Tag: Great Economists

By Richard Ebeling

Originally published in the February 2021 Edition of Future of Freedom

Ninety years ago, the United States and most of the rest of the Western industrial world was in the throes of the Great Depression. Usually demarcated as having begun with the U.S. stock market crash of October 1929, the Depression is most often dated as having reached bottom at the end of 1932 and the early part of 1933.

Unemployment, as measured by the government, reached more than 25 percent of the American labor force; Gross National Product declined by 54 percent. Wholesale prices in the U.S. declined between 1929 and 1933 by 23 percent, while farm prices, alone, went down by 52 percent over the same period. It is not surprising that, given the falls in prices, that the aggregate money supply had contracted by 30 percent during the Great Depression, and more than 8,000 banks closed their doors.

The Great Depression was unique in anyone’s living memory in terms of its severity and duration. While not to the same extent as in the United States, similar decreases in output and rising unemployment, accompanied by declining prices, were experienced in many of the leading European economies, with Germany being next in severity after America.

Coming only a little more than ten years after the disaster and destruction of the First World War, which ended in 1918 after four years of deadly conflict, the leading questions of the day in the 1930s were why and how did this economic collapse come about, and, equally if not more important, what needed to be done to escape from the maelstrom of massive harm to hundreds of millions of ordinary people?

Collectivist dreams of central planning triumphant

Collectivists of many stripes were sure that their day had come. The communist government in Soviet Russia was hailing the end of capitalism and the dawn of socialist revolutions everywhere for humanity’s salvation through a “dictatorship of the proletariat” and central planning. The fascist government in Italy insisted that the Depression showed the bankruptcy of classical liberalism and laissez faire, with the need for the nationalist “totalitarian” state — Mussolini had coined the term — that imposed its own form of corporatist central planning on society for the good of the people as a whole.

In January 1933, Adolf Hitler and his National Socialist (Nazi) Party came to power in Germany, determined to use concentrated, dictatorial power to restore the German people in all their “racial purity” to great power status, with its all being made possible through government spending on grandiose public works, (at first) clandestine military rearmament, and the Nazis’ own version of central planning by subordinating all of German business to the will and commands of the National Socialist leadership. If Stalin had ordered a Soviet five-year central-planning system beginning in 1928, after 1936 the Nazis imposed their own four-year central-planning system on the German people.

It was widely presumed by many that “capitalism” was the cause of the world’s economic disorder and human misery. Governments everywhere were, if not centrally planning as in Soviet Russia, fascist Italy, and Nazi Germany, then imposing regulations and restrictions, prohibitions and protections, deficit spending, and “jobs” programs. Franklin Roosevelt’s New Deal agenda implemented versions of all of them at one time and to one degree or another, including the fascist variation on the central-planning theme.

Political intervention as the base for the Great Depression’s severity

Few were the voices who spoke out against this political and ideological trend. Those who did saw the dilemma that the Western world was in to be due, precisely, to the abandonment of a truly liberal, free-market order. The Great Depression and its magnitude were caused by the forms and degrees to which governments intervened and preempted the normal operation and rebalancing of competitive markets that could have and would have restored economic coordination and “full employment” in a relatively short period of time.

One such classical liberal, free- market–oriented voice, now almost forgotten, yet highly respected and fairly well known at the time, was the German economist Moritz J. Bonn. For instance, just ninety years ago, on April 29, 1931, he delivered the annual Richard Cobden Memorial Lecture in London, England, entitled “The World Crisis and the Teaching of the Manchester School.” He pointed out that the 19th-century ideal of a limited government devoted to securing the personal liberty and economic freedom of each citizen had been replaced in Western democracies by the idea of increasingly unlimited government under which “majorities of all sorts have learned long ago to use their control over Governments as a handy means of dividing the national dividend for their own sectional purposes.”

Democratized plunder and privilege had become the order of the day. In such a setting, each special-interest group attempts to use political means to restrict competition at home through regulations and limit foreign rivals through tariffs or import quotas. Taxing had become a method for redistributing income and wealth to those able to sway government policies in their direction at the expense of those in voting minority status in the electoral process. That meant that markets were prevented from coordinating supply and demand, and government interventions created imbalances, distortions, and wage and price rigidities that left those countries in persistent economic disarray.

Government interventions made normal economic recovery impossible

As Bonn summarized it,

The free play of economic forces has been replaced everywhere, at least in part, by private monopoly or by government monopoly, by tariffs and by all sorts of price control, from wage fixing by arbitration boards, to valorization by farm boards…. There is intervention now on a big scale, based on forecasting and bent on planning, and there is a crisis much bigger than any crisis the world has seen so far….

The prevalence of manipulation has made the passing of the crisis far more difficult than did the state of affairs which corresponded to the principles of the [free-trade] Manchester School. In those days a crisis cured itself in the long run by the fall of prices, being from one commodity to the other, including labor as well as capital….

The chances of getting over the crisis in this way today are very remote. For in the present situation of the world, half of its institutions are manipulated whilst the other half are supposed to be free. The prices subject to the play of free competition, have fallen all over the world…. Other prices have remained fairly rigid. They are maintained by economic and political coercion, by combines of labor and capital, supported by tariffs and other manipulatory legislation…. If selected prices and sheltered wages can be maintained whilst all other prices are declining, a new satisfactory level cannot be attained…. The conflict between the free play of economic forces and the manipulation of Governments and monopolies is the main cause of the long continuation of the crisis.

Moritz went on to argue in an article that he wrote later in 1931 for The Bankers Magazine entitled “Some Causes and Some Problems of the Present Crisis” that those who proposed monetary expansion and government budget deficits as the “cure” for the Great Depression failed to fully appreciate that only a real rebalancing of markets, through appropriate relative price and wage and production adjustments, could bring sustainable full employment. All monetary inflation would do was threaten a new series of distortions, because the inescapable deleterious effects from any monetary expansion is that they affect different prices and wages in different ways at different times that throw the pattern of relative prices and the uses of labor and capital in misdirected and unsustainable directions, which becomes visible once an inflation comes to an end.

Moritz J. Bonn, the wandering scholar

Moritz Julius Bonn was born in Frankfurt, Germany, in June 1873. He earned his PhD in economics from the University of Munich in 1892; before completing his degree, he spent a term at the University of Vienna studying with Carl Menger, the founder of the Austrian school of economics, and another term at the University of Freiberg as a student under the famous sociologist and historian Max Weber. He traveled widely in Europe and the United States both before and after the First World War, and in 1930 published The American Adventure, offering an insightful analysis of American culture and society in the 1920s.

