Ludwig von Mises, Economist, Author and Teacher, Dies at 92



By Leonard SilkOct. 11, 1973

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Ludwig von Mises, one of the Foremost economists of this century, died yesterday in St. Vincent's Hospital at the age of 92. He lived at 777 West End Avenue.

Professor von Mises was best known in this country as a champion of libertarian economics — the doctine that regards with intense suspicion any intervention in the economy by government. He was recognized as a brilliant contributor to economic thought not only by his disciples but also by many who disagreed radically with his political and social philosophy, such as the outstanding socialist economist, Oskar Lange.

He acquired his first recognition for his “Theory of Money and Credit,” published in German in 1912. In that work he was the first to develop the theory of subjective value to explain the demand for cash balances as a basis for expansions and contractions in economic activity.

Stressing the causal role of individual human decisions, Professor von Mises observed that changes in the amount of cash individuals want to hold would cause expansions and contractions in the volume of money and credit.



Developed, Cyclical View

He went on to develop a complete theory of the business cycle resulting from the expansion and contraction of the money supply. Booms, he said, resulted from the expansion of fiduciary bank credit, which inflated the money supply and artificially lowered interest rates. This in turn led to overinvestment, which set the economy up for a slump. Depression would follow as the expansion of the money supply was brought to a halt—either because the banking system encountered a limit of reserves or because the monetary authorities clamped down on further credit expansion.

In 1922, Professor von Mises set forth his critique of collectivist economics in “Socialism: An Economic and Sociological Analysis.” The work was to have a major impact on socialist thinking.

He presented the challenging argument that rational economic organization was logically impossible in the absence of free markets. Hence, he contended, socialism was bound to wallow in inefficiency, because it lacked correct market prices on which to base decisions about what to produce and how to produce it.

Although they regarded his views as too extreme, such socialist economists as Oskar Lange in Poland and Abba P. Lerner in England took Professor von Mises's strictures seriously, and set out to construct a theory of socialism based on simulated markets—“playing the game of competition.” Professor Lange, who spent some years at the University of Chicago and returned to Communist Poland after World War H, once declared that “in front of every Socialist ministry of planning there should be a statue of Ludwig von Mises.”

It was not until the nineteensixties that the Soviet Union and other Communist countries began to take seriously the need for developing the market as a tool for rational planning and allocation of goods and resources.



Professor von Mises, however, regarded such socialist efforts at imitating the market—“planning not to plan”—as doomed to failure. “Unfortunately,” he wrote, “it is not possible to divorce the market ... from the working of a society which is based on private property in the means of production.” Without the striving of entrepreneurs for profit, of landlords for rent, of capitalists for interest and of workers for wages, the system could not succeed, he contended.

A Brilliant Teacher

The economist was regarded as a brilliant teacher. His students, at the University of Vienna and in his informal Wiener Kreis (Vienna circle), numbered many who were to go on to fame of their own as economists and philosophers. His students included Fritz Machlup, Gottfried von Haberler, Fredirch Hayek, Gerhard Tintner, Oskar Mogenstern, Ilse Mintz, Rudolf Carnap and Karl Popper.

Professor von Mises was credited with helping to revive respect for free‐market economics in Europe (he was considered by some the intellectual godfather of the German postwar “economic miracle”). His views are held in high regard at the American capital of libertarian economics, the University of Chicago, whose most famous resident scholar is Prof. Milton Friedman.

The economist was born in Lemberg, Austria, on Sept. 29, 1881. He left his professorship at the University of Vienna as the Nazi tide approached Austria, and became Professor of International Economic Relations at the Graduate Institute of International Studies in Geneva. He came to the United States in 1940 and became a citizen in 1946. He was a founder of the Mont Pelerin Society, a group of like‐minded economists; a member of the faculty of New York University from 1945 to 1969, and the author of 19 books.

Surviving is his widow, Margit.

The service will be held at noon Tuesday in the Universal Funeral Chapel, Lexington Avenue and 52d Street.