Why Libertarians Should Read Mises – Part Three

Why Libertarians Should Read Mises 

Part Three 

By Duncan Whitmore

In this final part of three essays exploring the importance of Ludwig von Mises’ for libertarian thought, we will examine Mises’ views on the fundamental importance of economics in society, and the meaning of this for understanding the particular nature of the state and statism in our own time. We will then conclude (in a separate post) with an annotated bibliography of Mises’ major works.

 The Fundamental Importance of Economics in Society

Mises had a particularly insightful understanding of the special, foundational status of economics and the influence of economic theory in human society. In his own words:

Economics […] is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence.


Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.


The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.1

Determining the causes and effects of trends in human history always presents us with something of a chicken or egg problem. Certainly it is true that the prevailing aspirations, attitudes, and ideas of one era will shape and determine those of the next. However, a specific conundrum is how much do our ideas shape events and how much, on the other hand, do events shape our ideas? How do the problems we face determine our attitudes and how much do our attitudes define our problems? And which type of ideas, events and problems are the most significant?

In light of what Mises has said above, it is submitted that economics – or, more precisely, economic aspirations and the methods chosen to employ them – carry especially fundamental importance. Moreover, economic conditions are the most likely determinant of the susceptibility of a people to new ideas, and whichever ideas are subsequently adopted are likely to have the most profound effects upon the course of that society.

In stating this, we are not simply making the trite observation that a typical person will concern himself more with eking out a basic living before turning his attention to the refinement of abstract ideas and the practice of high culture. Nor are we merely asserting that a typical person is more likely to change his ideas at the prospect at being paid enough money to do so than he is to cling to ideas that he has to pay for, true as it may be.

Rather, Mises understanding in this regard is uniquely sophisticated; for, as we saw in Part Two, in the Misesian formulation, economising action – the redirection of means to best fulfil our ends through the prism of reasoning – is the very raison d’etre of humanity. It is the foundation on which all of our knowledge, wisdom, morality, culture, temperaments and attitudes are based and, moreover, are ultimately in service of – it is the very life and soul of human existence.

Again, in Mises’ own words:

Man cannot escape death. But for the present he is alive; and life, not death, takes hold of him. Whatever the future may have in store for him, he cannot withdraw from the necessities of the actual hour. As long as a man lives, he cannot help obeying the cardinal impulse, the élan vital. It is man’s innate nature that he seeks to preserve and to strengthen his life, that he is discontented and aims at removing uneasiness, that he is in search of what may be called happiness.


Human reason serves this vital impulse. Reason’s biological function is to preserve and to promote life and to postpone its extinction as long as possible. Thinking and acting are […] the foremost features of man’s nature. The most appropriate description of man as differentiated from nonhuman beings is: a being purposively struggling against the forces adverse to his life.


Within the universe the existence of which our reason cannot explain, analyze, or conceive, there is a narrow field left within which man is capable of removing uneasiness to some extent. This is the realm of reason and rationality, of science and purposive action.


No philosophical subtleties can ever restrain a healthy individual from resorting to actions which – as he thinks – can satisfy his needs.


In living man […] desires [for a vegetative, contemplative life] are outweighed by the urge to act and to improve his own condition. Once the forces of resignation get the upper hand, man dies.2

Consequently, man’s endeavours to act and the conditions in which he finds himself having to do so will be the source of his most profound influences and will shape the course and character of his life.

In stating this, Mises is in no way embracing, as Marx did, any kind of naïve materialism or determinism. In fact, Mises flatly rejected the notion that human will and reason are the slaves of material conditions3, and categorically places ideas at the forefront of social change:

The history of mankind is the history of ideas. For it is ideas, theories and doctrines that guide human action, determine the ultimate ends men aim at, and the choice of the means employed for the attainment of these ends. The sensational events which stir the emotions and catch the interest of superficial observers are merely the consummation of ideological changes. There are no such things as abrupt sweeping transformations of human affairs. What is called, in rather misleading terms, a ‘turning point in history’ is the coming on the scene of forces which were already for a long time at work behind the scene. New ideologies, which had already long since superseded the old ones, throw off their last veil and even the dullest people become aware of the changes which they did not notice before.4

Moreover, he denies explicitly that man’s “ends” are of a distinctly material nature:

Economics does not assume or postulate that men aim only or first of all at what is called material well-being. Economics, as a branch of the more general theory of human action, deals with all human action, i.e., with man’s purposive aiming at the attainment of ends chosen, whatever these ends may be.5

It is true that a man must forever act within the physical, material world, and must always direct physical means to satisfy his ends. Nothing that he can do will change this fact of reality. However, what is categorised as a “better” devotion of means to ends – i.e. achieving a greater sense of fulfilment – and the very substance of means and ends themselves are a product of his own choosing. A human is not deterministically conditioned to accumulate more and more tat, and nor is it true that any piece of physical material that he can get his hands on automatically has value for his life by virtue of its existence. In short, he is not forced to regard “better” as always meaning physically more.

For instance, we can easily imagine that our actions and lives may be improved by devoting the existing means we have in a better way, rather than by simply increasing them – a different recipe, a different order, or a new routine, for example. Or we may even benefit from reducing the quantity of physical material in our environment if such material is an impediment to our ability to act and function. After all, who has never felt better for having a good clear out?

Further, where we do work towards obtaining an increase in the means at our disposal, it doesn’t follow that this is placed in service of lusting after more physical possessions. Rather, we also seek the more ethereal goals of improvement, refinement, quality, and connoisseurship. For instance, if a man earns an increase in his salary he may stop buying supermarket burgers and instead treat himself to butchers’ steaks; instead of stocking the fridge with more cheap lager he might take an interest in fine wine or dabble in the delights of a single malt; rather than covering his walls with more printed posters he may choose to purchase an original oil painting.