Appointed the rector of a Berlin university in 1931, he was removed from that position by the Nazis in early 1933, because he was both Jewish and an influential classical liberal. His dismissal caused an uproar in the British and American press because of his public reputation as an expert on European and U.S. economic policy and political affairs. Fortunately, he was offered a teaching position at the London School of Economics, which he held until 1938, when he moved to the United States. He held various visiting professorships at American universities until he returned to England in 1948, where he lived until his death in 1965.

His autobiography, Wandering Scholar (1949), which, among many other insights and interpretations of the places he traveled to over the decades, contains his recollections of how disastrous was the great German hyperinflation that finally led to virtual economic ruin for the entire country in 1923. In it, also, are shown the various statist trends of the late nineteenth and early twentieth centuries that led to the political and economic catastrophes of the First World War and the interwar period of the 1920s and 1930s that culminated in the Second World War.

The cultural value of capitalist profit-making

Throughout this period Bonn was often a great debunker of myths and fallacies about the supposed evils of capitalism. For instance, in 1931, he wrote in a German newspaper “Capitalism and Literature.” Critics of the market economy charged capitalism for the poor taste and topics of mass publications, whether books or magazines. In the pursuit of profits, businessmen foster the worst in people through increasing sales by pushing cheap detective stories and low-class sensationalism.

He reminded his readers that since the beginning of time, people have wanted their everyday amusements and playful ways. Profits are made by giving people what they want. Bonn asked, “Is capitalist mass production guilty of bad taste or is it bad taste that makes the mass production of bad books possible?” Through mass production at increasingly lower costs, books and magazines reflecting a wide diversity of likes and desires are made available to people that previously had not been the case.

Critics of capitalism forget that many books of a more serious and specialized scholarly type would never have been possible and available in relatively inexpensive editions for those interested in reading them, if not for the market economy. And many of the most popular authors of the time could never have had wide readerships if not for private-enterprise publishing. As Bonn puts it, “If a Bavarian chambermaid is able to give a friend a cheap copy of [John] Galsworthy’s [Forsyte Saga] for Christmas” is that not better than when such a thing was impossible, before capitalist publishing?

Bonn also responded to those who accused capitalism of making everything standardized and monotonously the same, just to produce things cheaply in large numbers to earn mass profits. Contrary to this misguided criticism, said Bonn,

Capitalism, in so far as it is real capitalism, is eager for novelty. In an economically planned and thoroughly organized communal life, no Ford automobile would have been invented, not because socialism could not have made an invention but because it would not have wanted to. Bolshevism will be able to cast aspersions on the capitalist world only so long as it can borrow capitalist ideas…. Its bureaucracy, once it has triumphed, would never tolerate the unauthorized development of the inventions of genius….

A world in which every individual has the same absolutely standardized private bathroom is a more individualistic world than one in which there are no private bathrooms at all, but only a great socialist tank. Is it more far-sighted to destroy the private bathrooms because not everyone yet enjoys one?

Anti-market cartels and the medieval imposed just price

Another myth that Bonn attempted to challenge was the notion that the problems of monopoly and price fixing by coalitions of large enterprises in the form of cartels were part of a free-market system. In his article “Medieval Economic Theory in Modern Business Life” (1929), he argued that what had arisen out of the wartime circumstances was a belief that every market price should cover its costs of production plus a fair and reasonable margin of profit; that had been part of the policy implemented by belligerent governments in the form of price controls, especially in Imperial Germany during the First World War, to entice manufacturers to produce the goods and services needed for the military as well as for the civilian population on the home front.

This mindset was reinforced, Bonn explained, by the experience of the great German hyperinflation of the early 1920s. What seemed as a profit-earning price when some finished consumer good was brought to market and sold often was shown to be a loss when the inflation-driven costs of the factors of production had the result that those earned profits were not enough to repeat the manufacturing process, since input prices were found to be increasing more than the just-earned output price from previous production. As Bonn put it, “Notwithstanding huge paper profits, trade as a whole and the banks as well lost most of their capital.”

What German businessmen and bureaucrats came to see as the rational ideal was stable or rising prices through government regulations, subsidies, protections, and supports that guaranteed profit margins. Free markets could not be trusted to ensure an earned net return over production expenses. “So the comfortable creed of falling prices being beneficial to mankind was replaced by the belief that rising prices by giving a [government] stimulus to production, are the true engines of social progress…. The conception at the bottom of this theory of stabilization of prices … is closely related to the medieval view of maintaining a given social order and a fixed individual income…. This can only be justified,” argued Bonn, “on the medieval theory of the ‘just price’; that the price paid by the consumer must compensate the producer for his actual outlay and the cost of his customary standard of living, to which he is entitled.”

And since such “just price” profit-margin guarantees cannot be certain on an open and free market, less-productive and more-inefficient producers turned to those in political power to ensure them of that which they could not always gain in the competitive arena. Hence, the long-established rationale for government-mandated and -supported cartels in Germany, which had already begun in the late nineteenth century. The profit-and-loss system was essential for economic betterment and market coordination, said Bonn:

I am inclined to think that as a method of industrial progress the weeding out of backward concerns by competition, leading to substantial writing down of overcapitalized plants, is a more efficient method than … cartelized industries…. I am convinced that real economic progress in a capitalist world is impossible without ever-recurring writing off, and I see in the [government-supported] cartels a well-thought-out system of maintaining inflated capital values.

Liberal free trade brought prosperity and peace

Moritz Bonn was also fiercely opposed to political and economic nationalism. He railed against the imposition of trade barriers and other forms of restrictions on the free movement of goods, capital, and people. With the coming of the Great Depression, all the major countries of the world attempted to protect their domestic markets from foreign competition. That intensified nationalistic resentments, angers, and government-policy plots to undermine the protectionist trade walls of other nations while safeguarding their own.

In “International Economic Interdependence” (1934), Bonn reminded his readers that the older pre–World War I system of relatively open freedom of trade not only increased material and cultural well-being for all participants but helped maintain a world of peace. Said Bonn,

Whenever the spirit of liberalism has prevailed in the economic sphere, international cooperation worked fairly well notwithstanding political nationalistic frictions…. Wherever international economic exchange was operated in its [liberal] spirit, international economic interdependence made for peace in the political field and for the reduction of friction in the economic field…. International interdependence of this sort was real cooperation. It raised the standard of living in all the countries concerned. It drew them together economically, and in doing so, made political friction far less likely

European imperialism and the rebirth of political paternalism

At the same time, he was no apologist for the global empires of countries such as Great Britain or France. Imperialism required a dangerous contradiction between the ideas and policies of the Western imperial powers at home and those followed abroad. Great Britain and France hailed themselves as nations grounded in the principles of personal freedom, self-government, and parliamentary democracy. It was presumed that every person should be considered to have an inherent right to his individual liberty and to freely determine and participate in the political system under which he lived.

