All Commentary
Sunday, June 1, 1986

Book Review: The Economist of the Country: Ludwig von Mises in the History of Monetary Thought by James Rolph Edwards

Carlton Press, 11 W. 32nd St., New York, N.Y. 10001 • 143 pages, $7.95

Young scholars intent on communicating the history and ideas of the “Austrian” school of economics to a wider audience could learn a great deal from James Rolph Edwards, Ludwig von Mises Assistant Professor of Economics at Hillsdale College.

This book deals with some crucial and forgotten aspects of monetary thought advanced early in this century by Mises. Edwards disproves the contention of some economists “that Mises made no contributions worthy of note to monetary theory and related topics which have not already been recognized by orthodox western economists and credited in their histories of monetary thought or general doctrinal histories.”

Professor Edwards stresses that most mainstream economists and economic historians fail to recognize the importance of Mises as a monetary theorist because they neglect his early writings. There was a time in the 1920′s when Mises was known in Vienna as “the economist of the country”—a man whose advice was sought by business and government leaders in his native Austria. But the climate of opinion shifted in the 1930′s.

Mises had warned that every inflationary boom would be followed by economic collapse, but when the Great Depression came, nations turned to economic planning and Mises’ work was ignored. Mises’ business-cycle theory, for instance, “has been virtually forgotten, until just recently.” The same has happened to his application of marginal analysis to the demand for money, one of his greatest contributions. Worse, perhaps, is the widespread belief that monetary theory “was not fully integrated with value theory until 1956,” although Mises had accomplished this in 1912.

Edwards attributes “the relative obscurity” of Mises partly” . . . to the fact that The Theory of Money and Credit and certain of his other early works were unavailable in English translations for some decades following their initial publication.”

In Edwards’ technical discussion of the nature of money, the regression theorem, the value of money, and so on, he makes it clear that most critics of Mises failed to spend the time required to understand him. Their con clusions result from too hasty a consideration of the ideas of this unique “Austrian.” Edwards probes the critics’ half-truths, the superficially-obvious certainties, showing their logical mistakes in contrast to the truth of Mises’ position.

Vindication of Mises against this background of ignorance and forgetfulness makes The Economist of the Country worthy of notice. []

(José I. Stelle is a free-lance writer, editor, and translator.)