Execution of Marie Antoinette on October 16

Frustrated aspirations rather than dire pauperism were a major cause of the French Revolution

The upshot of all of this is that, in asserting that economic aspects and economic ideas are the most important in determining societal change, it is not the physical, material conditions per se that are the drivers of social change. While the plunge of society from prosperity to pauperism may cause a greater number of people to tune in to Jeremy Corbyn, the key driver is the endogenous factor of man’s own eagerness to act in fulfilling a greater number of ends, and the relationship of that eagerness to the exogenous conditions. An impoverished society can persist for decades, or even centuries, with no major upheaval if its people are content to accept the fact, while another society that yearns for more and more will be equally stable if more and more can be provided. On the other hand, revolutionary social change will occur when the external conditions cannot meet the pace of eagerness – in other words, when there are frustrated aspirations.

The more important upshot of all of this is that economics and economic ideas, both true and false, are ultimately antecedent to the character, morality, temperament, culture etc. of a society rather than vice versa. It is true, of course, that the existing state of those elements will shape our future aspirations and ideas. In terms of ultimate causes, however, man’s propensity to act is what shapes everything else – our characters, culture, temperaments, morality will be the product of the economic choices that we face and the methods that we choose in order to make those choices.

In order to demonstrate this we will examine in detail two key qualities of human society without which that society could not function – its morality and its culture.

a) Morality

As we saw in Part Two, morals and ethics exist only because humans are faced with the unrelenting condition of scarcity – that we must choose the ends to which we devote the relatively short availability of means. The entire purpose of morality is to determine how these choices should be made – in other words, which goals are superior (“better”, “good”, “noble”, “honourable”, “wise”, “virtuous”, etc.) and which should be discarded (“worse”, “bad”, “evil”, “dishonourable”, “foolish”, “wicked”, etc.). Thus, the content of morality is not random or haphazard but is, rather, shaped by the real choices that we face in our lives.

Because of this, it follows that we have to know what the choices themselves and the available options within each choice are (i.e. we must know the conditions that will frame the moral code) before the moral code can be devised. We have a code of ethics that govern appropriate behaviour at the dinner table because the best way to eat is a real choice that we face, and we can determine the effects of following each option. Conversely, there is no code of ethics concerning how to sunbathe on Venus because nobody has ever been to Venus and we can scarcely imagine how we would even survive if we pondered how to sunbathe there.

For instance, let us look in detail at the ethics of the family and of sexual monogamy and fidelity. Traditional morality, which is still at least somewhat intact in this area, preaches that a person should have only one partner, and that sexual relations between them should be exclusive. Both in and out of wedlock, adultery, or “cheating”, is viewed as a moral repugnance. If a man sleeps with a woman who is neither his wife nor his girlfriend then he can rightfully expect to have to deal with the fury of the latter and the shame of his friends and family. Even voluntary, multilateral relationships in which everyone is perfectly happy with the situation are frowned upon, with polygamy going so far as to be punishable by law. Further, if a man fathers a child with a woman, it is expected that they will all live together as a family unit or, if they do not, it is still expected that he will have a role in the child’s upbringing and will support both mother and baby.

A further peculiarity is that sexual ethics tend to weigh much more heavily on women than they do on men. If a man has the propensity to sleep with multiple women he is regarded as a “stud” who may earn the admiration of, at least, his more “laddish” friends. On the other hand, a woman with the same degree of promiscuity is classified as a “slut” who has been far too “easy” in surrendering the temple of her body. For a woman, virginity, and the fact that she is perceived to have been “unspoilt”, still carries an allure, an allure which a woman may be keen to preserve. For men, on the other hand, losing one’s virginity as quickly as possible tends to be the badge of honour. Moreover, this is not just the selfish result of the “patriarchy” – women too are wont to make an equal condemnation of their promiscuous peers, and they tend to regard men who are popular with other women as more attractive than men who are not.6 And while, traditionally, both males and females are supposed to refrain from sexual intercourse until their wedding day, it is only the bride who, traditionally, dresses in symbolic white – pure, clean and un-besmirched.

If we ponder all of this for a moment then we come to the realisation that there is no factual need for any of this to be the case. Obviously, one consequence of intercourse is that it produces children and that there is a natural, biological link between the mother and her child which is likely to persist in any situation. But there is no physical or logical law to stop, say, men fathering children with multiple partners at one and the same time, or for everyone to have multiple husbands, wives, boyfriends or girlfriends. Nor is there anything to stop us from regarding promiscuous men as the “sluts” instead of promiscuous women.

We cannot, of course, ignore the motivating factors of love and jealousy, but even here there is a chicken or egg problem. Are we monogamous because we fall in love and are prone to jealousy? Or have we evolved to fall in love and become jealous because our species is, or in some way needs to be, monogamous? And, in any case, why must all the love be concentrated on only a single person? It is not impossible to love more than one person and yet, even when a person finds himself in such a crushing situation he is expected, eventually, to make a final choice.

Framed in this light, our sexual mores and ethics seem almost random, as if they do not really serve any particular purpose – we can easily conceive of a world where the opposite values are the case. We may, of course, cite the ancient influence of religion but, if we rule out the possibility of divine communication, this just pushes the problem back further – why do religions make such a virtue of sexual fidelity?

These issues are at least partly resolved when we look to the economic choices that were faced by our ancestors many millennia ago – specifically, the problem of overpopulation and creating the best economic environment in which to raise children.7 As we noted, the natural consequence of sexual intercourse is the production of children, and children represent hungry mouths to feed. This is a pressing fact even in our societies today characterised by a high volume of production under the division of labour and, thus, increasing wealth. It was especially pressing in primitive societies – such as hunter gatherers – which existed solely to consume whatever gifts the earth happened to bestow. For children can only be produced in abundance if there is a corresponding supply of food and other resources to maintain them.