But in conquering vast areas of the Earth and imposing without the consent of the subjugated peoples the political authority of those ruling over them in a faraway imperial capital, they were denying the very justification of their own domestic systems of government. Bonn explained this in a published series of lectures, The Crisis of European Democracy (1925):

But from a political point of view the populations of the colonial territories inhabited by colored peoples were subject races, whose consent to the rule of their white masters had never been asked for. They did not participate in the shaping of any policy affecting their fates.

Thus, a curious antithesis arose: As parliamentary institutions based on the principles of government conference were spreading slowly all over Europe, government by force was gaining ground afresh in all the territories newly acquired…. The authority for using force emanated in many cases from the same bodies — the parliamentary governments of the world — whose own existence was based on the denial of force, as a method of government

What was a central part of the rationale for these subject colonial peoples to be governed without their consent? That they had not developed the cultural and political prerequisites for self-rule, and needed to be tutored in those matters by their imperial masters before they could be fully free citizens. But Bonn said that this reawakened ideology of political paternalism by imperial force easily could be brought home to the imperial country’s own population:

If the colored races were fit subjects for an autocratic, though, benevolent, form of government, because they had not yet developed the capacity of governing themselves, it might be assumed without much questioning that there were large masses of people at home whose economic and intellectual status had not given them much chance to prove their fitness for self-government…. The acquisition and the developing of colonies thus gave a new strength to the old established theories of government by force.

This was a theme that he developed further in his later book, The Crumbling of Empire (1938). The practice and mindset of empire, he argued, served as part of the entrée into the twentieth century’s rationales for dictatorship in some European countries and welfare states in others. Say to a man that he does not know his own true interests or lacks the intelligence to fully make his own decisions, and it is not a far step in politics to conclude that peaceful persuasion needs to be replaced with paternalism by force.

Moritz J. Bonn was one of those classical-liberal voices of the twentieth century who understood how and why the world had turned away from its earlier roots in a philosophy, a politics, and an economics of freedom. He, like others from those middle decades of the last century, still has something of value to say and share with us. We should not allow them to be completely forgotten.

By Richard Ebeling

Originally published on July 9, 2022 for Capitalism Magazine

Regardless of the reason or rationale, the social effect of affirmative-action policies is to politicize social relationships. And the consequences of this have been everything from systems of privilege and corruption to mob violence and civil war.

America was founded upon the idea that it is the individual who possesses rights. This was counter to the political order that dominated in the rest of the world. Practically everywhere else, it was accident of birth that determined one’s “privileges.” Group membership was the criterion that specified what one deserved from others and owed to them. And these were debts and obligations that were set for life.

The individualist philosophy of America has been under attack — but from within. The old world philosophy of privilege and status has found new adherents in the advocates of affirmative-action programs in the United States. The individual’s place and relative income position in society are now to be determined by the ethnic group to which he belongs as well as that group’s politically determined “fair share” to jobs, education and monetary reward.

Thomas Sowell is one of the best and most prolific free market economists alive today. A good portion of his efforts have been devoted to debunking the myths surrounding racial relationships in economics and politics. His latest book, Preferential Policies: An International Perspective, is a frontal assault on the rationales for, and the evidence supporting, the ideology of affirmative action.

Crucial to the entire affirmative action argument is the assumption that in a nondiscriminatory world, individuals of different ethnic groups would be evenly distributed in each and every profession and occupation. Based on this starting assumption, the affirmative-action advocates then jump to the conclusion that any under-representation of an ethnic group in an occupation, relative to that group’s numbers in the surrounding community, is proof of racial discrimination.

Sowell demonstrates that this assumption has absolutely no basis in fact in any society. Indeed, the opposite is more the norm around the world. Because of culture, history and value systems transmitted between generations of different groups, in every society it is usually the case that there occurs group-clustering in various activities in an economy. This is an anthropological and sociological fact that has nothing to do, per se, with race or racism.

He argues that to claim that any numerical over- or under-representation of an ethnic group in an occupation is “proof” of discrimination is as absurd as to look at the same data and conclude that the disproportionalities are due to “genes.” Furthermore, many of the reasons for these occupational disproportionalities are only understandable in terms of various qualitative factors that are at work — historical and cultural factors that cannot be reduced to a quantitative and statistical massaging of the facts.

Affirmative-action policies, Sowell explains, have existed for centuries all over the world. They arise from resentment and envy, from beliefs of superiority and fears of inferiority. They sometimes have been meant to protect majorities from successful minorities; at other times to protect stagnant minorities from industrious majorities. But regardless of the reason or rationale, their social effect is to politicize social relationships. And the consequences from this have been everything from systems of privilege and corruption to mob violence and civil war.

Sowell asks us to remember that many roads to hell have been paved with good intentions. And that the questions we should ask about such policy proposals are: What kind of incentives do affirmative-action policies create in the society, and for whom? How do such policies modify the institutional processes within which people make decisions and choices?

When affirmative-action policies are looked at in terms of these questions, they have not only failed to attain the ends for which they were designed, but they have often been counter-productive, harming many of the very people the interventions were meant to assist.

Often proposed as a temporary measure to compensate for past wrongs done to a group, affirmative-action laws, once in place, take on a permanent life of their own. Those who receive benefits from these policies have incentives to maintain their privileges. And once one group is bestowed with such preferential treatment, there soon arise many other groups claiming that what one group deserves is their “right” as well.

Those who must answer to the affirmative-action police for hiring practices have incentives to choose employees, not on the basis of qualification, but on whether they belong to the “correct” group and in the appropriate numbers. This leads to resentment and anger on the part of those who might have been the ones getting the job or receiving the promotion — if it hadn’t been for “them” and their special political pull. And it creates psychological doubts among the recipients about whether they are holding their positions merely because they met a needed ethnic quota on the job. Sowell argues that these are costs too high to pay just so that some in the political and economic arenas can gain privileges for themselves at the expense of both freedom and real opportunity for the less fortunate. One can only hope his analysis and conclusions can help turn a very dangerous tide in our society — before it’s too late.

