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Source link: http://archive.mises.org/11853/faculty-spotlight-interview-yuri-n-maltsev/

Faculty Spotlight Interview: Yuri N. Maltsev

March 4, 2010 by

Yuri N. Maltsev received his MA in history and social sciences at Moscow State University and his PhD in economics at the Institute for Labor Research in Moscow. Some of his major achievements include consulting on Central and Eastern European economic, trade and political issues, as well as appearing on national television and radio programs. He currently is a professor of economics at Carthage College in Kenosha, Wisconsin.

How and when did you come about Austrian economics?
My gateway to Austrian economics was The Road to Serfdom by F.A. Hayek. I was given a copy by a friend for just one night and Hayek laid it down in such a clear, apodictic and revealing way that I became very interested in learning as much as I could about him and the Austrian School.

What convinced you of the merits of the Austrian School of Economics over other schools of thought?
The Austrian School of Economics is economics of freedom, economics for free people, economics of human action, not of government design. It is the only school which accurately predicted the fate of the socialist experiment, which cost over 150 million lives last century. Ludwig von Mises showed with precise and irrefutable logic why socialism could never work.

How did Austrian economics change your worldview?
It absolutely convinced me that there are absolutely no alternatives to freedom and voluntary exchanges in any sphere of human life and endeavor.

You were an economist for the Soviet Union, how did this affect your study of Austrian economics?
I got an unlimited access to Western economic publications and could study as much as I wished at the government’s expense. I was warned, however, not to tell others what I’ve read. Even under Gorbachev, you could not just say, “this system is baloney.” You could only go about it slowly and covertly, exposing its inefficiencies and failures, which is what I did in my lectures and writings.

Yuri Maltsev, a month before he defected from the Soviet Union.

Had you not defected from the Soviet Union, how would you be today?
I could be possibly dead already – life expectancy for males in Russia is 57 and I am 59 already. If alive, I would probably do same as here – teach, write and promote ideas of freedom in any way I can.

Who have been your greatest intellectual influences?
Austrians: Ludwig von Mises, Murray Rothbard, F.A. Hayek, Hans-Hermann Hoppe, Thomas DiLorenzo, Joseph Salerno and many others. Russian writers: Dostoyevsky, Tolstoy, and Solzhenitsyn. Poets: T.S. Eliot and Josef Brodsky.

As a professor of economics, how do you go about introducing your students to Austrian economics?
It is much easier today than say 20 years ago: www.mises.org provides us with great teaching resources. The Ludwig von Mises Institute became the world’s largest research center and depositary of books, journals, video and audio materials on the Austrian School. These resources are extremely valuable in teaching and learning. I am recommending my students to explore the Austrian School perspective in all my classes, leaving them with the opportunity to choose their favorites themselves.

Yuri as an ROTC cadet in the Soviet Army.

Yuri as an ROTC cadet in the Soviet Army.

What do your students think of Austrian economics?
Many of them developed deep interest in the Austrian School and some attended the Mises University. I am in contact with many of my former students who developed a life-long interest in Austrian economics and are practicing economists, businessmen, lawyers and other professionals.

What advice would you give to a student who is afraid to discuss Austrian economics with fellow students and with professors?
Do not be afraid. Mises’s personal motto was: “Tu ne cede malis sed contra audentior ito. Do not give in to evil, but proceed ever more boldly against it.” Fight back any attempts to limit your freedom of speech. Having said that, I would advise students to be tactful and polite in their discussions with fellow students and professors. Remember that shouting and sloganeering are habits of the Left.

Did you ever discuss Austrian economics with your peers or your students while a scholar in the Soviet Union?
I did quite a lot with fellow economists at the Academy of Science and in my lectures on perestroika. After the collapse of the USSR many intellectuals from Russia, Lithuania, Poland, Estonia embraced the Austrian School and today we witness a considerable following of the School in these and other formerly socialist countries. The Austrian School is definitely more popular in Eastern Europe than Western Europe.

A young Yuri Maltsev in his first grade uniform.

A young Yuri Maltsev in his first grade uniform.

