Monday, 16 October 2017


The other Mises and his Monetary Plan for Reconstruction

Posted by
December 9, 2011
in Blog

Unlike some of his followers, Ludwig von Mises invested considerable part of his life studying policy issues with a thorough knowledge of the economic conditions and statistics of his native Austria (he even had an estimate of the number of leading entrepreneurs in the country).  A good example would be part II, D) of his “Draft of Guidelines for The Reconstruction of Austria” which he prepared at the request of the late Otto von Hapsburg, and published in the book “The Political Economy of International Reform and Reconstruction” (Liberty Fund, 2000) edited by Richard Ebeling and described in his short essay “The Other Mises.”   Part II, D) presents a long list of taxes which he seemed to approve of but would make Grover Norquist and many other cringe . . . Additional parts of the program would annoy those who only know Mises theoretical work, especially those dealing with the government role in education, retaliatory tariffs against countries that adopted a hostile policy toward Austrian exports (p. 149), and the hiring of bureaucrats: “The French system of competitive examinations is to be applied in filling public service jobs.  Notwithstanding its weaknesses, this system is incomparably superior to patronage, nepotism and corruption.” (p. 156) His monetary plan, however, which appears on p. 150, Part II, B) is a beauty by its simplicity and consistency: “The currency must be backed by gold. The note-issuing bank must be strictly obligated to redeem on demand in gold at legal parity its notes and liabilities on their bills of trade.  It must publish a weekly report of its status. Money exchanges with other countries must not be subject to any restriction.” “The Political Economy of International Reform and Reconstruction” has other sections devoted to money.  In a chapter devoted to Mexico’s Economic Problems, he writes: “Monetary troubles are never the inextricable outcome of conditions beyond the control of a country’s government.  They are always the result of a deliberate policy.  This policy is sometimes the result of erroneous monetary doctrines.  But sometimes even a government that is imbued with perfectly sound ideas may prefer monetary troubles as the lesser evil.” Thank you Richard Ebeling for bringing some of these writings of Mises back to print.  The “other” Mises, teaches us that when it comes to policy reform,  even the greatest champions of freedom might disagree.   They all share however the conviction that sound money has to be a key element in an economic system of a free society and in any plan of reconstruction.