By Richard Ebeling

Originally published on June 7, 2022 for The Future of Freedom Foundation

At a banquet dinner held in New York City on March 7, 1956, honoring the famous Austrian economist Ludwig von Mises, another equally renowned member of the Austrian school of economics, Friedrich A. Hayek, delivered a talk highlighting the important contributions of his long-time mentor and close friend, going back to when they first met in the Vienna of the early 1920s.

Hayek pointed out the significance of Mises’s 1912 book, The Theory of Money and Credit, with its development of what became known as the “Austrian” theory of money and the business cycle. But Hayek wanted to emphasize to those attending the dinner the real importance of another of Mises’s books, one that appeared ten years later in 1922. This was Die Gemeinwirtschaft, or in its English-language title, Socialism: An Economic and Sociological Analysis. This work, Hayek said, made “the most profound impression on my generation … for our generation it must remain the most memorable and decisive production of Professor Mises’s career.” Hayek continued:

It was a work on political economy in the tradition of the great moral philosophers, a Montesquieu or Adam Smith, containing both acute knowledge and profound wisdom…. To none of us young men who read the book when it appeared was the world ever the same. If [Wilhelm] Röpke stood here, or [Lionel] Robbins, or [Bertil] Ohlin (to mention only those exactly the same age as myself), they would tell you the same story. Not that we at once swallowed it. For it was too strong a medicine and too bitter a pill…. And though we might try to resist, even strive hard to get the disquieting considerations out of our system, we did not succeed. The logic of the argument was inexorable.

It was not easy. Professor Mises’s teaching seemed directed against all we had been brought up to believe. It was a time when all the fashionable arguments seemed pointed to socialism and when nearly all “good men” among the intellectuals were socialists…. For all the young idealists of the time, it meant dashing of all their hopes.

Mises’s challenge of central planning

It is now 100 years since the first (German-language) edition of Mises’s Socialism appeared in print in 1922. It is a century in which socialism-in-practice has been experienced in a wide variety of countries around the world. But when the volume was published in 1922, the First World War had been over for only less than four years. The Bolshevik revolutionaries in Russia under Vladimir Lenin had only recently triumphed over their anti-communist opponents in a bloody civil war that ended the year before. It was still several years away, in 1929, when Lenin’s successor, Joseph Stalin, would end all remaining private enterprise in Soviet Russia and introduce comprehensive five-year socialist central planning.

Therefore, when Mises’s Socialism first appeared, its relevancy could hardly be questioned, but it still seemed “academic,” that is, still a theoretical critique of whether or not a socialist economic system could be an effective and superior alternative to the “capitalist order,” whose days seemed inevitably numbered. Socialism, as Hayek remarked, was the fashionable “wave of the future” for many of the opinion-influencing intellectuals around the world.

Even so, when it first appeared, it almost immediately caused a firestorm of controversy in the German-speaking world. Here was a book that challenged virtually all the premises, presumptions, and prophecies about the beautiful and better world that was awaiting mankind with the coming of the socialist utopia. An end to production for private profit would lead to material prosperity for all. The elimination of “wage slavery” and worker exploitation at the hands of capitalist employers would mean the arrival of “economic equality” and “social justice.” Wars for the benefit of capitalist arms manufacturers would be a thing of the past, and international peace will have, finally and permanently, arrived. All human relationships would be transformed into altruistic associations of “other-orientedness” with the demise self-interest and possessive greed and selfishness caused by private ownership. Finally, mankind will have entered a heaven-on-earth.

The heart of Mises’s argument was that a socialist centrally planned economy was institutionally unable to effectively and “rationally” function in any way equal or superior to a competitive market economy. Hence, the socialist promise of material standards of life far better than under capitalism was “impossible.”

Private property, competition, and prices

This part of his critique of socialism had been published two years earlier, in 1920, as an article in a German-language scholarly journal under the title, “Economic Calculation in the Socialist Commonwealth.” Mises asked a simple but profound question. Once a socialist regime has come to power, successfully nationalized all of the means of production, and established a system of central planning, how would the central planners know what to do?

How would they know which goods and services to produce in terms of the actual wants of the members of this new socialist society? How would the central planners decide how to do the producing in terms of technologies chosen and the relative types and amounts of scarce resources (land, labor, and capital) to employ in one line of production rather than some other? What would be the economic benchmarks or bases by which the central planners would know they had produced the right goods, in the right amounts, with the most cost-efficient use of the means of production under their control to ensure that the best outcomes prevailed with the least economic waste?

In a functioning, free-market economy, all such questions are answered and solved through the competition of supply and demand and the resulting price system. In the marketplace, consumers are able to inform and convey information to producers what it is they want, and how intensively, by expressing their demand for things through the prices they are willing to pay for final goods and services they are interested in buying. Producers inform consumers what they would be willing to produce and at what prices they might be able to bring quantities of goods and services to market.

At the same time, private enterprisers and entrepreneurs interested in undertaking the production of various goods must compete with each other for employment and use of the scarce means of production that could be potentially employed in different ways making different goods. Their rival bids for purchasing or hiring those means of production, in turn, generate the prices for the factors of production: wages for labor, rent for the use of land, prices to purchase capital (machines, tools, equipment), and interest to borrow other people’s savings for investment projects of many different types and for different lengths of time.

Thus, out of these competitive bids and offers and rivalries on both the demand and supply sides of the market, there emerges the structure of relative prices for outputs and inputs. Those private enterprisers and entrepreneurs can now compare the possible price at which a finished good, if manufactured, might sell for at some point in the future after a production process had been undertaken, with the prices that would have to be paid to employ the needed land, labor, capital, and resources during the production process.

A rational and reasonable decision then could be made as to whether any particular good in question could be produced with a certain combination of the needed inputs and result in a profit (monetary revenues greater than monetary costs) or a loss (monetary revenues less than monetary costs). The profit-oriented self-interest of private enterprisers and entrepreneurs would always tend to make sure that the goods being produced, with particular combinations of resources, were those for which consumer demand justified the costs to bring them to market.

Abolishing the institutions for economic rationality

The impracticability of a socialist system of central planning was that it did away with the institutional prerequisites that are essential for economic rationality: private property in the means of production, a competitive market process for the emergence of a functioning price system, and a stable medium of exchange — money — on the basis of which those inputs and outputs could be compared to determine profit or loss.

