The Humaneness of Liberalism: A Review of Mises’s Liberalism

Austrian economist Ludwig von Mises made signal contributions to many fields. Foundationally, he sought to ground economics in first principles such as the dynamism of human action in market order and the rejection of positivism. In Human Action, he developed an original theory of praxeology grounded in an account of the human being as homo agens or acting man, influencing subsequent thinkers. His work in economics famously proposed the socialist calculation problem in dialogue with F. A. Hayek. He also refined understandings of the business cycle.

Mises’s book Liberalism deserves greater attention for the clarity and power of its defense. Amid the present decline of liberal sympathies and ascendance of populist and nationalist movements worldwide, it is worthwhile to revisit just what liberalism is. Other scholars have taken up this task recently, including Joshua Cherniss, Alexandre Lefebvre, and Cass Sunstein.¹ Yet while their expertise is in law and political theory, Mises often draws on economic, as well as political, ideas to articulate the theoretical and practical case for classical liberalism. He engages fundamental economic principles, like the international division of labor, and political ideas, like cosmopolitanism, demonstrating the ways they enrich nations and promote peace.

Liberalism advances the case for the humaneness of liberalism and its superiority over other programs in driving prosperity and peace. Mises’s work succeeds in conveying the humanity of liberalism and its primacy over socialist and corporatist alternatives. It does so formally and conceptually. In terms of form, Mises contends that liberalism must persuade through ideas rather than force, and his writing style embodies the humane qualities that he finds at the essence of liberalism. Conceptually, Mises’s account distinguishes itself from other defenses of liberalism by its continual emphasis on economic ideas, especially the enrichment achieved through private property and the international division of labor—themes absent in present-​day accounts that foreground legal and political ideas.

Nevertheless, the book has several lacunae. Mises’s critique of proposals for a third way between liberalism and socialism is underdeveloped. Meanwhile, he fails to reckon with liberalism’s deficient realization in the Global South—and challenges in the Global North—despite the universality of its idea. Applied to today’s context, moreover, Mises’s cosmopolitanism seems ideal yet utopian. This is especially so considering contemporary crises of migration, the rise of international organizations lacking in democratic legitimacy, and the resurgence of nationalism.

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Mises wrote Liberalism during Europe’s interwar period, a time of rising fascism, Soviet collectivism, and economic interventionism resulting in “a reduction in the productivity of labor and a concomitant increase in want and misery.”² In his view, “antiliberalism is heading toward a general collapse of civilization.”³ Amid this cultural moment, he sought to reassert the fundamental importance of private property as the foundation for peace and prosperity. But in spite of his liberal idealism, he concedes in Liberalism’s opening a theme that recurs throughout: liberalism has never been fully realized. There were always obstacles, particularly regarding private property. Yet even though liberalism was never completely achieved, “it sufficed to change the face of the earth”⁴ through dramatically improving the world’s living standards.

Mises notes liberalism’s proven record in improving material quality of life. Hence his concern with liberalism is material, not transcendent. Liberalism focuses on outer well-​being because it recognizes that spiritual goods can only come from within. Indeed, liberalism cultivates the outward material preconditions for the development of inner life. Relatedly, Mises argues strongly against romanticizations of the medieval way of life given its impoverishment. Productivity was solely an outcome of the capitalist mentality, driven by the entrepreneur, “the catalytic agent … of the capitalist economy.”⁵

Though refrains about the “Great Enrichment” attained through liberalism are commonplace, Mises’s insight here is one of the book’s stronger empirical vindications of liberalism. He counterposes it against transcendent conceptions of economics that seek to go beyond material concerns, while nevertheless benefitting from—and possibly taking for granted—the living standards that liberalism has generated.

Mises excels in promoting liberalism on both formal and conceptual fronts. He writes elegantly yet vigorously, not seeking to compel but only to persuade of the advantages of liberalism in enriching the wealth and peace of nations. “Liberalism … desires peace and the ascendancy of ideas.”⁶ This method intersects with his broader insight, that liberalism can only be realized through persuasion and the power of ideas—not through force or conquest. He contrasts this normative ideal with the reality of colonialism, a subject of critique for many neoliberal thinkers. Ideas, then, can drive a renewed awareness of liberalism’s core ethical potency, in contrast to theories or programs imposed by force.

While contemporary discourse tends to focus on caricatured concepts such as the atomized individual of liberalism, Mises offers a high-​level analysis of liberalism’s economic and political ideas. Economically, the essence of liberalism and indeed civilization is “property, that is, private ownership of the means of production.”⁷ He relates this idea to the international division of labor, which drives peace: “It is from the fact of the international division of labor that liberalism derives the decisive, irrefutable argument against war.”⁸ Though the liberal does not expect to abolish war by moralizing about it, they seek to create the economic conditions that eliminate war’s causes—including private property and the international division of labor. Protective tariffs interfere with this system and lower the productivity of labor, hence Mises advocates freeing trade from restraints.

