Mises the Hypocrite?

Miscellaneous History
1

This is the article: Mises the Hypocrite: When Reality Trumps Praxeology

I’d appreciate some info about these two points:

  1. He even supported limited and temporary subsidies to assist poor Mexican farmers to establish themselves as more-successful private enterprisers.

I don’t have a copy of Eberling’s book. Was Mises in favor of instituting govt subsidies of farmers, or of keeping existing subsidies going for a while?

  1. “In tackling the economic crisis the Dollfuss-Schuschnigg dictatorship pursued harsh deflationary policies designed to balance the budget and stabilize the currency. The government’s program featured severe spending cuts, high interest rates, and frozen wages. From an orthodox economic point of view there was considerable success: by 1937, both industrial and agricultural production had surpassed the levels of 1929; trade was more favourably balanced; the National Bank had liquidated most of its foreign debt and even accumulated reserves of gold and foreign exchange. In a sense the Christian Corporative regime demonstrated the viability of the Austrian state, but it did so at the cost of alienating a majority of the Austrian people. On the eve of Anschluss a third of the population was still out of work, while those fortunate enough to have jobs were bringing home paychecks considerably smaller than before the Great War” (Bukey 2000: 17).

What does he mean by “frozen wages”?

  1. “Beginning in in 1931, [Austrian] unemployment grew rapidly, reaching a peak in 1933–6, with between 24 and 26 per cent of the labour force out of work …. When, in 1937 and 1938, there was a modest recovery, unemployment never dropped below the 20 per cent value. This had a devastating effect on the legitimacy of the Austrian system …. As the Austrian government sustained its reluctance to apply Keynesian policies, the economic recovery never entered a serious tale-off phase in the second half of the 1930s. Linked to an exhausted determination of the Austrian government to resist the pressures from Germany, the economic crisis of the 1930s should be seen as an additional reason why the Austrian society was receptive to the annexation by Germany in March 1938″ (Gerlich and Campbell 2000: 55).

Austrians are fond of pointing to the US recession of 1920-1921 as (alleged) proof that austerity brings prosperity, but you will not find them using 1930s Austria as proof of that, even though their hero Mises may well have had a hand in the contractionary policies pursued by the Austro-fascists.

In reality, it was the vicious austerity and deflationary economics imposed on Austria that led to some measure of public support for the Nazi takeover (Utgaard 2003: 72).

Any explanation or comments about this?

2

At that time Austria was in no way a liberal country and was in very poor shape. It experienced hyperinflation after WWI and had been ruled by the social democrats (who engaged in increased public spending and favouritism of labour unions) from that time until 1934, when it was taken over by a Fascist regime (in the proper sense), which instituted price controls etc. Combine this with the international downturn of the early 30’s, protective tarriffs being raised, the failure of the largest bank in Austria in 1931 as a result of French intervention and, from 1933, Germany purposefully trying to prevent Germans from engaging in tourism/work/investment in Austria by imposing a fee on entrance into Austria and the resulting unemployment is unsurprising. In 1932 Mises and co. attempted to advise the government on what to do - to no avail. Austria of the 20s/30s did not resemble Mises’ prescription at all.

3

After reading the whole article it is safe to say that the author simply doesn’t get it when discussing Mexico. Mises position was that slowly undoing the socialist policies would be a better choice than simply undoing them in one fell swoop. An incremental move away from the socialist policies would allow for those on the margin of protected industries to fail first and move to areas of production that were viable. Simply ending al the policies at once would cause massive dislocations in the capital structure that would be difficult to reover from.

4

Points two and three are meaningless because the author fails to establish that Mises influenced economics policy in Austria at the time or even supported it.

5

Maoists still exist?! Sweet!

6

I know, right?