Today is the 130th birthday of Ludwig von Mises. Mises was, in my opinion, the greatest economist of all time as the man who systematized the Austrian school of economics and developed some of its key insights.
His Theory of Money and Credit gives the first fully-fledged exposition of the Austrian Business Cycle theory, later refined and developed by FA Hayek; his article Economic Calculation in the Socialist Commonwealth and book Socialism make the defining argument against socialism based on the impossibility of calculating resource allocation without a functioning price system; his Epistemological Problems of Economics and Theory and History (a personal favourite) are broadsides against positivism and historicism in economics and the social sciences. His magnum opus, Human Action, gives the most comprehensive and persuasive defence of the free market that I am aware of. (Eamonn has written a great primer on Mises, which is available for free here.)
For me, Mises is the root of 20th Century libertarianism. Himself a product of the early Austrian economists Menger, Bohm-Bawerk and Weiser, Mises directly spawned the two great – and often conflicting – traditions of Austrian school thought, by converting a young FA Hayek to liberalism and hugely influencing Murray Rothbard. For all their disputes, both the Hayekian and Rothbardian traditions owe their roots to Mises. Both have produced some of the most important works of economics and the social sciences of the 20th Century, in the Misesian tradition. Ayn Rand usually made her economic arguments along Misesian lines. Mises has had an impact on politics as well: both Ron Paul and, closer to home, Steve Baker have cited Mises as key influences and promote his ideas where they are needed most.
Reading Mises at university changed my life, by convincing me of the need for truly laissez-faire capitalism without government control of the money supply or the economic autocracy of socialism. We stand on the brink of another crisis caused, yet again, by the government-induced bubbles that Mises identified. Mises never made his arguments in terms of natural rights or morality, but in much simpler terms. His message was that if you want peace, prosperity and happiness, people must be free.
Here's an extract from Mises on the economic foundations of freedom:
Unfortunately many of our contemporaries fail to realize what a radical change in the moral conditions of man the rise of statism, the substitution of government omnipotence for this market economy, is bound to bring about. They are deluded by the idea that there prevails a clear-cut dualism in the affairs of man, that there is on the one side a sphere of economic activities and on the other side a field of activities that are considered as noneconomic. Between these two fields there is, they think, no close connection. The freedom that socialism abolishes is "only" the economic freedom, while freedom in all other matters remains unimpaired.
However, these two spheres are not independent of each other as this doctrine assumes. Human beings do not float in ethereal regions. Everything that a man does must necessarily in some way or other affect the economic or material sphere and requires his power to interfere with this sphere. In order to subsist, he must toil and have the opportunity to deal with some material tangible goods.
The confusion manifests itself in the popular idea that what is going on in the market refers merely to the economic side of human life and action. But in fact the prices of the market reflect not only "material concerns"; like getting food, shelter, and other amenities; but no less those concerns which are commonly called spiritual or higher or nobler. The observance or nonobservance of religious commandments; to abstain from certain activities altogether or on specific days, to assist those in need, to build and to maintain houses of worship, and many others; is one of the factors that determines the supply of, and the demand for, various consumers' goods and thereby prices and the conduct of business.
The freedom that the market economy grants to the individual is not merely "economic" as distinguished from some other kind of freedom. It implies the freedom to determine also all those issues which are considered as moral, spiritual, and intellectual. . . .
What makes many people blind to the essential features of any socialist or totalitarian system is the illusion that this system will be operated precisely in the way which they themselves consider as desirable. In supporting socialism, they take it for granted that the "state" will always do what they themselves want it to do. They call only that brand of totalitarianism "true," "real," or "good" socialism the rulers of which comply with their own ideas. All other brands they decry as counterfeit. What they first of all expect from the dictator is that he will suppress all those ideas of which they themselves disapprove. In fact, all these supporters of socialism are, unbeknown to themselves, obsessed by the dictatorial or authoritarian complex. They want all opinions and plans with which they disagree to be crushed by violent action on the part of the government.