The very effect of “free” love – that is, sexual relations with multiple partners devoid of any particular commitment – is to produce an abundance of children. Constant sex with as many partners as possible may have been delightful for the males who lived to enjoy it, but it led to an unsustainable increase in the population that very quickly outstripped the supply of food. Thus, sexual ethics characterised by fidelity and monogamy, and the crystallisation of the family unit, arose to prevent the uncontrollable surge in population by providing an environment in which fathers had to provide for their children. The more children he produced, the more he would have to work to provide for them, and so he would be disincentivised from fathering too many. The available resources could, therefore, be rationed satisfactorily to the existing population.

We can also see why it is that females are expected to adhere to sexual ethics and remain “virtuous” ahead of males. It is true, of course, that in a society of “free love” the strongest, most able, “alpha males” would obtain the majority of the partners and so, no doubt, the lingering admiration of a successfully promiscuous male is partly some kind of hangover from this fact. But the more concrete reason for the active condemnation of promiscuous women is likely to result from the biological link between woman, pregnancy and child. A man is able to impregnate a woman and subsequently disappear, never to be seen nor heard from again, and even if he did not so vanish then there could always be some doubt as to whether he was, in fact, the father. This is not possible for a woman, however, for if she is impregnated the fact will be there for all to see within the following nine months. A woman could therefore face the condemnation for having produced another mouth to feed more easily than a man. To put it bluntly, men could get away with sex out of wedlock – women could not.

As the result of a biological fact there was, therefore, more of a pressing need for women to avoid wanton sexual intercourse, a need which served to shape the content of sexual ethics which persists to this day – even though the original underlying economic concerns may no longer be with us in such a degree. Thus we can see how the economic conditions – the propensity of humans to devote means towards ends, and the relationship of this propensity with the external conditions – served to drive the creation of moral ideas.

Sexual Ethics

Our sexual ethics were moulded by the economic conditions facing our ancestors

There is a further element of sexual ethics that we ought to mention in relation to economic conditions and that is the traditional view that people should abstain from sex until they marry. The implications of the ascendance and subsequent descent of this rule resonate a lot with the economic conditions of the past and the present, and other moral virtues that are the corollary of these conditions.

As we mentioned earlier, a society which can sustain “free love” is essentially a consumer society – there is a relative abundance of resources and the majority of efforts are focussed on consuming now, rather than saving and producing more. In such a society there is, therefore, little need for virtues such as patience, prudence, wisdom, foresight, judiciousness, and so on, for everything that one could need is, more or less, readily available. Such a society is also, consequently, a “high time preference” society, concerned only with the immediate gratification of physical, carnal desires. Thus, it is no surprise that such a society should also indulge in wanton sexual intercourse – no dating and waiting in favour of immediate satisfaction.

In a society which is, however, faced with a higher degree of scarcity and must turn its attention to wealth production instead of unrestricted consumption, qualities such as such patience, prudence, wisdom, foresight and judiciousness become essential. For not only does the necessary saving and investment of consumable resources in further production demand a greater ability to wait, but the most successful producers – i.e. the wealth generators – will be those who display these qualities. Consequently, it is no surprise that these qualities find their way also into sexual ethics in the form of waiting, choosing carefully, and saving oneself for the best. Indeed, such qualities mark oneself out as an eminent producer, and thus likely to be a wealthy, high quality mate – whereas a person who cannot control his urges is likely to be a poor decision maker who is unable to sustain his attention upon any long term, productive effort. Thus, it makes sense for people to wish to display their virtues through abstinence from casual sex in order to be more attractive to the eventual partner. And, of course, once society is characterised by the creation of wealth this brings with it the question of its preservation. Many marriages between wealthy families were made more for the opportunities a partner presented in creating and consolidating dynastic wealth rather than for reasons of love.

And yet now, as our society is once again morphing from a productive/accumulative society to a consumerist one, the situation is gradually reversing. “Casual”, transactional sex is once again a common feature of our society and, at least if not practised to excess, rarely encounters much concern or outrage. In fact, the replacement preoccupations with “safe sex” and the avoidance of unwanted pregnancy and sexually transmitted infections indicates that casual sex itself has, more or less, been accepted. Moreover, this has also gone hand in hand with the emergence of the state as the primary benefactor in the upbringing of children, providing food, shelter and education if necessary. In other words, the raising of children has now become more of a communal concern. Thus, the original economic factors that governed the laws of sexual ethics have also been eroded, and with them the laws themselves.

b) Culture

Turning now to culture, it is possible, like morality, to view cultural attributes as being somehow “random” or “haphazard”, as if they are just disembodied choices made in a vacuum. In fact, a distinct culture is the result of the unique economic conditions presented to a people by the precise opportunities, challenges, resources, climate and environment of their specific location.

To take just some basic examples, the Mediterranean practice of taking a siesta in the middle of the day originated because the temperature was too hot to work at that time. Indian food makes use of spices because of the difficulties in preserving food in such a hot climate, a difficulty that was not quite so prevalent in regions further from the equator. The practice of circumcision was born out of the challenges posed to male hygiene and comfort in a hot desert environment.

As a society becomes more culturally sophisticated, its unique problems and advantages determine and shape its particular language, morality, philosophy, technology, art, literature, folklore, music, religion, and ritualistic traditions. The people and their way of life are shaped by the unique challenges they face in their efforts to direct means towards ends and the world is, thus, as culturally rich as it is rich in different environments of opportunity and difficulty. This, too, serves a further purpose, for the elevation of what could be the dreary and mundane economic factors of life into colourful cultural and customary expressions provides social cohesion by greasing the wheels of social co-operation. Rather than simply whinging about the hardships we face, we turn their conquest into a celebration of the ways of living – a celebration enthused with pride and patriotism that invoke a lifelong passion for and attachment to our homelands.


