For most of us there is usually a book or two that help shape our beliefs. They are books that have a revolutionary impact on our thinking. For many classical liberals/libertarians, as the popular saying goes, it usually begins with Ayn Rand. And Atlas Shrugged certainly deserves this reputation but it’s certainly not the only book. For many it began with the works of Mises, Hayek, Rothbard, and Henry Hazlitt (just to name a few). For myself it was Hazlitt’s Economics in One Lesson and my own professor, Walter Block’s Defending the Undefendable (certainly Hazlitt’s book comes first because without it I undoubtedly would have interpreted this book very differently. Whether you agree with the radical positions or not this book shows just how far the logic of the one lesson can be taken, this is possibly why Hazlitt himself praised it).
In regards to Economics in One Lesson, I am not alone. In fact, Ayn Rand’s main competition very well may be Hazlitt’s fantastic introduction to economics. The book is revolutionary to so many because it corrects the misconceptions so many of us have towards the subject of economics. And, it not only points out the correct way to think about economics, it also shows just how entertaining and important it is, and in only one lesson!
Today’s document, a letter to Leonard Read on February 18, 1982, shows Hazlitt discussing one of the books that “almost” revolutionized his way of thinking, namely Ludwig von Mises’s Socialism. He says “almost” because he was never inclined toward socialism but it did change the way he thought about it. This should not be surprising if one knows Mises’s argument against this so-called “perfect in theory” economic system. Most see socialism’s weaknesses from the incentive problems they cause (which are certainly real) but Mises shows it is doomed to failure before it even starts. Socialism is impossible! Due to the central ownership of the means of production there is can be no exchange, without exchange there can be no prices, and without prices there can be no rational economic calculation. The lack of economic calculation makes it impossible for socialism to achieve the material wealth promised by the socialist dream. So, in Socialism (which expands upon his 1920 article “Economic Calculation in the Socialist Commonwealth“) Mises demonstrates not only that socialism is not perfect in theory but strictly impossible. Thus, Mises argument against socialism is certainly most likely to have a revolutionary impact on most people’s thinking, even if they were already against socialism.
While Socialism was certainly not the direct influence on Economics in One Lesson, that would be Bastiat’s essay “What is Seen and What is Not Seen,” it is clear to see why the lesson is so important. The economic system as a whole is very important, getting these institutions right is crucial. Thus, all the more reason to think about what happens in the long run and for everyone. If only we could get more people to read these revolutionary books.