But, Mises argued, under socialism, the means of production cannot be (legally) bought and sold, since they are under the monopoly ownership and control of the socialist government. With nothing to legally buy and sell, there are no competitive bids and offers for the means of production. With no bids and offers, there is no marketplace leading to agreed-upon terms of trade. With no agreed-upon terms of trade, there are no market-generated prices. And without market-based prices for both consumer goods and the means of production, there is no successful and rational way to determine profit and loss within the economic system.

As a result, Mises argued, rather than an economic horn-of-plenty in terms of all the goods people really want, in the quantities actually desired, and produced in a way that uses the means of production in the most cost-rational way, what results is a system of, as Mises called it much later on, “planned chaos.” Here went all the socialist hopes and dreams of an alternative social order that would produce more and better goods than in a competitive market economy.

Mises’s 1920 critique on the unworkability of a socialist economic order became the centerpiece of his 1922 volume on Socialism. For decades to follow, indeed, until the collapse of the Soviet Union in 1991, socialists and others denied or ignored Mises’s arguments. Or they attempted to propose forms of what became known as “market socialism,” under which government managers of state-owned enterprises would be assigned to act “as if” they were capitalists using prices imposed by the central planning agency to decide what to produce and in what particular ways.

Socialism versus classical liberalism 

But Socialism is more than just an economic critique of the unworkability of socialist central planning, however profound and timeless this core part of the book was and remains. What Ludwig von Mises offered was an entire critical analysis of the very idea of a socialist system, from the widest philosophical, social, historical, and ideological perspectives. When Hayek referred to the breath of the book being more in the tradition of eighteenth-century Enlightenment figures like Montesquieu or Adam Smith, he was not exaggerating.

At the same time, the volume is a statement and defense of the classical-liberal worldview of individual freedom, the free society, the competitive market order, and the ideal of a global community of men based on human dignity and liberty, voluntary association, and world peace and prosperity. At every turn, as Mises explains the nature and dangers from the establishment of a socialist system, it is juxtaposed with the alternative vision and virtues of free-market liberalism for a truly tranquil and harmonious world.

To begin with, political and economic liberalism reflected humanity’s escape from its long historical existence under conquest, slavery, politically imposed status, and numerous forms of tyranny and despotism. Under emergent liberalism, human relationships, slowly but surely, were transformed into those of contract under which individual association was based on voluntary consent and mutual benefit.

The human being changed from an “object” to be used and abused in the service of others, under the use or threat of political force, into a distinct human being possessing individual rights, deserving respect and dignity from others. The master-and-servant relationship became one of citizens in a free society possessing equality of rights under an impartial rule of law.

Mises emphasized this change in the human condition by highlighting how liberalism had changed the status of women in society. For ages, women were the property of fathers and husbands, expected to obey, and controlled in all they were allowed to do. But with the growing economic liberty of free-market capitalism, women increasingly were recognized as independent human beings possessing the same equal rights as men and free to direct their own lives as they chose in the arena of private property rights, inheritance, contract, and nearly all aspects of decision-making.

Socialist central planning and political tyranny

Any form of socialism entailed a reversal or narrowing of these classical-liberal triumphs in human life. Government nationalizing of private property and the imposing of central planning meant that the individual was now at the mercy and dictates of those planning the socialist society. The government would assign work, determine how and where people lived, and distribute the centrally planned output based on a political determination of what members of the socialist society deserved and “needed.” Mises summarized all this:

The Socialist Community is a great authoritarian association in which orders are issued and obeyed. This is what is implied by the words “planned economy” and the abolition of the [free market] anarchy of production…. It follows that men become the mere pawns of official action….

Socialist society is a society of officials. The way of living prevailing in it, and the mode of thinking of its members are determined by this fact…. Socialism knows no freedom in occupation. Everyone has to do what he is told and go to where he is sent…. Officialdom is extended to the sphere of the spirit. Those who do not please the holders of power are not allowed to paint or to sculpt or to conduct an orchestra. Their works are not printed or performed….

The nationalization of intellectual life, which must be attempted under Socialism, must make all intellectual progress impossible…. No censor, no emperor, no pope, has ever possessed the power to suppress intellectual freedom which would be possessed in a socialist community.

Has there been any instance of a system of socialism-in-practice with comprehensive central planning over the last 100 years that has not borne out Ludwig von Mises’s explanation and warnings of what was likely to happen when “capitalism” is overthrown and the control over the economic affairs of any society is transferred to those who then hold in their hands the destiny of all those under their power?

Have not socialist societies all been giant prisons of tyranny, torture, terror, and mass murder against all those identified and marked as “enemies” or “opponents” or “wreckers” of the Central Plan? Socialism-in-practice has left a global graveyard of well over 100 million victims — innocent, unarmed men, women, and children — on the road to Utopia.

Classical liberalism and world trade

In addition, Mises explained that economic liberalism has helped to foster a worldwide community of peace and prosperity. Over the last 200 years, as political barriers and prohibitions were lowered or abolished, boundary lines between countries became less and less important. Market interactions increasingly became private affairs between consumers and producers, demanders and suppliers bound together in an international web of economic interdependency arising from specialization and division of labor. In place of bombs and bullets dividing and destroying human beings, a bountifulness of peaceful and productive freedom of trade connected more and more members of the human race.

Said Mises: “For Liberalism the problem of the frontiers of the state does not arise. If the functions of the state are limited to the protection of life and property against murder and theft, it is no longer of any account to whom this or that land belongs.” People, capital, and goods freely move to where economic opportunity and personal preference finds it most attractive and desirous. As Mises reinforced:

The greater productivity of work under the division of labor is a unifying influence. It leads men to regard each other as comrades in a joint struggle for welfare, rather than as competitors in a struggle for existence. It makes friends out of enemies, peace out of war, society out of individuals.

This was no fantasy. Before the First World War in 1914, a peaceful and prosperous global community was well toward becoming a reality to the extent to which free-trade liberal principles were mostly practiced among the then-leading
nations of the world. But this
was shattered by the First World War as belligerent nations sealed themselves off from their wartime enemies through renewed protectionism, passports and visas, and centralized planning and systems of wage and price controls — all in the name of “winning the war” by governments across the battle lines. All the nations at war, in other words, introduced “war socialism.” Accompanying this came restrictions on personal freedom, civil liberties, and lost privacy as virtually anything became subject to government surveillance.

Socialism and conflict

In the aftermath of the war’s end in 1918, all the socialist projects ended up being forms of “national socialism,” that is, socialism within individual countries. Mises argued that this not only made citizens of any such socialist state the economic and social captive of their own government, for if systems of fairly comprehensive socialist central planning were to be established in a growing number of countries, it would also mean the end to a peaceful and mutually beneficial international order.

