I Chose Liberty - Ludwig von Mises Institute

30 I Chose Liberty: Autobiographies of Contemporary Libertarians
deduction is a very robust defense of the free society and indeed allows you to go on the
offense against any socialist or collectivist system.
This rationalistic approach, then, has allowed me to square off or to hook up nicely
with my natural law and natural rights way of thinking. The epistemology of Ludwig von
Mises is an advance over the point where Kant stopped by setting the axiom of action firmly
in reality; the positivist onslaught becomes blunted. The logical deductive method of Mises
has been a true eye-opener and a pleasure to read. I am very grateful to the Mises Institute
in bringing it to my attention.
Although Mises replaced Hayek as my most favourite philosopher cum economist cum
political scientist, Mises had rekindled my interest in Hayek—but as Hayek the economist
rather than Hayek the social and political thinker.
Ludwig von Mises’s 1912 book The Theory of Money and Credit had set out the first
formulation of the Austrian theory of the business cycle, showing how an artificial lowering
of interest rates could cause a change in people’s time preferences and misallocate
capital away from consumption and into investment-orientated projects. As entrepreneurs
know, with the availability of cheap money bringing marginal projects to fruition, this
ultimate capital overhang brings overinvestment to certain sections of the economy at
the expense of under-investment in others—hence the boom-bust cycle is born. Little
did I know that Lionel Robbins, at the LSE in the 1920s and 1930s, adopted the Misesian
position on epistemology and in general economics; having studied at the LSE one would
have thought one would have been made aware of this. Robbins invited von Mises’s most
prominent student, Hayek, to lecture, and the Prices and Production lecture series was
created in 1931.
Hayek presented and reformulated the Austrian theory of the business cycle; both
Hayek and Robbins, came into great conflict with Keynes and his followers in Cambridge
in the 1930s. Keynes wrote a treatise on money, which Hayek attacked very successfully,
and Keynes acknowledged most of the criticism, modifying his position. When the
General Theory was published, however, Hayek did not bother critiquing it, as he thought
Keynes would change his position. On the contrary, this book of Keynes’s was instrumental
in creating the climate for central government, planning and control as the Second
World War began. After this war, Hayek left the LSE largely to write on political philosophy
in America; indeed, at the University of Chicago he was prevented from joining the
economics department. Ironic that he was a first rate economist and his work at LSE
resulted in the award of the Nobel Prize in economics in 1973. My delight and pleasure
in reading Mises has lead me to discover the works of professor Roger Garrison, which
are a continuation of Hayek’s. In his book Time and Money: The Macroeconomics of Capital
Structure, Professor Garrison presents us with an accurate and up-to-date picture of the
Austrian theory of the business cycle and how it critiques the Keynesian system and
indeed the monetarist system as well.
I was delighted to set up, with the help of the Mises Institute, the distinguished Hayek
visiting fellowship at LSE. The debate in the UK is largely sterile; although the great intellectual
work of Hayek proceeded via the IEA, and with Margaret Thatcher’s great contribution
the climate has moved in the direction of a liberal free society, much more work needs to be