Economic Policy. Людвиг фон Мизес

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       ECONOMIC POLICY

      The Liberty Fund Library of the Works of Ludwig von Mises

      EDITED BY BETTINA BIEN GREAVES

      The Anti-capitalistic Mentality

      Bureaucracy

      Economic Freedom and Interventionism: An Anthology of Articles and Essays

      Economic Policy: Thoughts for Today and Tomorrow

      Human Action: A Treatise on Economics

      Interventionism: An Economic Analysis

      Liberalism: The Classical Tradition

      Nation, State, and Economy: Contributions to the Politics and History of Our Time

      Omnipotent Government: The Rise of the Total State and Total War

      On the Manipulation of Money and Credit: Three Treatises on Trade-Cycle Theory

      Planning for Freedom: Let the Market System Work A Collection of Essays and Addresses

      Socialism: An Economic and Sociological Analysis

      Theory and History: An Interpretation of Social and Economic Evolution

      The Theory of Money and Credit

      The Ultimate Foundation of Economic Science: An Essay on Method

      EDITED BY RICHARD M. EBELING

      Selected Writings of Ludwig von Mises

      Volume 1: Monetary and Economic Policy Problems Before, During, and After the Great War

      Volume 2: Between the Two World Wars: Monetary Disorder, Interventionism, Socialism, and the Great Depression

      Volume 3: The Political Economy of International Reform and Reconstruction

      This book is published by Liberty Fund, Inc., a foundation established to encourage study of the ideal of a society of free and responsible individuals.

      The cuneiform inscription that serves as our logo and as a design element in Liberty Fund books is the earliest-known written appearance of the word “freedom” (amagi), or “liberty.” It is taken from a clay document written about 2300 B.C. in the Sumerian city-state of Lagash.

      © 1979 by Liberty Fund, Inc. Editorial additions and index © 1995, 2010 by Liberty Fund, Inc.

      Front cover photograph of Ludwig von Mises used by permission of the Ludwig von Mises Institute, Auburn, Alabama.

      This eBook edition published in 2011.

      eBook ISBN: E-PUB 978-1-61487-146-0

       www.libertyfund.org

      CONTENTS

Introduction by Bettina Bien Greaves

Foreword by Margit von Mises

First Lecture Capitalism

       Second Lecture Socialism

       Third Lecture Interventionism

       Fourth Lecture Inflation

       Fifth Lecture Foreign Investment

       Sixth Lecture Politics and Ideas

       Index

INTRODUCTION

      The ideal economic policy, both for today and tomorrow, is very simple. Government should protect and defend against domestic and foreign aggression the lives and property of the persons under its jurisdiction, settle disputes that arise, and leave the people otherwise free to pursue their various goals and ends in life. This is a radical idea in our interventionist age. Governments today are often asked to regulate and control production, to raise the prices of some goods and services and to lower the prices of others, to fix wages, to help some businesses get started and to keep others from failing, to encourage or hamper imports and exports, to care for the sick and the elderly, to support the profligate, and so on, and on, and on.

      Ideally government should be a sort of caretaker, not of the people themselves, but of the conditions which will allow individuals, producers, traders, workers, entrepreneurs, savers, and consumers to pursue their own goals in peace. If government does that, and no more, the people will be able to provide for themselves much better than the government possibly could. This in essence is the message of Professor Ludwig von Mises in this small volume.

      Professor Mises (1881-1973) was one of the twentieth century’s foremost economists. He was the author of profound theoretical books such as Human Action, Socialism, Theory and History, and a dozen other works. However, in these lectures, delivered in Argentina in 1959, he spoke in nontechnical terms suitable for his audience of business professionals, professors, teachers, and students. He illustrates theory with homespun examples. He explains simple truths of history in terms of economic principles. He describes how capitalism destroyed the hierarchical order of European feudalism, and discusses the political consequences of various kinds of government. He analyzes the failures of socialism and the welfare state and shows what consumers and workers can accomplish when they are free under capitalism to determine their own destinies.

      When government protects the rights of individuals to do as they wish, so long as they do not infringe on the equal freedom of others to do the same, they will do what comes naturally—work, cooperate, and trade with one another. They will then have the incentive to save, accumulate capital, innovate, experiment, take advantage of opportunities, and produce. Under these conditions, capitalism will develop. The remarkable economic improvements of the eighteenth and nineteenth centuries and Germany’s post-World War II “economic miracle” were due, as Professor Mises explains, to capitalism:

      [I]n economic policies, there are no miracles. You have read in many newspapers and speeches, about the so-called German economic miracle—the recovery of Germany after its defeat and destruction in the Second World War. But this was no miracle. It was the application of the principles of the free market economy, of the methods of capitalism, even though they were not applied completely in all respects. Every country can experience the same “miracle” of economic recovery, although I must insist that economic recovery does not come from a miracle; it comes from the adoption of—and is the result of—sound economic policies. (p. 11)

      So we see that the best economic policy is to limit government to creating the conditions which permit individuals to pursue their own goals and live at peace with their neighbors. Government’s obligation is simply to protect life and property and to allow people to enjoy the freedom and opportunity to cooperate and trade with one another. In this way government creates the economic environment that permits capitalism to flourish:

      The development of capitalism consists in everyone’s having the right to serve the customer better and/or more cheaply. And this method, this principle, has, within a comparatively short time, transformed the whole world. It has