Each centrally planned country would limit imports and exports to what the respective national central planning authorities decided was good and desirable. Foreign investment, now being “affairs of state,” would be dictated and determined by politics rather than by private and peaceful pursuit of profit in the service of global consumer demand. The benefits of international division of labor would be lost. Wars between socialist countries would become a new danger, as one centrally planned society attempted to forcibly obtain needed or desired goods or resources from another centrally planned society that refused to exchange in pursuit of its own domestic planning purposes and targets.

Socialism, therefore, means the demise of the economic and social unity of the world, replaced by national socialist planners potentially sealing off one country from another, with interactions and trade limited to and confined within the
determinations of those same planners. The individual becomes a captive of his own nation’s central planners, who determine how and what types of relationships he will be allowed to have with any and all of the other peoples around the world.

Liberty versus socialism

In a book of over 500 pages, Mises also dissects the various religious and secular ethics that had been used to rationalize and justify a collectivist system replacing a society of free individuals respected and secure in their rights, each peacefully pursuing their own personal purposes and ends. He debunks the centuries-old presumption that individuals following their own goals come into conflict with some presumed higher social or national or collective good. He explains that there is no “social good” independent of and separate from the ends and purposes of the respective individual members of a society. The free market harmonizes the peaceful pursuits of each individual with the purposes and activities of all others.

Toward the end of Socialism, Ludwig von Mises called all friends of freedom to the intellectual battlefront:

Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle [between liberalism and socialism], the decisive battle into which our epoch has plunged us.

Mises was not unaware of how difficult is the task to oppose and defeat collectivism and socialism. In the preface that he wrote for the 1932 second edition of Socialism, Mises said that generations may have to pass for classical liberalism’s victory, and it was for future generations that he had written this book:

I know only too well how hopeless it seems to convince impassioned supporters of the Socialist Idea by logical demonstration that their views are preposterous and absurd. I know too well that they do not want to hear, to see, or above all to think, and that they are open to no argument. But new generations grow up with clear eyes and open minds. And they will approach things from a disinterested, unprejudiced standpoint, they will weigh and examine, will think and act with forethought. It is for them that this book is written.

So, 100 years after Ludwig von Mises’s Socialism was first published, it was written with you in mind, today. You are the future generation that Mises hoped for.

By Richard Ebeling

Originally published on March 10, 2022 for the American Institute for Economic Research

Whether at least part of Ukraine survives as a free and independent country when this war ends, or whether that will have to wait until some time in the future, Ukrainians will have to plan for the reconstruction of their economy at some point in the future. The economic policy agenda for such a reconstruction is at least partly at hand, and can be found in the writings of the Austrian economist, Ludwig von Mises.

Our television screens and social media sites are filled with the images of death and destruction as the Russian army continues its devastating advance into Ukraine. How long this will go on, and with what human and material costs is still not known. But for the Ukrainian people and their country’s economy, the world is, truly, being turned upside down.

Before the Russian invasion of Ukraine on February 24, 2022, the Ukrainian economy was performing fairly well by a variety of official statistics. Price inflation had been declining modestly from nearly 11 percent in the middle of 2021 to an annual rate of 10 percent in January 2022. The rate of monetary expansion had been accelerating through most of 2021, but in January 2022, all the Ukrainian money supply measurements had modestly decreased compared to December 2021, suggesting possible diminished monetary pressures on prices.

Ukrainian Gross Domestic Product (GDP) had grown in the last quarter of 2021 at an annualized rate of nearly 6 percent, and was expected to grow at a reasonably good clip through 2022. The Ukrainian-Russian crisis of 2014 had resulted in Russia’s annexation of Crimea and the breaking away of parts of eastern Ukraine by Russian-supported separatists. The Ukrainian government’s deficit spending to cover military and other expenditures pushed the government debt to GDP ratio from 40 percent in 2013 to nearly 81 percent in 2016. But by the end of 2020, the debt to GDP ratio had declined to less than 61 percent, for a 25 percent decline over four years.

However, the Ukrainian government’s budget deficit in 2020 had equaled 6.1 percent of GDP compared to 1.9 percent in 2018 and 2.1 percent in 2019. And the government’s red ink had significantly continued in 2021. So even if this new war had not interfered, the government debt burden was likely to grow. With growing budget deficits to finance, the government would possibly have turned, again, to the Ukrainian central bank for the money to cover its expenditures in excess of taxes. This would have threatened to reverse the modest deceleration in price inflation.

Ukraine’s Uncertain Political and Economic Future

All of this has now been thrown out of the budgetary window with the war. Will there even be an independent Ukraine at the end of 2022? If it does exist, will it be a really independent country or a puppet state doing the bidding of Vladimir Putin? Will the territory of Ukraine be within the internationally recognized borders before the Russian attack, or will eastern parts of the country be cut off as permanent separate “people’s republics,” or be out-and-out annexed by Russia, as happened with Crimea in 2014?

By the time the military phase of the conflict comes to an end, how much physical destruction will have occurred as a constraint on postwar production and reconstruction? How many Ukrainians will have been killed or seriously injured or disappeared from the Ukrainian labor force due to the likelihood of millions of people going into prolonged or permanent exile in other parts of Europe and the world?

What will be the trade and investment climate and possibilities in a postwar Ukraine, again assuming it continues to exist as some type of separate country, real or puppet? A good part of the answer to this last question will depend on the extent and nature of American and European Union sanctions that remain imposed on Russia, and on whatever remains of Ukraine, if it’s anything other than a vassal state obedient to Moscow.

Will the people of a conquered Ukraine resign themselves to their Russian-determined fate and try to go about everyday life in the new circumstances? Or will there be an extended underground of resistance and sabotage? For several years following the end of the Second World War in 1945, groups of Ukrainian partisans continued armed resistance against the Soviet Union in the forests of western Ukraine. Will that type of determined resistance manifest again?

If a puppet regime is imposed in Kyiv, Ukraine’s economic future for a significant period of time will be determined by the degree to which Western sanctions are kept in place. The country’s economic prospects will be confined within the limited options and narrower opportunities as a vassal state within the political and economic orbit of Putin’s Russia.

