Ludwig von Mises · 1959
Originally published in 1959, Ludwig von Mises’s German essay traces the monetary catastrophe of 1923 to the intellectual commitments of German political philosophy and economics under the Second Reich. The supplied version is a republication whose date is undocumented. Mises examines the doctrines that made inflationary policies defensible and protected them from theoretical criticism.
Die Ideen, die die Politik der Völker leiten, fallen nicht vom Himmel.
English translation: The ideas which guide the policies of nations do not fall from heaven.
This premise makes the formation of economic opinion a problem of historical causation. Mises connects the collapse to monetary ideas associated with Lexis, Knapp, and Bendixen, asking how Germany’s achievements in mathematics and physics could coexist with what he considers a profound weakness in the sciences of human action. His answer concerns the standards by which economic arguments acquired authority.
Um das zu verstehen, muß man auf jenes „ethische Pathos“ zurückgreifen, von dem 1872 der Aufruf sprach, der zur Gründung des Vereins für Sozialpolitik geführt hat.
English translation: In order to understand this, one must go back to that "ethical pathos" of which the appeal of 1872 spoke that led to the founding of the Verein für Sozialpolitik.
In Mises’s account, this ethical orientation displaced logical inquiry: arguments were judged through their presumed moral and political purposes rather than their explanatory validity. Opposition to established professors consequently became a sign of suspect intentions, and dissenting theories could be rejected without examination. His objection is not to ethical seriousness itself, but to its use as a substitute for knowledge.
Daran, daß in dem Streben nach Wahrheit an sich ein ethischer und praktischer Wert erblickt werden könnte, wurde nicht gedacht.
English translation: No thought was given to the possibility that an ethical and practical value might be discerned in the striving after truth itself.
The pursuit of truth supplies Mises’s alternative conception of scholarly responsibility. He credits Max Weber’s campaign for freedom from value judgments with challenging the political partiality of German economic and social thought. Yet the Verein für Sozialpolitik also remained the principal German-language forum in which these controversies could be pursued, making it both an object of criticism and an arena of debate.
The essay’s central evidence is autobiographical and explicitly limited. Mises explains that his conversational notes disappeared when the National Socialists plundered his Vienna apartment in March 1938. He retained a summary of objections to Böhm-Bawerk and himself prepared for Böhm-Bawerk in spring 1914. Because it omitted names, and because recollection after more than forty-five years might be unreliable, he leaves the interlocutors unidentified. Their reported arguments must therefore be distinguished from his own positions.
These objections joined moral condemnation of interest to confidence in state economic direction. Böhm-Bawerk’s theory was treated as an apology for unearned income, whereas governmental efforts to lower interest appeared ethically necessary. Mises’s monetary explanation of business cycles was rejected in favor of the claim that crises belonged to capitalism but could be prevented through impartial state supervision. His interlocutors accepted neither his causal explanation nor the Marxian conclusion that capitalism must therefore be abolished.
Military preparedness reinforced this outlook. Criticism of cashless payments and the concentration of gold in the central bank encountered the argument that monetary institutions must serve the state’s capacity to wage war. Individual redemption rights appeared subordinate to that purpose. Knapp’s state theory of money was welcomed as emancipation from English doctrine, while reliance on gold was represented as dependence on foreign producers and monetary powers. Mises presents these positions as a convergence of moralism, nationalism, and confidence in state authority.
Man hielt es für überflüssig, auf die Gedankengänge solcher Häresien einzugehen oder gar den Versuch zu machen, sie zu widerlegen.
English translation: It was held to be superfluous to enter into the trains of thought of such heresies, or even to make the attempt to refute them.
The decisive failure, for Mises, was the refusal to engage rival explanations. The Austrian school could be dismissed as hostile to the state, and his work as serving speculators. His recollection of the Verein’s 1919 Regensburg meeting extends the argument beyond the prewar period: participants still rejected the connection between expanding note circulation and the mark’s depreciation.
Mises frames this testimony as a contribution to causal history, not merely retrospective fault-finding. The closing account of his participation in the Verein, encouraged by Weber, shows his continued effort to secure discussion of value theory within an uncongenial institution. At Dresden in 1932, that discussion was relegated to an epilogue. In his retrospective narrative, its marginal position crystallizes the broader problem: the exclusion of theoretical inquiry from authoritative economic debate helped deprive policymakers of the concepts needed to understand monetary disaster.
This work was divided into 1 sections when it entered the library's research corpus—an apparatus for search and citation, not necessarily the author's own table of contents. Each title opens its summary.
Put a question to this work; the Librarian answers from its 1 sections and cites the passage.
Ask the Librarian