Cultures and cultural practices are heavily dependent upon the combinations of economic challenges and opportunities in different parts of the world

All manner of further, specific examples of cultural practices abound. The economic importance of the buffalo in North America lent it a sacred quality in the eyes of Native Americans, whereas the elephant is similarly revered in India and Africa. Short hair for men supposedly became fashionable in the West following plague carrying mosquito infestations, and is usually the norm for regimented occupations (such as soldiering) in order to practise and display the necessities of routine and discipline; the typically long length of women’s hair, on the other hand, partly derives from the fact that long, healthy hair was a significant biological marker amongst the well off, which contrasted such women with those who had to engage in menial work or household chores where such hair would be a nuisance. Cultures which benefited from easy access to animal hides, such as in Africa, produced music that had a greater reliance upon percussion instruments and, as a result, rhythmic inventiveness, whereas cultures further from the equator with a greater abundance of wood and vegetation could fashion more elaborate string instruments that enabled them to focus more on melody and harmony. In wealthy Britain, it is the norm that, if someone offers you refreshments, you do not scoff them all down at once, whereas in cultures that are/were relatively short of food the failure to consume entirely the offerings of a host is seen as a great insult.8 Even something as innocuous as a handshake in order to greet another individual supposedly had its origins in the need to demonstrate that you were not holding a weapon and so your intentions were friendly. And, generally speaking, the further South towards the equator into warmer climes that you go, increased body contact was made possible as a result of the necessity to wear fewer clothes, and so greeting rituals tended towards the more open and intimate hugging and kissing. The list could go on.

We can see from all of this why a policy of multiculturalism – to the extent that it tries to mix cultures in places where they did not originate – is so ridiculous, amounting to the sociological equivalent of to trying to put either a jungle or a hot desert (or both) in Central London. If you strip a culture of the underlying economic aspirations, choices, and means that a people must face in their particular location then the culture ceases to have any reason for existing. Indeed, that is why, at least in the past, emigrants to another culture have usually become integrated fully into the latter by the first or second generation. The particular needs of social co-operation in the new homeland require one to embrace the very particular cultural mores that are associated with that country. “Ghetto-isation”, on the other hand – where foreign immigrants live separately in their own communities and continue to practise the culture of their homelands – largely results from the fact that they either do not, will not or cannot seek economic opportunities in the wider society of the new country.

Thus we can see that, ultimately, the culture of a people, being intimately connected to the unique environment of that people, will be a product of the economic choices that are faced by that people and, moreover, of the ideas that it uses to implement those choices. It is to this latter aspect in relation to our own society in twenty-first century Britain that we will now turn.

British Society in the Twenty-First Century

A great deal of understanding of our own society today – our culture, our morality, our attitudes, our temperaments and so on – can be gained from the economic choices that were made in the past. What we will aim to demonstrate is that dry economic theory, far from being an isolated body of knowledge, has had huge ramifications for the entire fabric of British society, and provides powerful explanations for the kind of social, moral and cultural degradation that we have experienced over the past thirty to sixty years – degradation which often preoccupies the direct attention of libertarians and the right more generally.

Indeed, in spite of the irony of the following passage that pertains so much to him, John Maynard Keynes exhibited a rare moment of clarity when said that:

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist […] It is ideas, not vested interests, which are dangerous for good or evil.9

In this regard, there are at least three, dominant economic choices that were made in Britain several decades ago and are particularly pertinent to understanding the situation with which we are faced today:

  • The abandonment of “sound” money (“inflationism”);
  • The birth of the welfare state;
  • And, although it is not specifically an economic choice, the institution of democracy.

We will explore each of these in turn.

a) “Sound” Money and Inflationism

The abandonment of “sound” money, as most libertarians are aware, means that our currency is no longer defined as a weight of precious metal but, rather, consists of irredeemable paper that can be printed at will by the state.

Economic theory will tell us, of course, how inflationism will progress by granting a purchasing advantage to the earliest recipients of the new money, who can spend it on valuable goods and services at the old, un-inflated prices, distorting the structure of production in their favour. Price rises then ripple throughout the economy, eventually causing a general rise in the so-called price level.

However, inflation does not simply mean that the government gets to spend more money, prices rise, we all get very annoyed, but that is otherwise the end of the matter. Rather, inflation puts a stake through the very heart of society by causing with it untold levels of moral, social and cultural decay. In the words of Jörg Guido Hülsmann:

[Inflation causes] money and financial questions [to] come to play an exaggerated role in the life of man. Inflation makes society materialistic. More and more people strive for money income at the expense of personal happiness. Inflation-induced geographical mobility artificially weakens family bonds and patriotic loyalty. Many of those who tend to be greedy, envious, and niggardly anyway fall prey to sin. Even those who are not so inclined by their natures will be exposed to temptations they would not otherwise have felt. And because the vagaries of the financial markets also provide a ready excuse for an excessively parsimonious use of one’s money, donations for charitable institutions will decline.10

And Henry Hazlitt:

[Inflation] discourages all prudence and thrift. It encourages squandering, gambling, reckless waste of all kinds. It often makes it more profitable to speculate than to produce. It tears apart the whole fabric of stable economic relationships. Its inexcusable injustices drive men towards desperate remedies. It plants the seeds of fascism and communism. It leads men to demand totalitarian controls. It ends invariably in bitter disillusion and collapse.11

In other words, the effects of inflation – the falsification of values, the decimation of savings, the illusion of wealth – create habits and attitudes that are completely at odds with the normal moral, cultural and spiritual health of a nation.

Inflation makes us cynical, impatient, and short term oriented. It quickens the pace of life as we struggle to make our work pay the value of what it produces. Patience, hard work, and saving become pointless as their value is robbed before it can be enjoyed, replaced by dreaming of “quick wins” and “lucky breaks”. Quality, beauty and durability cease to be sought after, giving way to quantity, disposability, functionality and convenience – a fact that pervades material and non-material aspects of our lives. We drink our coffee from cardboard cups while we are on the move, and eat our meals out of plastic sleeves or from containers heated quickly in the microwave. We watch films saturated with mindless “action” and special effects instead of the steady development of character and plot. Great symphonies have given way to the instantly forgettable, mindless repetition of two minute pop songs. Books and articles dealing with weighty subjects are discarded in favour of clever sound bites on Twitter. Our buildings are now devoid of beauty and permanence, being mere fabricated replicas that can be knocked down as easily as they are put up. Immediate satiation becomes more important than seeking long term fulfilment.