Ukraine as Europe’s Submerged Nation in the Soviet Union

The worst scenario for the country and its people would be a repeat of what occurred in the aftermath of the First World War. After centuries under the rule of, especially, Imperial Russia and Austria-Hungary, Ukrainian nationalists declared their nation’s independence, like many other ethnic and linguistic groups were doing in central and eastern Europe in 1918 and 1919. But the Ukrainians, due to internal divisions, could not withstand the attacks of the conflicting armies of a reconstituted Poland trying to recreate a “greater Poland,” and Lenin’s Bolshevik forces overrunning parts of Ukraine while defeating the remnants of the anti-communist Russian military units.

The final outcome, after a peace treaty between Poland and Soviet Russia in 1921, was that the western part of the Ukrainian lands, including the city of Lviv, came under Polish control; the other two-thirds of the country, containing the capital city of Kyiv, fell under Soviet power. From 1921 to 1991, Ukraine remained a “submerged nation,” which under Soviet control suffered the death of millions of innocent men, women and children during Stalin’s forced collectivization of the land in the early 1930s. The Ukrainians suffered even more destruction in the Second World War, first from the invading German army in 1941-1943, and then with the return of Stalin’s rule at the end of the war in 1944-1945.

With the end of the Soviet Union in 1991, Ukraine declared its independence. For the last thirty years, the country has experienced the dream that has been dreamed by many Ukrainians for centuries: being an independent nation-state. But, now, Putin’s Russia threatens to remove Ukraine, again, from the political map of the world, as happened in 1921 at the hands of Lenin and his Soviet government.

Ukraine’s Prewar Imperfect Political System

Independent Ukraine has not been a model of a perfectly functioning political democracy, nor has the government always respected the civil liberties of every citizen. Corruption has abounded. Privileges and favors to various individuals and interest groups have been freely meted out. Fiscal mismanagement has always been present, and price inflation has sometimes been high and erratic due to the Ukrainian central bank’s willingness to turn the handle of the monetary printing press to finance the government’s spending needs.

But whatever the political imperfections, economic regulatory hurdles, and monetary and fiscal abuses, freedoms of the press, speech, religion, and association have been fairly reasonably practiced in recent years. On the Freedom House’s index for overall respect for political rights and civil liberties in countries around the world, Ukraine got 61 percent out of a hundred. Not close to Germany’s 94 percent, or the UK’s 93 percent or even Poland’s 81 percent, among some other European countries. But Ukraine appeared to be a shining example of a politically free society compared to, say, Russia with a score of 19 percent out of a hundred, or Belarus with only 8 percent.

Ludwig von Mises’s Gold Standard Proposal for Ukraine

Whether at least part of Ukraine survives as a free and independent country when this war ends, or whether that will have to wait until some time in the future, Ukrainians will have to plan for the reconstruction of their economy at some point in the future. The economic policy agenda for such a reconstruction is at least partly at hand, and can be found in the writings of the Austrian economist, Ludwig von Mises.

Mises, interestingly, was born in Lviv in 1881, when it was then known as Lemberg in the old Austro-Hungarian Empire. He served as an artillery officer in the Austrian Army during World War I, seeing action on the eastern front against the Russians. After Lenin’s Bolshevik government signed a separate peace with Imperial Germany and Austria-Hungary in February 1918, Mises was sent to the part of Ukraine that fell under Austrian occupation. He was assigned as officer in charge of currency control, with his headquarters in Odessa. Mises served there for most of the spring of 1918, until he was ordered back to Vienna as an economic expert with the Austrian general staff until the end of the war in November 1918.

In the summer of 1918, shortly after returning to Vienna, Mises prepared a policy paper offering “Remarks Concerning the Establishment of a Ukrainian Note-Issuing Bank.” It was an outline of the institutional rules to be followed by a Ukrainian central bank under a gold standard. (In Selected Writings of Ludwig von Mises, Vol. 2, pp. 23-29)

All bank notes issued and outstanding, Mises said, should be at all times covered with gold reserves or foreign exchange redeemable on gold to one-third of the bank’s liabilities. Bank assets in the form of secure, short-term loans should back the remaining two-thirds of the notes in circulation. Mises admitted that there might be particular historical and institutional circumstances that would have to be taken into consideration in setting the conditions under which certain types of borrowers might have access to the lending facilities of the Ukrainian central bank. But what was crucial for Ukraine to have a sound monetary system were ample gold reserves for redemption on demand; also essential were limits on the term structure of loans made by the central bank to make sure it was always, ultimately, able to meet its obligations to maintain a functioning gold standard.

Establishing a gold standard in Ukraine, or anywhere else in the world today seems highly unlikely. Governments value too highly their ability to access fiat money for their deficit-covering purposes, and for central banks to have the means by which to try to influence borrowing, spending, and employment through monetary and interest rate manipulations. But Mises’s central point was that unless there are institutional rules and checks on a central bank to prevent it from arbitrarily changing the quantity of money and credit in the economy, the danger of serious price inflation and the booms and busts of the business cycle will always be present.

Mises’s Economic Agenda for Postwar Reconstruction

An outline of a Ukrainian postwar agenda for economic reconstruction is to be found in a series of monographs, essays, and lectures that Mises delivered in the early 1940s after his escape to America from war-torn Europe in 1940. Much of Europe was being destroyed in the conflict between Nazi Germany and the Allied powers. When the war was finally over, the task of rebuilding a broken Europe would be immense. (See, Selected Writings of Ludwig von Mises, Vol. 3: “The Political Economy of International Reform and Reconstruction”.)

To successfully rebuild Europe, the postwar world would have to be one of work, saving, and investment to, first, rebuild all that was gone, and then to build on that for a more prosperous life than had prevailed before the outbreak of the war in 1939. Or as Mises, expressed it, “It is the duty of honest economists to repeat again and again that, after the destruction and the waste of a period of war, nothing else can lead society back to prosperity than the old recipe – produce more and consume less.” Mises went on:

The distinctive mark of a sound economic policy is that it aims at the establishment of a durable system resulting in a continuous improvement of the nation’s wellbeing. There can hardly be imagined a worse principle of government than that of the short-run policies of the last decades . . . A policy that, indifferent about tomorrow, strives after ephemeral success and carelessly sacrifices the future is not progressive but parasitic . . .

“There is but one means to improve the economic wellbeing of a whole nation and each of its individual citizens: The progressive accumulation of capital. The greater the amount of capital available, the greater the marginal productivity of labor and, therefore, the higher the wage rates. A sound economic policy is a policy that encourages savings and investment and thereby the improvement of technical methods of production and the productivity of labor.

