I Chose Liberty - Ludwig von Mises Institute

George Reisman 283
no other reason than that it abandoned the distinction between private action and government
action and implicitly urged unregulated, uncontrolled government action, i.e., the
uncontrolled, unregulated use of physical force. This was the logical implication of treating
government as a free business enterprise. I had to conclude that government in the form of
a highly regulated, tightly controlled legal monopoly on the use of force, was necessary
after all, in order to provide an essential foundation for unregulated, uncontrolled private
markets in all goods and services, which would then function totally free of the threat of
physical force. This indeed, represented nothing more than a return to my starting point.
It was what the government established by the United States’s Constitution had represented,
and which I had so much admired.
At that time, and in later years, I came to be influenced by Ayn Rand’s ideas in numerous
ways, thanks in part to the fact that over the years between 1957 and her death in 1982,
I had the opportunity of frequently meeting with her and speaking with her extensively
about her writings. The influence of her philosophy extolling individual rights and the
value of human life and reason appears repeatedly in my book, Capitalism, and in numerous
ways sets its intellectual tone.
The year and a half or more following my abandonment of the doctrine of competing
governments turned out to be the most intellectually productive of my life, and to provide
most of what is original in my book.
By this time, I had already completed all of the course work for a Ph.D., but I still had
the written and oral exams and the dissertation in front of me. My original plan had been
to go straight through for the Ph.D., in the shortest possible time. Now I found the prospect
of the obstacles that still remained to be somewhat more daunting, and so I decided that
it would be worthwhile to take a few months out and obtain an MBA degree. For this, all
I needed to do was write an MBA thesis.
I decided to choose a topic that would require that I read only “good people”—i.e.,
sound authors. I had come to the conclusion that because the efforts of proto-Keynesians,
such as Malthus and Sismondi, had been decisively defeated by the classical economists
in the early nineteenth century, and because nothing like the pure-and-perfect-competition
doctrine had ever even arisen in the nineteenth century when classical economics was
in vogue, there must have been something in classical economics that served to refute
or thoroughly preclude such doctrines in the first place, and thus that I should turn to
it once again as a source of knowledge. The thesis topic I chose was The Classical Economists
and the Austrians on Value and Costs. This topic required that I read extensively in Menger,
Böhm-Bawerk, and Wieser for the Austrian views, and not only in Smith and Ricardo,
but also in James Mill, Say, McCulloch, Senior, and J.S. Mill, for the views of classical
economics.
This project turned out to be a very good idea, indeed. I learned much more about the
doctrine of diminishing marginal utility, including how it subsumes cases in which prices
are actually determined in the first instance by cost of production. (On this point, see the
lengthy quotation from Böhm-Bawerk on pp. 414–16 in Capitalism and see also my translation
of Böhm-Bawerk’s “Value, Cost and Marginal Utility” and my notes on the translation,
both of which appear in the fall 2002 issue of the Quarterly Journal of Austrian Economics.)