Inflation weakens personal reliance and responsibility by giving the illusion that oodles of money flowing from the state make it the fount of all goodness. It makes war and war mongering eminently more attractive and sustainable. It has helped destroy family bonds by creating the necessity for both partners to work while dumping the kids in childcare. It completely remoulds the character and moral fervour of the people and of their social relationships.

Somewhat ironically, in spite of the cultural degradation and distortion of reality wrought by inflation, novelists have captured the essence of its effects more incisively than historians and sociologists. The “constant flicker” of American life, the vacuous, materialistic characters, and the hot pursuit of unrealistic dreams culminating in disaster that form the material of F Scott Fitzgerald’s The Great Gatsby can be explained by the nature of the easy money environment of the 1920s. The ultimate fraud of the wizard, the symbolism of the yellow (gold) brick road trodden with silver slippers on the way to the false splendour of the Emerald (greenback) City has encouraged interpretations of a monetary theme running throughout the universally popular The Wonderful Wizard of Oz. And, although it is unlikely that Lewis Carroll had a specifically monetary theme in mind, the illusionary milieu and the inversion of reality in Alice’s Adventures in Wonderland have invariably been used as a metaphor for the effects of inflation.12

Great Gatsby

F Scott Fitzgerald’s The Great Gatsby captures many of the societal effects of the easy money environment of the 1920s

More specifically, the failure to tackle the underlying environment of inflationism explains why the free market reforms of the 1980s ended up – and could only have ended up – as state corporatism rather than a genuine market economy. It allowed the likes of Thatcher and Reagan to claim their allegiance to freedom and free markets while simultaneously expanding the size and scope of the state. It allowed “New Labour” to abandon economic socialism while simultaneously bloating the welfare state. It has created the illusion that our prosperity owes itself to the likes of intangible paper securities rather than in real goods. Inflation is responsible for the bifurcation of wealth and income between the well connected in the artificially sustained gigantism of the financial services sector on the one hand, and the rest of us on the other – thus fuelling the fire of calls for “social justice” and the increased attractiveness of redistributionist doctrines.


Given all of this, it is not sufficient for libertarians to regard the return of “sound” money as some kind of isolated, “economic” issue that, in spite of being a good thing, must take its place somewhere alongside other matters. Rather, it is inflationism that makes it so difficult for us to tackle the long slide into statist domination, and into moral, cultural and spiritual decadence and decay.

Mises recognised the distinctly political nature of “sound” money. In fact, the term is not, technically, an economic one, the adjective “sound” indicating a judgment of value which would be out of place in the wertfrei science of economics. Rather, the correct designation in economic theory is “commodity” money.

In Mises’ own words:

It is impossible to grasp the meaning of the idea of sound money if one does not realize that it was devised as an instrument for the protection of civil liberties against despotic inroads on the part of governments. Ideologically it belongs in the same class with political constitutions and bills of rights. The demand for constitutional guarantees and for bills of rights was a reaction against arbitrary rule and the nonobservance of old customs by kings. The postulate of sound money was first brought up as a response to the princely practice of debasing the coinage. It was later carefully elaborated and perfected in the age which […] had learned what a government can do to a nation’s currency system.


The sound-money principle was derived not so much from the Classical economists’ analysis of the market phenomena as from their interpretation of historical experience. It was an experience that could be perceived by a much larger public than the narrow circles of those conversant with economic theory. Hence the sound money idea became one of the most popular points of the liberal program. Friends and foes of liberalism considered it one of the essential postulates of a liberal policy.13

Unfortunately, we seem to have taken our eye of the fundamental importance of “sound” money. Indeed, this importance in the fight against statism and all that it entails was probably captured most succinctly by the Machiavellian Mayer Amschel Rothschild, founder of the infamous banking dynasty:

Permit me to issue and control the money of a nation and I care not who makes its laws.

When we witness the growth of the state that inflation has enabled we can understand just how much truth is packed into so short a sentence. Moreover, Rothschild’s explicit elevation of money over law seems to be a lesson that libertarians have been slow to learn. For when we think of ways in which to tackle the state we nearly always concentrate more on the law rather than on money. We normally think of our political rights as including elements such as free speech, freedom of association, freedom of contract, the right to a jury trial, and so on. All of these are popular talking points not only amongst libertarians but within the general population. But where, on the other hand, is our right to “sound” money? Why is this right not considered as being of equal, or even greater importance, just as Mises suggested that it should be?

Sound Money

“Sound” money may well be the most important aspect of a free society and should be considered as a political right

Indeed, such a right is conspicuously absent in most constitutions and charters of “human rights”. It found its way in some form into the US Constitution, but it is buried in Section Ten of Article One, which limits the rights of the states. It has no prestigious place within the more memorable Bill of Rights, and fails to illicit the kind of passion that surrounds the First and Second Amendments. But if we fail to secure “sound” money then, eventually, we will ultimately fail to secure and preserve all of our other freedoms as well – and with them will go our moral, spiritual and cultural health.

b) Welfare Statism

Welfare statism provides a pertinent example of how economic aspirations and the external conditions can combine to seal the fate of a nation when they cause it to heed the siren song of wrongheaded economic theory.

