Why Ludwig von Mises Admired Sigmund Freud

Thanks to Bettina Greaves, We Have It in His Own Words

Sigmund Freud has been dead 76 years. Still, his ideas are daily in the news — debated and denounced — and yet so much a part of how we think. Defense mechanisms, Freudian slips, projections, talking cures — these phrases and ideas are all part of our lives. Even that we freely speak of PTSD as a mental and not physical problem speaks to his influence. We take his massive contributions all for granted now.

Few people know of the link between the most famous psychologist and most famous free-market economist of the 20th century.

Sigmund Freud was 25 years older than Ludwig von Mises, but they were two of the most significant figures of the interwar Viennese intellectual milieu. Mises cited Freud’s books and adopted many of his analytical concepts to make his case against socialism and for a subjectivist understanding of economics.

When Mises wrote his stunning treatise attacking socialism in 1922, he turned to the work of Freud to make a case against women’s subjugation, for freely chosen gender roles, and for traditional family structure. Against the socialists who wanted the state to raise all children, Freud argued that taking away children from parents leaves permanent scars. And against the advocates of “free love,” who do not believe in partner attachments, Mises cited Freud’s view that civilization requires the channeling and maturation of the sexual instinct.

Mises called Freud a “genius” for having these insights.

Mises might have also felt a deeper political connection to Freud. Freud despised group-think politics and political leaders generally. He saw collectivism as a false therapy for underlying psychological maladies. His book Group Psychology and the Analysis of the Ego critiques military-style organization of society and exposes the lie that political leaders can bring about equality and collective consciousness. For his liberalism, and possible libertarianism or even anarchism, Freud’s books were burned in Nazi Germany. Freud’s Vienna apartment — just like Mises’s — was ransacked by Nazi soldiers, forcing him into exile.

It wasn’t just that Mises deeply appreciated Freud’s own contributions. Mises often mentions psychology and psychotherapy as significant scientific advances, ones that contributed to the cause of human liberty.

I’ve always longed for the opportunity to query Mises further on his views on these matters. After all, Freud is one of most influential and nearly universally criticized intellectual figures of the 20th century.

Beyond the attack on socialism, what did Mises think Freud had contributed to his and our own understanding of the human sciences? So far as I knew, Mises never elaborated in any depth on this point.

It wasn’t until a couple of days ago that I came to understand the larger picture.

In 1952, Mises gave nine lectures at the San Francisco Public Library, mostly covering socialism and Marxism. Bettina Bien Greaves was there and took careful, perfect shorthand notes — talk about a lost skill! Half a century later, she gathered these notes and edited them into beautiful essays in a book called Marxism Unmasked: From Delusion to Destruction. These were published in 2006, but, as far as I can tell, they were not widely read or discussed. (They’ve also finally been published online at FEE.org.)

A delightful feature of this book is how the essays reflect a spoken prose, not highly formalized academic work. So the entire narrative provides extra insight into Mises’s own personality. It is in these lectures that Mises defends Freud in some detail.

Mises begins his discussion of Freud by remarking how completely “mixed up” are the people who link Marxian materialism with Freudianpsychoanalysis. For one thing, Freud was not a socialist. More than that, Mises said, Freud and his contemporary Josef Breuer actually fought against materialist thinking and opened up a completely new way of understanding the astonishing power of the human mind.

Before psychology and psychoanalysis, Mises says,

It was the generally uncontested assumption among all doctors that mental disabilities were caused by pathological changes in the human body. If a man had something that was called a nervous or mental disease, they looked for some bodily factor that brought about this state of affairs. From the point of view of the doctor who deals with the human body, this is the only possible interpretation. However, sometimes they were absolutely correct when they said, ‘We don’t know the cause.’ Their only method was to look for a physical cause.

Mises gives an example that obviously had a profound impact on his thinking:

It happened in 1889, just a few years before the first book of Freud and Breuer was published. An eminent man in France committed suicide. For political reasons and because of his religion, the question was raised whether or not he was sane. His family wanted to prove that it was a mental disease. In order to prove his mental disease to the Church, they had to discover some physical cause.

In the absence of a physical cause, the only option was to assume some moral problem, or that he was exaggerating symptoms for effect (“malingering”). Thus, the man who committed suicide without obvious physical maladies could not be buried on church grounds, for example. Mises further notes that “The case of Crown Prince Rudolf of Austria, who committed suicide at Mayerling, raised similar issues.”

Mises gives another example: a lady who was paralyzed physically but with no apparent physical cause. Her paralysis was entirely in her mind.

Psychology imagined, perhaps for the first time and in a significant way, that the causation could run from the mind to other physical and biological manifestations. The way we think, the things we imagine, the dreams we have, the attitude we take toward ourselves and others, can have a profound effect on us and on the physical world. Freud, like Mises, believed in the primacy of thinking as a causal agent in the course of human life.

To have discovered that what we think and believe can have definite effects on the human body was, Mises said, “a radical change in the field of the natural sciences; such a thing had never happened before.… This was something that all the natural sciences had denied and contested before.”

Before Freud, Mises explains, mental illness was seen as either a purely physical problem or a moral problem. Leeches or the confessional made up the possible range of therapies. With psychoanalysis, we see a third possibility: that the core problem, whether or not it has physical manifestations, is a pathology of the mind, and that implies a different approach to therapy as well.

The humanitarian implications of this possibility — and hence the implications for liberty — are profound. It means having a great sympathy for the afflicted and having a method of dealing with the problem that is neither physically coercive (via the state) nor spiritually manipulative (via the church) but still scientific.

Freudian psychoanalysis was a new science of the mind.

Further, Mises said in his lecture,

Freud was a very conscientious and cautious man. He didn’t say, “I have completely discredited the old doctrines.“ He said, “Perhaps one day, after a very long time, the pathological doctors will discover that ideas are already the product of some physical external bodily factor. Then psychoanalysis will no longer be needed or useful. But for the time being you must at least admit that there is a temporary value in Breuer’s and my discovery and that, from the point of view of present-day science, there is nothing that confirms the materialist thesis that every idea or every thought is the product of some external factor, just as urine is a product of the body.”

“Psychoanalysis is the opposite of materialism,” said Mises. “It is the only contribution to the problem of materialism vs. idealism that has come from empirical research in the human body.”

To have found this lecture is a beautiful thing. It elucidates why Mises had such deep affection for Freud’s work, not only as a tool for refuting the crazed plans of free-love socialists, but also for heightening the role of individuals and the ideas they hold as the driving force of history.

It makes sense if you think about it. Mises was the great champion of subjectivist economic theory, with its radical observation that the whole shape of the world of economics is ultimately traceable to values residing in human minds. Freud did the same for the discipline of medicine and therapy. They both went beyond materialism to find explanatory power in how and what we think. Both highlighted the awesome power of the inner life of the individual mind.

To be sure, Mises recognizes all the criticisms that can be justly leveled against later developments in psychology, particularly its use by the state. He has no interest in defending that. But as for Freud himself, Mises maintained his celebration of Freudian psychology all through his life, from his earliest work until these 1952 lectures, at which point Mises himself was 71 years old. That’s a long and enduring relationship between one great intellectual and another. 

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