared. Mises defends the free society on the grounds that it is the most desirable from the perspective of human happiness, peace, and productivity. He advocates individual sovereignty, the limitation of the state, the necessity of a gold standard, cooperation in society through individualism, and world peace via free trade.


Hülsmann explains that Mises’s goal was to develop an edifice of formal economic theory using logical deduction from the axiom of human action—the fundamental idea that individual men act. Mises contended that economic truths are derived from that self-evident axiom and that they cannot be tested empirically. He deduced the idea that individuals cooperate because work performed under the division of labor is more productive than work done in isolation. He argued that the division of labor depends on the existence of the various institutions of a free society, such as private property, limited government, competition, money, free exchange, and the profit motive.

Mises extended Ricardo’s Law of Comparative Advantage to become the law of human association, through which each person finds his most profitable place in the cooperative activities of production and exchange. He explained that even the most unproductive individuals (and countries) should concentrate on the areas in which their productive inferiority is the least, because such mutual cooperation would be to the advantage of everyone.

Mises also maintained that government intervention impairs the workings of capitalism. He proved that every political interference in the market harms some individuals and makes society worse off. Interventionist policies fail to attain their objectives, generate unintended and undesirable results, lead to further government controls, and divert production from the projects that would have been undertaken if people were free to follow their own judgments. For example, he explained how monetary changes introduced through the banking system not only distort interest rates but also generate business cycles. He demonstrated that depressions and recessions can be the result of government policies of credit expansion intended to lower market interest rates.

The Misesian idea of the “subjective” nature of value takes human ends as the ultimate given. He was unconcerned with what or why people value—only with how they meet their goals of attaining their values. For him, economics is a value-free science of means rather than of ends. Economics presumes no value judgments itself but does show that individuals’ chosen values can be achieved to the greatest degree only in a free-market economy.


I have mentioned that Mises and Ayn Rand (1905–82), the best-selling novelist and world-renowned philosopher, have been capitalism’s most influential defenders. Hülsmann mentions in passing that Mises had a personal acquaintanceship with Rand and that there may be some intellectual affinities between Mises’s “praxeology” (science of human action) and Rand’s Objectivism . Unfortunately, he does not discuss in detail the potential for formal engagements between the Austrian and Randian approaches. However, a number of contemporary thinkers view their ideas as complementary and reinforcing, believe that study of both Mises and Rand is necessary to a proper understanding of capitalism, and contend that the Austrian approach can be integrated with the Randian moral defense of capitalism.

In fact, it is possible for Rand’s “objective value theory” to coexist with and complement Mises’s pure subjectivism. Objectivism is Rand’s integrated system of thought that defines and explains the objective principles by which a person must think and act if he is to live a life proper to man. Misesian economics, by contrast, is the logical analysis of the success or failure of selected means to attain subjectively chosen ends. The Objectivist worldview can provide a context to the economic insights of Austrian economists, because in making objectively life-affirming ethical value-judgments, people can refer to and employ the lessons of economic science. Thus, Misesian economics can be viewed as compatible with Objectivism ’s perspective on the nature of man and the world and on the need to exercise one’s virtues. When brought together, then, the Austrian “value-free” defense of capitalism and the moral arguments of Rand can strengthen the case for a free society.

The Objectivist worldview can provide a context to the economic insights of Austrian economists.

Ludwig von Mises’s thought and writings encompassed a vast spectrum of knowledge. He constructed a monumental, systematic, comprehensive, and overarching conceptual framework that attempted to spell out the timeless, immutable laws that guide the world and human behavior. He succeeded as an advocate of verbal logic, reasoning, and deduction in an age dominated by empiricism, positivism, and mathematical models. This foremost economist of the twentieth century inspired the rebirth of classical political economy, especially when he integrated his profound theories of methodology and the social sciences in his monumental work, Human Action.


Ten years in the making, The Last Knight of Liberalism tells the story of the inspiring life and accomplishments of a genius neglected in his own time, and of his uncompromising search for the truth. It is an exciting, readable, and enjoyable look at Ludwig von Mises’s character, background, economics, and philosophy.

Hülsmann’s fine book also provides a meticulous and detailed description of the development of the Austrian School of Economics. Mises’s ideas and insights are presented in the context of the political and military events that shaped Austria and its neighboring countries during the early twentieth century.

Jörg Guido Hülsmann’s tribute to Ludwig von Mises is a broadly and deeply researched scholarly accomplishment. Written with effortlessly readable prose, this biography will be of enduring interest to intelligent laymen unfamiliar with Mises’s writings as well as to academicians and others already familiar with the life and legacy of this intellectual giant.

Edward W. Younkins
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Edward W. Younkins
Work and Achievement