In Britain, welfare statism began in earnest under the post-War Labour government headed by Clement Attlee. Buoyed up by a sense national unity from having collectively survived and vanquished a common enemy, yet sick of wartime destruction and deprivations, the British people were highly susceptible to the appeal of creating a shared prosperity through collective effort. The Labour Party’s manifesto for the 1945 general election talks almost exclusively about economic progress through “public ownership”. There is no mention of “social justice”, “diversity”, “inclusion”, “multiculturalism”, or any of the other buzzwords that characterise the left today. Even “equal” and “equality” are omitted, although the preamble, naturally, castigates concentrations of economic power in the hands of “the few”. This was squarely a manifesto for jobs, for industry, for food, housing, education, health and social insurance, all brought about through the steady control and wise hand of the state. In fact, the entire document reads like a list to Santa Claus:

The nation wants food, work and homes. It wants more than that – it wants good food in plenty, useful work for all, and comfortable, labour-saving homes that take full advantage of the resources of modern science and productive industry. It wants a high and rising standard of living, security for all against a rainy day, an educational system that will give every boy and girl a chance to develop the best that is in them.14

The Labour Party won the election by a massive landslide, ousting Winston Churchill as Prime Minister in spite of his leadership of the country to victory. The new government proceeded apace with a string of nationalisations of the railways, canals, road haulage, coal mining, gas, electricity, telephones and steel manufacturing, and, of course, birthing the “cradle-to-grave” welfare state – the jewel in the crown of which was, and probably still is, the National Health Service. The decisions made in just six short years continue to have their ramifications today.

Like inflationism, it is a mistake to assume that the effects of the welfare state are “merely” economic. It is not the case that the state takes money from some people, gives it to others in the form of healthcare, benefits or whatever, but we otherwise all go about our lives while putting up with the irritation.

The primary effect of the welfare state is to distort the causality inherent in people’s actions that devote means towards ends. In other words, it separates cause from consequence by removing the natural effects of people’s own decisions. By providing a cushion to relieve the bad effects of bad decisions while simultaneously confiscating the good effects of good decisions in order to inflate that cushion, the bad results of bad decisions are made less costly while the good results of good decisions are made less beneficial. Thus, there is less of a need to concurrently pursue good decision making and avoid bad decision making. And yet, as we explained earlier, the entirety of a people’s character, culture, temperaments and morality is based around that very thing – the consequences that flow from decisions to devote means towards ends. Separating consequence from cause will, thus, achieve a complete remoulding of all of these aspects.

If the state will protect you from the bad aspects of life – unemployment, ill health, financial misfortune, producing too many kids, care in old age, etc. – while simultaneously punishing the good, there is no need to seek and refine qualities in oneself that lend themselves to making “good” decisions ahead of making “bad” decisions. Patience, prudence, perseverance, knowledge, wisdom, experience, and judiciousness cease to have value, being replaced by laziness, ignorance, stupidity, mindlessness, carelessness, and impetuousness. Thus the welfare state completely degrades the character of a nation, turning it from a population of dedicated, hard working people into a nation of carefree zombies.


Causality and consequence are hugely important aspects of human action; their impairment by the welfare state completely remoulds the character of a nation

The destruction of causality removes from the purview of the people a hugely important strand of objective reality, with the result that the world becomes random and subjective. As there are no longer “good” and “bad” decisions, or at least not to the same degree, all paths become equally valid; all decisions are of equal worth; all outcomes are as good as any other. Thus, the welfare state breeds a kind of moral, social and cultural nihilism. The essence of morality – the distinction between “good” pursuits and “bad” ones – is rendered pointless and so traditional societal norms are gradually destroyed. No longer can anyone “judge” or “discriminate” against anyone else – all choices are the same, everyone has equal worth, all goals, dreams and ambitions (if people still have them) are as good as any other, with “society” ready to foot the bill should you fail. Social cohesion and social co-operation fractures, with relative homogeneity splintering as people pursue their own flights of fancy. Ironically, it is the welfare state, and not free market capitalism, that encourages hyper-individualism – people no longer need to rely on cultivating familial, friendly, professional and social ties or hierarchies in order to live their lives.

Indeed, as the welfare state robs people of any purpose or meaning, it grants them both the impetus and the wherewithal to pursue so-called “alternative lifestyles.” Devoid of the need to concern oneself with such basic, earthbound matters as earning a living, raising a family, or providing food for the table, people engage instead in trivialities and frivolities, or in the pursuit of hedonism and faux “spirituality”. With no fulfilment to be found in dealing with everyday life, people seek “escape” and “experiences” through alternative media such as drug taking, excessive alcohol consumption and sexual experimentation.

Culture ceases to reflect and idealise the realities of economic life – indeed, there are no longer any ideals. Objectivity, reality, truth, and reason give way to the post-modernistic obsessions with subjectivism, relativism, pluralism and irreverence. In a world devoid of heroes and villains film and literature celebrate, instead, the anti-hero. Art ceases to capture the splendour of real people, places and events, churning out instead talentless fabrications justified by some kind of psychobabble emanating from the artist’s own narcissism. Rather that gasping in awe at the splendour of great portraits and landscapes, we seek instead to be “shocked” or “jolted” in a descending spiral into the disgusting, depraved and taboo.

Moreover, the welfare state gives carte blanche to social engineering by granting the wherewithal to the state to determine social outcomes. The state is, thus, endowed with seeming omnipotence and a corresponding degree of allegiance, setting itself up as the only religion. Traditional sources of good and bad, right and wrong, and justice and injustice are replaced by the will of atheistic, technocratic “scientists” who can tell us the answer to everything before waving their magic wands to right all wrongs.

In short, the welfare state makes a nation physically, morally, culturally, and socially sick. It destroys all aspects of economic life. It makes us selfish and self-oriented. It rips apart families and traditional social structures. It dissolves the boundaries of morality. It distorts objective reality into a subjective haze. It sets up the state as God worshipped by the millions of faithful dependents.

c) Democracy

Although democracy is not, as we mentioned earlier, specifically an economic system, it has important economic ramifications. Indeed, the difference between economic systems and political systems is illusory because they end up amounting to the same thing – one cannot advocate for a political system without, in turn, promoting an economic system and vice versa. It is impossible, for instance, to dedicate oneself to the pursuit of political liberty or laissez faire without recognising private property as a fundamental principle – and, thus, one must also promote private ownership of the means of production, which is the lynchpin of a capitalist economic system. Similarly, one cannot propose a socialist economic system without abolishing private property and thus advocating for an authoritarian political structure – a fact which few socialists and statists either realise or admit. The only difference on the façade is that explicitly economic arguments tend to concern themselves with the production of wealth whereas political arguments are more overtly preoccupied with questions of justice.

