Ludwig von Mises was one of the last members of the original austrian school of economics. He earned his doctorate in law and economics from the University of Vienna in 1906. One of his best works, The Theory of Money and Credit, was published in 1912 and was used as a money and banking textbook for the next two decades. In it Mises extended Austrian marginal utility theory to money, which, noted Mises, is demanded for its usefulness in purchasing other goods rather than for its own sake.

In that same book Mises also argued that business cycles are caused by the uncontrolled expansion of bank credit. In 1926 Mises founded the Austrian Institute for Business Cycle Research. His most influential student, Friedrich Hayek, later developed Mises’s business cycle theories.

Another of Mises’s notable contributions is his claim that socialism must fail economically. In a 1920 article, Mises argued that a socialist government could not make the economic calculations required to organize a complex economy efficiently. Although socialist economists Oskar Lange and Abba Lerner disagreed with him, modern economists agree that Mises’s argument, combined with Hayek’s elaboration of it, is correct (see socialism).

Mises believed that economic truths are derived from self-evident axioms and cannot be empirically tested. He laid out his view in his magnum opus, Human Action, and in other publications, although he failed to persuade many economists outside the Austrian school. Mises was also a strong proponent of laissez-faire; he advocated that the government not intervene anywhere in the economy. Interestingly, though, even Mises made some striking exceptions to this view. For example, he believed that military conscription could be justified in wartime.

From 1913 to 1934 Mises was an unpaid professor at the University of Vienna while working as an economist for the Vienna Chamber of Commerce, in which capacity he served as the principal economic adviser to the Austrian government. To avoid the Nazi influence in his Austrian homeland, in 1934 Mises left for Geneva, where he was a professor at the Graduate Institute of International Studies until he emigrated to New York City in 1940. He was a visiting professor at New York University from 1945 until he retired in 1969.

Mises’s ideas—on economic reasoning and on economic policy—were out of fashion during the Keynesian revolution that took over American economic thinking from the mid-1930s to the 1960s. Mises’s upset at the Keynesian revolution and at Hitler’s earlier destruction of his homeland made Mises bitter from the late 1940s on. The contrast between his early view of himself as a mainstream member of his profession and his later view of himself as an outcast shows up starkly in The Theory of Money and Credit. The first section, written in 1912, is calmly argued; the last section, added in the 1940s, is strident.

Mises had a strong influence on young people. The resurgent Austrian school in the United States owes itself in no small part to Mises’s persistence.