Sometimes when universities receive gifts from donors, they come with strings attached. In 2002, the University of Missouri received one of those gifts, with the stipulation that the economics department must hire a few professors to teach the Ludwig von Mises Austrian economics theory. Hillsdale College—my small alma mater in Michigan—was appointed watchdog to ensure Mizzou followed through. These schools are now going to court, with Hillsdale claiming that Mizzou hasn’t fulfilled the Mises requirement, while Mizzou argues that it has.
So, who is Ludwig von Mises and why would a donor believe it so important that students learn about him?
To answer this question, I reached out to Dr. G.P. Manish, a Mises Institute fellow and my Austrian economics professor at Troy University. He is well-versed in all things Mises and he laid out some of the main points.
Ludwig von Mises was an economist who supported free markets and economic liberty. He is most famous for fighting against socialism. He also used economic concepts to explain decision-making in non-market areas like households and government. For example, we think about opportunity cost when we decide to spend money on a sandwich instead of a salad, but we can also use this thinking when deciding whether to spend time cleaning or watching TV.
In general, Austrian economics takes a realistic view of the market. It allows for uncertainty, mistakes, and innovation while other economic theories assume these factors away.
After this mini-lesson, I asked Dr. Manish if he thinks that students should learn about Mises. Here is his response:
I believe it is vital that students learn about the ideas of Mises. Doing so will give them a window into a different way of thinking about economic phenomena and will make them question the mainstream, Neoclassical tradition.
. . .
The free market, as Mises emphasizes time and again, benefits not only a narrow elite, but all groups in society, including the least well-off. This can be eye-opening in a world where capitalism and free markets are often charged with benefiting the rich while leaving the less fortunate masses behind.
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A market economy is not devoid of error: entrepreneurs earn both profits and losses. But it is the only economic system where the production decisions of entrepreneurs and the resulting allocation of resources can be coordinated with the preferences of consumers. This vital lesson can be learnt only by studying the works of Mises.
As I’ve said before, markets work and Mises clearly understood that. The issue at Mizzou will be decided in the courts, but regardless of the outcome, many students would benefit from learning about this important thinker.
Dr. G.P. Manish is the BB&T Professor of Economic Freedom and a member of the Manuel H. Johnson Center for Political Economy at Troy University.