The economic consequences of democracy are that it places the decision making authority over all wealth and property in the hands of majority, via the conduit of the state. In principle, therefore, the rights of private property and the enjoyment of one’s own wealth are sustained only so long as it is permitted by the majority. In the long run, everyone’s wealth will prove to be fair game.

The result of this has been to turn us from a nation of wealth producers into a nation of rent seekers. It becomes more profitable for us to tap into the societal stockpile than it does to find ways to better one’s own life unilaterally. Thus, instead of pursuing education, self-improvement and self-reliance, people instead make themselves more needy, more helpless and more pathetic, i.e. more deserving of a government handout. Under the principle of “from each according to his means to each according to his needs” it is unsurprising that everyone will try his best to fall into the category of having “needs” rather than having “means”.

The most dangerous aspect of democracy, however, is that it destroys the distinction between the state and the people. Faith in the ballot box has endowed the actions of the state with a thick veneer of legitimacy, because every such action is now an action of the people, by the people and for the people. In short, it achieves collectivism through the back door.

Democracy Athens

Democracy blurs the line between the state and the citizenry

The result of this has been our increased willingness to submit to authoritarianism and the erosion of ancient rights of freedoms – something which has proceeded apace in the past forty years. After all, if the people are the state then aren’t protections from the state unnecessary? Why would we need saving from ourselves?

Hence, we can understand the victories of “hate speech” laws, and laws against causing “offence”, against the right to free speech; suspected criminals are no longer put on trial by the state, but are, rather, tried by the people themselves – so who needs habeas corpus or double jeopardy? Because the people are the state then whatever the state says must be true, what the state does must be right, and the justice dispensed by the state must, indeed, be just. To suggest otherwise, or to point out that the state is corrupt, immoral and evil, is to suggest that the people themselves are all of these things – hardly a winning argument.

The effective “nationalisation” of the citizenry achieved through the mergence of the people and the state into the same entity has led Hans-Hermann Hoppe to describe democracy as a “soft variant of communism”.15 As such, the state and statolatry has gradually infected all areas of our lives just as it did in the explicitly communist Soviet Union.

For instance, the so-called “public service” of politicians is exalted as the highest achievement. We glorify the state’s lackeys and officers, whether they are the armed forces, the police, nurses, or fire fighters, as automatic “heroes”. In films, cops are always the good guys; the President of the United States is always wise and noble; businessmen, on the other hand, are criminals, and vice versa. Of course, individual politicians and policemen may be portrayed as corrupt and disreputable, but these are mere aberrations, lone pirates sailing in what is otherwise a sea of goodness. The state itself is left unblemished.


Democracy inevitably leads to statolatry. This photograph was taken not in Nazi Germany but in the US. The so-called “Bellamy Salute” to the US flag was dropped during World World Two

History taught to our children in their state run schools becomes a narrative of progress and prosperity brought about by the democratic state, rather than in spite of it. Wars are started by dictators; they have been stopped by peace loving democrats. “Capitalism” creates havoc, poverty and depression; the wise hand of the state knows how to steer the ship. The historical figures who fostered and grew the state, such as Abraham Lincoln, Woodrow Wilson and Franklin Roosevelt, are lauded; those who fought against it are quietly forgotten. Nothing can even be allowed to question the illusion that the state is there for us and is on our side.

The notion that the people and the state are one and the same thing (or that the latter is otherwise the “expression” of the people) has gradually caused the converse to be assumed as true as well: that the people are an expression of their state and that the people should want and embrace what is dictated to them by the state. In the words of Bill Clinton “you can’t say you love country and hate your government.” Thus, the supreme irony of democracy is that society becomes “top-down” rather than “bottom-up”. Politics and politicians invade all areas of life; government is seen as the solution to everything; positive law and legislation become sacrosanct.

The worst result of this is that the cultural and moral fervour of the nation is viewed as little more than a technical arrangement that can be shaped and moulded by the state at will. If the state embraces multiculturalism and open borders then so should the people; if the state promotes and celebrates the lives of minorities such as gays and transgendered people then so should everyone else; if the state tells us that there are no differences between us, the Germans, the French and Italians then we should see none; if the state wants us to live in a global community then we should want to do so. After all, to follow Clinton’s logic, if we disagree with any of this then we hate our government, and if we hate our government then we must hate our country. And no one wants to do that, of course.

Indeed, one of the grave mistakes that resulted from this kind of thinking is to regard the consolidation and centralisation of states in projects such as the EU as sufficient to achieve a “unity” of peoples regardless of their different ethnicities, languages and cultures. In other words, combine all of our governments into one giant edifice then wars and conflicts will be a thing of the past and lions will lie down with lambs. Statists blinded by this view could only be overcome by bewilderment and incredulity when people began to reject the globalising, multicultural, leftist agenda by reasserting their own values and cultures. For those who view all progress and prosperity as a result of the modern democratic state, anything that halts or reverses the growth and progression of this state must be an attack on the progress of humanity itself, driving society back into the Middle Ages. Hence, we have the denigration of Brexiteers as backward, barbarian, and uneducated. These people fail to understand that individual citizens and private entities have been creating unity, or, at least, peaceful harmony for centuries through the mutual benefits of trade and co-operation. The state has only ever gotten in the way of this endeavour.


What we can see from all of this is that the biggest impacts on British society that we are experiencing today have resulted from significant, distinctly economic choices that were made in the past. These economic choices have not been of mere technical arrangements that concern only the production and distribution of wealth. Rather, the nature and condition of our culture, morality, character and temperament are the natural outcome of our decisions to pursue inflationism and welfare statism under the aegis of the democratic state.

