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Jun 1, 1975

Mises, “Omnipotent Government” and “Theory and History”

Theory and History is…one of Mises’ greatest works,” a masterpiece “on the philosophy and methodology of the social sciences.”

Ludwig von Mises’ Omnipotent Government and Theory and History are the great laissez-faire economist’s most neglected books, neglected even during the notable revival of the Austrian school in the last few years. Though the books are very different, there is one common denominator that may explain much of the neglect: neither work is, strictly speaking, “economics.” In both books, Mises shows his breadth and depth as a social scientist by expanding into political science (Omnipotent Government) and the philosophy and methodology of the social sciences (Theory and History). Yet it would do economists—notoriously, the narrowest of scholars—an enormous amount of good to read these works, and philosophically minded readers will benefit even more.

Omnipotent Government was published during World War II and was one of Mises’ first books written in English. It is essentially an analysis of the basic nature of the Nazi and Fascist states. At the time it was published, it was read widely in political-science circles as the major antithesis to the then prevalent Marxian analysis of fascism and nazism: namely, that they were the “last stage” of capitalism—in which the “capitalist class” called on the State to maximize its repression in order to terrorize Marxists and the “working class” movement. Mises was one of the first analysts to attack this concept, and to show that nazism and fascism were totalitarian collectivist systems which had far more in common with communism than with free-market capitalism. And, what is more, they were the logical outcome of the galloping statism and militarism of the pre-fascist societies. Mises’ linkage of fascism with Marxian socialism was a shocker in the Marx-laden intellectual world of the 1940s, and it paved the way for the Arendt-Friedrich conception of “totalitarianism” as the common linkage of the three great statisms of the twentieth century.

There is an inevitable, though unfortunate, war-time flavor to the work, and Mises’ occasional dicta on European foreign policy have been outmoded by the later findings of revisionist historians. But his linkage of the totalitarian countries as common examples of aggravated statism remains, of course, perfectly sound, as does his insight that the only viable alternative to the interventionist-collectivist path is laissez-faire capitalism, the free-market economy and free society.

While Omnipotent Government remains highly useful to the present-day reader, Theory and History is more than useful; it is one of Mises’ greatest works, and indeed one of the great works in this century on the philosophy and methodology of the social sciences. Its neglect is no less than an intellectual tragedy. The central theme of the work is the proper relationship between “theory” and “history” in economics and in all the other social sciences. Implicitly refuting all of modern determinist (including mathematical) economics and other social sciences, Mises shows that each event resulting from the action of individual human beings is necessarily unique. Each event of human history, while of course similar and related to other events, is the unique resultant of the changing and differing values and ideas of myriads of different individuals, each person having his own knowledge and motivations. Hence, these events cannot be treated as homogeneous, random units which can be classified and manipulated to arrive at quantitative laws of history or of social science. Therefore, the applied social theorist is not a “scientist” who can precisely forecast the future; the best he can do is explain and weigh events as an “artist” and make tentative qualitative, rather than quantitative, predictions. Adherents of the Austrian school of economics have been accused of being antiempirical, mystical a priorists, divorced from economic reality. But a thorough reading of Theory and History reveals quite the opposite; it is the Misesians—the Austrians—who have the proper respect for the unique, empirical events of human history, whereas it is the pretentious quantitative “economic scientists” who necessarily abuse and distort the rich empirical facts of history in order to arrive at their allegedly “scientific” quantitative “laws” and (invariably wrong) forecasts of the future.

But this bald statement can scarcely convey the richness, the brilliance, the insight with which Mises establishes his view of the proper relation between theory and history, and with which he demolishes the various schools of spurious “scientists” of human history. In the course of the work, Mises sets forth devastating critiques of the historicists, the positivists, the Marxists, and determinists generally, and counters with an excellent defense of freedom of the will in human action. The only weak part of the book is Mises’ defense of subjectivist ethics, a position stemming from his utilitarian approach to ethics. But this is the only weak spot in a glorious and highly significant work. It is vitally important that Theory and History take a place in renown and influence with Mises’ other great masterpieces, Socialism and Human Action. The full force of Mises’ great contributions to human knowledge—and to libertarianism—cannot be understood without immersion into Theory and History. Reviewed by Murray N. Rothbard / Political Philosophy / Omnipotent Government (291 pages) / LR Price $8. / Theory and History (384 pages) / LR Price $10