The Need for Secure Property Rights and Entrepreneurship

Mises argued that fundamental to a peaceful and prosperous future was a change in ideas away from various forms of collectivism and political paternalism to “an ideology that could lead us to a perfect free market economy.” Property rights need to be recognized, secured, and protected against not only private plunderers but, more importantly, against the confiscating and regulating hands of government.

This was essential not only to induce the domestic incentives for work, saving, investment and entrepreneurial creativity, but also to create the domestic institutional confidence to successfully attract and secure both direct foreign private investors and financial lenders from abroad. Only in this way could a war-recovering country – like Ukraine will be – accelerate reconstruction and increase production and productivity, so as to not be dependent only on the possibilities from domestic savings and scarce resources in that postwar environment.

There has to be both a respect for and the free market latitude given to entrepreneurs and the entrepreneurial spirit out of which arises progress and prosperity. As Mises said, looking over the wreckage left by the war in Europe, “If there is any hope for a new upswing it rests with the initiative of individuals . . . The entrepreneurs will have to rebuild what the governments and the politicians have destroyed.”

Ending the Politics of Envy and Economics of Redistribution

This also means, Mises said, that the politics of envy and government redistribution must be put aside. Who shall be left to be taxed in any “tax the rich and subsidize the poor” scheme in a setting in which war has made practically everyone a “have-not, when the focus of economic policy should be to foster capital formation, not wealth redistribution.” In the type of postwar setting in which Ukraine will find itself, Mises’s words remain no less true today: “There is no other recipe than this: Produce more and better, and save more and more.”

Taxes need to be low, predictable, and non-disincentivizing. Property rights need to be secure, protected, and free from the intervening and regulating hand of government. A politics of envy and political pandering to special interest groups has to be set aside, so profit-seeking, market-directed entrepreneurs can be confident and at liberty to peacefully and productively go about the work of producing what consumers want and investing in more, new, and better capital to raise the standards of living of all over the longer run.

Trade between nations needs to be free and unrestricted so all might benefit from gains from specialization in a global system of division of labor. The doors of Europe have been thrown open to Ukrainian refugees in the generous and charitable spirit of offering shelter and safety to those escaping from Putin’s dreams of “making Russia great again.” When the shock and sorrow die down, there should be no fear of a free movement of people, alongside a free movement of goods and capital. Hands, just like money and commodities, move where they can be most profitably and productively employed to the long-run betterment of all, everywhere. This, too, was part of Mises’s program for international peace and prosperity.

The Need for a Radical Change in Ideas to Economic Liberty

According to Mises,

“What ranks above all else for economic and political reconstruction is a radical change in ideologies. Economic prosperity is not so much a material problem; it is, first of all, an intellectual and moral problem.”

Putin’s foreign policy of conquest, or Ukraine’s pre-war domestic politics of corruption and favoritism, or America’s political economy of seemingly unending budget deficits and growing debt, are the practical outcomes of an ideology of plunder. The idea is that taking is superior to exchanging; that coercing is better than reasoning and persuading; and that forced association is as moral as relationships based on voluntary agreement. It is the immorality of force versus the ethics of liberty.

War dramatically brings out the difference between these two opposing conceptions of social life. Out of this conflict and at some time in the future, Ukrainians will have to not only rebuild their country, but decide which of these two ideologies will be the foundation for their country’s future. The better one would be Ludwig von Mises’s proposed ideology of a “perfect free market economy.”

Friedrich Hayek (1899–1992) was a philosopher and economist born in Austria-Hungary at the turn of the nineteenth century. Part of the esteemed Austrian School, Hayek became well-known around the world for his defense and encouragement of classical liberalism. In 1974, Hayek was awarded a shared Nobel Memorial Prize in Economic Sciences for his work in fiscal theory and economic fluctuations, examining how social and institutional variables impact markets. 

After being raised by a family of scholars and professors in his early years, Hayek became interested in philosophy, academia, and the arts. Despite his interests however, any career ambitions would have to be put on hold when Hayek joined the Austro-Hungarian Army in 1917 to fight in the final year of World War I.

Heavily discouraged by the destruction and death he witnessed living through the war and Spanish Flu, Hayek returned to his native country to pursue an academic career, vowing to improve the political and economic processes that he believed helped contribute to the world’s recent tragedies. 

Hayek enrolled in the University of Vienna where he studied philosophy and economics. By the end of his schooling, Hayek had obtained two law doctorate’s, was taught by and worked for Ludwig Von Mises, and was heavily influenced by the works of Carl Menger. 

While living in London in the early 1930s, Hayek exchanged letters in a newspaper column with John Maynard Keynes, arguing that incentivizing private investment was a much better answer on the road to economic recovery than government spending programs. 

In the early 1940s, Hayek wrote what is now his most well known book, The Road to Serfdom, in which he analyzed the relationship between economic and political freedom. He goes on to warn those reading that a new despotism could come about in the name of government liberation for the greater good of society. Hayek also advocated for free markets, arguing any step towards government regulation was just the beginning on the journey towards sacrificing individual freedoms in exchange for tyrannical government control. 

Throughout the 1950s, Hayek moved to America where he was a visiting professor at the University of Arkansas and the University of Chicago. There, he led several seminars on philosophy and economics, amongst other topics. On several occasions, Hayek worked closely with Milton Friedman to form multiple academic institutions advocating for social liberty and free markets. He also published his second book entitled, The Constitution of Liberty.

Until being awarded the Nobel Memorial Prize in 1974, Hayek jumped between Germany, Austria, and California, continuing to teach and write despite suffering from various health issues and depression. Although he was surprised to receive the Nobel Award, Hayek used the opportunity to rejuvenate his career and promote his libertarian ideas to the masses. 

During his remaining years, Hayek remained a prominent figure in the conservative free-markets movement, receiving recognition from multiple institutions, and became an outspoken figure in British politics. He had several meetings with Margaret Thatcher to discuss economic policy and was also one of twelve Nobel awardees to speak with Pope John Paul II to discuss the relationship between Catholicism and the sciences in the modern world.

Hayek’s work ranges but includes topics such as the market’s business cycle, the failures of centralized economic planning, liberties being restrained for the sake of collectivism, political philosophy that promotes free societies and justice under the rule of law, and the importance of choice theory as a part of an individual’s decision making. 

Hayek died in March 1992 in Freiburg, Germany and is buried near Vienna, Austria. 

Sources:

Wikipedia entry

Encyclopedia Britannica

Mises Institute

The Nobel Prize

Foundation for Economic Education