Consequently, we are now in a better position to understand our current predicaments and what they mean for the prospect for liberty. It is submitted that as economic choices got us into the mess we are in today it will probably be economic choices that get us out. Although the express denigration of traditional culture and morality that has resulted in the current “culture war” is an explicit aim of the so-called Cultural Marxists, Cultural Leftists, Gramsci-ists, or whatever you want to call them, it is unlikely that they could have caused the kind of demolition that they done without inflationism, welfare statism and democracy having already weakened the foundations. Moreover, the only reason why cultural leftism garnered any traction at all is because the collapse of socialism stripped leftism of its economic appeal. It is likely, therefore, that we need to accomplish a major economic shift if any of this decay is to be halted.

As the present author argued previously16, this shift will most likely occur on the day when the modern, democratic state falls into bankruptcy – when the state, effectively, will no longer be able to fund itself, the welfare state, or continue apace with inflationism without destroying the financial entire system. On that day, when the state can no longer afford retirement and unemployment benefits, when it can no longer pay for the sick, dying and elderly, the omnipotence and effectiveness of the state in the form that we know it will be brought into question – a question which libertarians must have ready answers to.

In light of the chicken or egg problem we identified at the beginning – how much will events shape our attitudes and ideas, and how much will ideas and attitudes shape our response to events – should libertarians focus more on tackling leftist cultural attitudes on the one hand or the siren song of leftist economics on the other? After all, our prevailing characters, temperaments, and morality will play an important role in our susceptibility to the different kinds of economic ideas that will be mooted when the crisis comes; it would be a disaster if this crisis of the state was met by a call for more statism as the result of an instilled statist bias. On the other hand, the economic choices that are made at that time will, in turn, affect all of those societal elements for a generation or more.

Fortunately, it is unlikely that libertarians will be forced to make any kind of difficult choice. In the first place, of course, welfare statism and inflationism will, at least partly, destroy themselves, and so a huge chunk of both the power and appeal of statism will be rendered inert. Indeed, we may come to find that specific attacks on these things become superfluous, if not unnecessary. The hyperinflations suffered in the interwar period by Germany have continued to this very day to instil a “hawkish” bias in the Germans when it comes to monetary easing – an attitude which was reflected in their stance towards bailing out the failing members of the Eurozone such as Greece. There is no reason why, should we suffer a similar experience, the effects upon us will be dissimilar.

More pertinently, however, there is one strategy that has the potential to kill two birds with one stone. This is the advocacy for decentralisation away from the large, consolidated modern states and the splintering of revenue raising and administrative authority into smaller, more local jurisdictions.

On the one hand, this would allow libertarians to build a kind of counterculture to the leftist nonsense of political globalism, multiculturalism, diversity, etc. by celebrating and promoting instead specifically local values, customs, cultures and traditions. This will help to shift allegiances away from the state and into families, communities, congregations and so on in time for when the crisis hits.

On the other hand, however, decentralisation would make any statist-oriented economic solutions almost impossible. The present author outlined some of this in a speech to the members of this institution in January of this year17, but suffice it to say here that the decentralised state is a weaker state, with much less power and control vis-à-vis its citizens than a larger state. Indeed, it would be impossible for, say, individual counties to instil any kind of inflationism or welfare statism on the scale that the government of the whole of the UK has achieved. Moreover, the relative homogeneity of smaller jurisdictions helps to quell the populist and redistributionist excesses of democracy. At the very least, there is a greater chance that some of those smaller jurisdictions will adopt specifically free market reforms and these will be the jurisdictions that prosper. People voting with their own feet will take care of the rest.

What is certain, however, is that libertarians, if they ever hope to bring about a world that is mostly free of the tyranny of states, cannot ignore economics and economic theory – and, ideally, they should place far more emphasis on it than they already do. And who better to turn to than the master himself, the namesake of this institution, Ludwig von Mises?

So for those readers who have already had the pleasure of reading Mises, it is time to dust off your copies of Human Action or Socialism and reacquaint yourself with his intellectual brilliance. For those of you who are yet to uncover the treasure of the Misesian world then the annotated bibliography (to be published in the following post) should assist you in finding a place to start.

Mises thumbs


1Ludwig von Mises, Human Action: A Treatise on Economics, The Scholars’ Edition, Ludwig von Mises Institute (1998), pp.874-5, 881.

2Ibid, pp.877-8.

3Ibid, pp.79-84, 141-142.

4Idem, Socialism: An Economic and Sociological Analysis, Yale University Press (1962), pp.566-7.

5Idem, Human Action, p.880.


7This explanation is elaborated in Hans Herman Hoppe, A Short History of Man: Progress and Decline – An Austro-Libertarian Reconstruction, Ludwig von Mises Institute (2015), Chapter One.

8A colleague of the present author witnessed this first hand when a business associate from Africa proceeded to eat all of the biscuits on offer during a conference. It was only afterwards that the cultural anomaly was, with mutual amusement, realised.

9John Maynard Keynes, The General Theory of Employment, Interest and Money, Palgrave Macmillan (1936), pp.383-4.

10Jörg Guido Hülsmann, The Cultural and Spritual Legacy of Fiat Inflation, https://mises.org/library/cultural-and-spiritual-legacy-fiat-inflation.

11Henry Hazlitt, Economics in One Lesson, Ludwig von Mises Instute (2008), p.157.

12See, for example, https://economicprism.com/monetary-madness-and-rabbit-consumption/https://www.silverdoctors.com/gold/gold-news/using-alice-in-wonderland-to-explain-the-most-ingenious-invention-in-the-history-of-finance/; and https://seekingalpha.com/article/3987672-wonderland-postminus-2008-monetary-policy-created-market-dysfunction.

13Ludwig von Mises, The Theory of Money and Credit, Ludwig von Mises Institute (2009), p.414.


15Hans-Hermann Hoppe, Reflections on State and War, https://www.lewrockwell.com/2006/12/hans-hermann-hoppe/reflections-on-state-and-war/.

16Duncan Whitmore, The Useful Idiocy of the Left, https://misesuk.org/2018/08/28/the-useful-idiocy-of-the-left/.

17Duncan Whitmore, Economic Progress and Decentralisation, https://www.youtube.com/watch?v=WSbZ9FmnErI.



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