Ludwig Edler Von Mises, was born in Lemberg, capital of Galitzia in the former Austro-Hungarian Empire, which today corresponds to Ukraine, on September 29, 1881. In 1900 after graduating, he began his law and public administration studies in The University of Vienna In 1903 he reads the book Principles of Political Economy of Carl Menger, this text served as the founder of the Austrian economic school, the book in question, led him to have a more theoretical approach and to deepen studies on economic theory. In 1909 he began working in the Chamber of Industry and Commerce of Vienna, this is a quasi-state organization, where he remained for 25 years, from there he exerted a great influence on Austrian politics.

Part of his work

Part of it is extracted from his extensive and prolific work. Public throughout his life more than 200 essays, dealing with different topics, such as the application of the positive method of economics, statism and education. In 1912 he published The Theory of Money and Credit, there he presents a new theory about the economic situation, in which the crises are caused by the inadequate distribution of resources due to inflation.

There it shows that the amount of money in the economy is not neutral and that its increase has redistributive effects. In this work, he also assigns money a certain price, like any other good, for supply and demand. He also exposes in this work, his theories about economic cycles, which are produced by the inflationary ideology exercised by central banks, which, like politicians and businessmen, choose to keep interest rates low in an artificial way, with the consequent excess of investments.

In 1922 he made his second major work entitled Socialism, in which he predicted the ruin of this system as a result of the absence of prices and there he also criticized the state intervention for the alteration that occurs in them, and consequently in the Correct allocation of resources. Then in 1944, he laid the foundations of the modern economy of the bureaucracy and called attention to the uncontrolled growth of government institutions.

His thought

He expressed that the government has a duty to care for, protect and defend against aggressions from inside or outside, the life and property of its people under its jurisdiction, fix possible disputes that arise and leave the people, in the rest, freedom to obtain their own goals and ends of life. Today the government is asked to regulate and control production, raise the prices of some services and goods and lower those that have to be lowered, set salaries, help some businesses to start keeping others out of possible bankruptcy, take care of the sick and the elderly and other things of their concern. Ideally, the government should be a kind of caretaker’s luck, not of the people themselves, but of the conditions they give citizens, producers, entrepreneurs, merchants, consumers, savers and workers to achieve their dreams and objectives in peace.

So what is the future?

If the government does all of the above, people could provide themselves in better conditions than what the government could possibly do and give. When the government complies to protect the rights of its citizens to do what they want, as long as they do not violate the equal freedom of others to also do the same, they will do what arises naturally, which is nothing but work, cooperate and trade with each other.

Under these conditions, they will then have the incentive to accumulate capital, save, experiment, innovate and take advantage of opportunities and produce. Under these premises, capitalism can develop. This development is that everyone has the right to serve their client better and / or more economically. This principle, in a short time, has transformed the entire world. It has given the possibility of unprecedented growth in the world population.

Ludwig Von Mises affirms that the main protagonist in the economy is the entrepreneur, since he will succeed whenever the prices generated in the market cover his losses, in this way the less capable and competitive entrepreneurs will be ruined and favoring This way, innovation and progress. This market process makes the conditions of supply and demand produce changes in the market permanently, so a static model could not capture this reality. This great Austrian economist dies at 92 in New York City on October 10, 1973.

What do you think about this topic? Do you agree that this would be the future of the economy?

If you want more information about our products and services you can contact us or write your question at the bottom (comments section).

Image by geralt via under a creative commons license.

Leave a Reply

Your email address will not be published.