The Free Market and Its Enemies : Pseudo-Science, Socialism, and Inflation
In the summer of 1951, Ludwig von Mises delivered a series of lectures at FEE. Bettina Bien Greaves, a FEE staff member at that time, took down Mises' lectures in shorthand and faithfully transcribed them into a full manuscript. It has remained unpublished until now. FEE proudly makes these lectures available to a new generation. For readers already familiar with some of Mises's works, these lectures at FEE offer a glimpse of Mises the teacher. For readers not familiar with his writings, these lectures offer an excellent starting point. Here Mises summarizes many of the central themes he developed in Human Action. Topics discussed include the crucial distinction between natural and social sciences; the fallacies of Marxism; the disastrous effects of inflation on the economy; the necessity of a stable monetary system backed by the gold standard; and the relationship between capitalism and human progress. Edited and with an introduction by Richard M. Ebeling (11 pages); 112 pages in total, including index.
[Addendum, Mar-2018] download (pdf)
Remarks © (2005) by interesting-books-selector.com:
These lectures are a nice complement of Mises' book Theory and History (1957), but "The Free Market and Its Enemies" is not introductory to the writings of Mises. My favorite Mises introduction is his lecture Economic Policy (1958).
Here are a few remarks and quotes from "The Free Market and Its Enemies" (those with proposed corrections were selected for correctional purpose only):
- «There is always a point beyond which the human mind can go -- a realm into which inquiry brings no more information. Through the years this
frontier has been pushed farther and farther back. Natural forces have been traced back beyond what was formerly considered "ultimate" human knowledge. But human knowledge must always stop at some "ultimate given."»
-- quote p7.
I believe Mises said "... beyond which the human mind can't go" which is confirmed by the sentences that follow the phrase quoted above. Further I doubt that it is necessary to make such a general statements on the limits of recognition of the human mind, since Mises' lectures were not intended to teach about philosophy or spiritual science. Concerning the limits of human consciousness, I highly recommend to read Rudolf Steiner's Philosophy of Freedom.
- «Karl Marx said nothing about the desirability of socialism; he pretended not to be speaking in favour of socialism.»
-- quote p22
- «against socialized medizine, social insurance, and labor legislation, calling them frauds to exploit the
laboring classes even more than before.»
-- quote p27/28
- «The real problem of Inflation is that it falsifies these [ed. note: i.e., financial business statements with
value credited to equipment and assets] calculations and brings about tragic problems.»
-- quote p18
I wonder if Mises knew that the main problem with inflation is that if inflation is above a certain, determinable rate, companies can no longer be profitable after tax.
Of course this could be called tragic problems but why not be more precise?
In The Warren Buffett Way by Robert G. Hagstrom the inflationary effect on companies' return on equity (ROE) is shown; if a company returns zero to their owners (shareholders of a company), its operational business are valueless because inflation simply eats up all after tax earnings.
- "Even if tax rates were 90 percent, [...] there would be some real return for owners [of a positive business] if inflation rate were zero.
"At a 32 percent tax bracket, with inflation at 8 percent, companies earning 12 percent
on equity return zero to their owners. Traditional wisdom for years assumed that stocks were the perfect hedge against inflation."
-- quotes from The Warren Buffett Way, p58
Even with interest rates still very low in 2005, inflation is picking up and an 8% inflation rate is not an unrealistic forcast for a few years from today; guess we could even look out above - but how many companies earn more than 12% on equity? Hagstrom's book also also explains why passing on cost of inflation to customers won't help.