Mises’s insight here links the economic to the political. His ideal is the free movement of labor and capital to optimal conditions, since full freedom of migration enriches human labor and thus production. This drives a liberal cosmopolitan vision. Mises’s account of the cosmopolitan demos is compellingly grounded in open economic principles, providing a worthwhile alternative to insular forms of nationalism. These fail to grasp liberalism’s expansiveness beyond the national frame and how that conduces more strongly to peace and prosperity. As Mises writes:

Closely related to his cosmopolitanism, Mises’s liberalism has in view the good of the whole rather than special groups or interests. This contrasts especially with corporatism, prominent in Mises’s Europe. “Liberalism is not a policy in the interest of any particular group, but a policy in the interest of all mankind.”¹⁰ Indeed, liberalism is a “world-​embracing concept.”¹¹ The capaciousness of liberalism drives Mises’s latent theory of global governance or an “international superstate,”¹² which Quinn Slobodian has drawn out.¹³ Mises also applies this cosmopolitan outlook compellingly to policy, which aims at peaceful cooperation among nations and within each nation. And this peace returns fundamentally to the primacy of private property and the international division of labor, supporting the doux commerce thesis that trade enhances peace.

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Despite these significant merits, Liberalism has several lacunae. Mises finds impossible a third way between liberalism and socialism, linking it to coercive impacts on labor markets that drive unemployment and a decline in the productivity of labor. However, left wanting was more engagement with concrete figures and texts rather than abstractions—especially ordoliberalism and Catholic social teaching. Mises’s German ordoliberal interlocutors could be seen as advocating a third way while remaining committed to private property. Similarly, Catholic social teaching has long sought a third way, affirming private property as a natural but not absolute right while sharply criticizing communism. More engagement with the concrete arguments of ordoliberalism and Catholic social teaching—key advocates of the third way—would have been ideal, recognizing with Sunstein that liberalism is a “big tent.”

Furthermore, Mises fails to reckon with the reality of liberalism outside of the Global North. He asserts that “liberal thinking must permeate all nations, liberal principles must pervade all political institutions, if the prerequisites of peace are to be created and the causes of war eliminated.”¹⁴ While a worthwhile ideal, this insight faces contestation. If liberal thinking must become universal, then what explains its failure to be realized in the Global South? Policymakers pursued a program of economic nationalism rather than liberalism during decolonization, contrasting with Mises’s vision and often resulting in war. Mises does not grapple with this, but it remains a subject of intense debate among development economists seeking to understand obstacles to growth in the Global South.

Beyond the Global South, moreover, if liberalism is as humane as Mises thinks it is, what explains that the liberal societies of the Global North still experience war and internal strife? Possibly the answer is anthropological—the weakness of will inherent to human nature. Mises argues that unlike class war analyses in Marxism, liberalism shows that antagonism of interests does not exist. But the empirical reality of constitutional democracies would seem to contradict this. Despite democratic peace theory’s insight, these societies face polarization and wage wars against non-​democratic regimes. Though Mises does have a realism, conceding that liberalism has never been fully achieved, one wonders about his idealism given the agonistic reality of even the most advanced liberal societies.

Mises’s idealism is also evident in his cosmopolitan outlook. While this cosmopolitanism was humane in contrast to the political and economic movements of his time, it also reveals a utopianism in today’s context. In Europe, recent decades have seen nationalist backlash to mass immigration, contributing to the rise of political parties averse to Mises’s liberal cosmopolitanism. These nationalist tendencies are countered by the simultaneous growth of international organizations, often secluded from the democratic legitimacy and accountability of the nation-​state. How would Mises understand the resurgence of nationalism today, and would he support global governance in its current iteration, increasingly averse to economic liberalism? Some note that market globalism, Mises’s preferred program, fails to enhance freedom for many. They instead favor protectionist measures that prioritize national particularity over a universal cosmopolitan community.

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That said, Mises’s work here is magisterial. Reading Liberalism, it is difficult not to be moved by the humanity of liberalism as Mises articulates it. He excels in both formal and conceptual modes. Writing eloquently, he never resorts to polemic but instead seeks to persuade through ideas. And he largely succeeds in conveying liberalism’s merits, focusing on the power of its political and economic ideas—especially cosmopolitanism and the international division of labor. Although Mises wrote during a different historical context, similar movements in favor of nationalism are at work today, providing a shared basis for reflection. In our cultural moment, with the liberal idea under siege, Mises’s work in Liberalism deserves renewed attention.