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The Greatest Thinker You’ve Never Read: Ludwig von Mises

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September 29, 2012
by Art Carden
Had he not passed away at the tender age of 92 in 1973, Ludwig von Mises would have turned 131 years old today. In my humble opinion, he was the greatest social thinker of the twentieth century. In a series of breakthrough contributions like The Theory of Money and CreditSocialism: An Economic And Sociological AnalysisHuman Action (his magnum opus), and Theory and History–to say nothing of a series of smaller and no-less-insightful works like Bureaucracy and Omnipotent Government–Mises developed theories of economic growth and business cycles that are relevant today. One of the wonders of the modern world is that his major contributions are available to be perused or downloaded from the institute bearing his name or from the Liberty Fund. Today, anyone with access to an internet connection can access his works with little or no trouble. Anyone with a USB drive can carry his greatest works on a keychain.

The progress that made this possible wasn’t an accident, and it wasn’t random. Indeed, this brings us to Mises’s greatest contribution: his demonstration that socialism cannot function as a rational economic system and that private ownership of the means of production is necessary if value is going to be maximized and waste is going to be minimized in the production process.

Mises started–and in my humble opinion, ended–the debate over whether an economic system based on common or social ownership of the means of production could function with his essay “Economic Calculation in the Socialist Commonwealth.” He demonstrated that it was impossible to know whether a particular production process was wise (resource-optimizing) or unwise (resource-wasting) in the absence of prices for the means of production. His socialist critics accepted this, and Oskar Lange suggested that a statue of Mises be given a place of honor by the socialist Central Planning Board (here is Murray Rothbard with more).

Mises carried his argument step further, though: he argued that these prices cannot emerge without exchange, and exchange in turn cannot happen without private ownership of the means of production. Many economists laud the market for its efficiency properties as free markets generally direct resources to their highest-valued ends while minimizing costs of production. In the Misesian tradition, however, the market plays a much more essential role…

Continue reading at Forbes.com…