What are your hobbies?
I love travel and I travel a lot – with my students, colleagues, friends and family. I travel in the US and internationally – to date visited 77 countries. It provides you with a great perspective on freedom: the freer the country is, the more prosperous and culturally rich are the people, the cleaner are the environment and nature, and abundant are the wildlife. I also organize a lot of educational study tours.

What are your favorite film and theatrical works?
Film: The Bonfire of the Vanities (1990). Plays: The Tragedy of Macbeth and Cyrano de Bergerac.

What music do you enjoy the most?
Johann Sebastian Bach, Ludwig van Beethoven, Gustav Mahler and Pyotr Ilyich Tchaikovsky, and George Gershwin on a light side.

Can you think of an artwork that symbolizes or depicts human action?
The Thinker (1902) sculpture by Auguste Rodin.

Works by Yuri Maltsev:

  • Editor and author of the introduction: Requiem for Marx, Ludwig von Mises Institute, Auburn, AL, 1993, 377 pp. (Find it here)
  • A chapter on Franklin Delano Roosevelt and Joseph Stalin in Reassessing the Presidency. The Rise of the Executive State and the Decline of Freedom. Ed. by John V. Denson, Ludwig von Mises Institute, Auburn, AL, 2001, pp. 527-546. (With Barry Dean Simpson). (Find it here)
  • “Murray Rothbard as a Critic of Socialism,” Journal of Libertarian Studies, No. 1 (Spring), 1996, pp. 232-253. (Find it here)

See Yuri’s Mises Daily archive here. See Yuri’s video and audio archive here.

Yuri’s website: Yuri N. Maltsev’s page on Mises.org


Jeffrey Tucker March 4, 2010 at 2:52 pm

Wonderful interview. Up with Mahler!

Matt March 4, 2010 at 3:02 pm

Can we get more of these profiles? This is great to read.

Keith Trawick March 4, 2010 at 3:55 pm

I would have preferred himi to say BONFIRE OF THE VANITIES was his favorite book. The movie sucked big time!!!!

N March 31, 2010 at 2:16 pm

You would have preferred him to conform to your point of view?

Bruce Koerber March 4, 2010 at 10:32 pm

We are all very glad that you are going to far exceed the life expectancy of males in Russia!

Inquisitor March 4, 2010 at 11:33 pm

Hehe this guy is of course an asset to the institute, to have someone who lived through the USSR to recount its flaws (when Samuelson was still promulgating how wonderful it is…)

J Cortez March 5, 2010 at 12:30 am

I think Maltsev is great. Thanks for the profile.

Mitchell Powell March 5, 2010 at 1:27 am

many intellectuals form Russia
ought be changed to
many intellectuals from Russia

Rick Dutkiewicz March 5, 2010 at 11:10 am

Great new feature. It was very good to read Yuri’s profile. Thanks.

Andrew Cain March 5, 2010 at 5:55 pm

Daniel Sanchez and I are actually starting a program in which we interview various faculty members of the Mises institute so you are going to see more of these in the future.

Tom Trosko March 5, 2010 at 9:49 pm

Would you please add an option to get these in an email update, or post them directly to my facebook page? Teachers of liberty will eat these up and I would like to thank you for adding them.

Israel Curtis March 5, 2010 at 11:50 pm

Check the sidebar – become of Fan of Mises on Facebook and you will get the latest posted on your wall. Also, check the link at the top of the sidebar to “Join the Mailing List”

Tomislav March 7, 2010 at 5:19 am

„Ludwig von Mises showed with precise and irrefutable logic why socialism could never work“- Yuri N. Maltsev

What follows as an answer to the statement of Maltsev is an excerpt from the article ,,Against Mises” by Paul Cockshott:

Chapter 2
The argument from calculation

The director 5 wants to build a house. Now, there are many methods that can be resorted to. Each of them offers, from the point of view of the director certain advantages and disadvantages with regard to the utilization of the future building, and results in a different duration of the building’s serviceableness; each of them requires other expenditures of building materials and labor and absorbs other periods of production. Which method should the director chose? He cannot reduce to a common denominator the items of various materials and various kinds of labor to be expended. Therefore he cannot compare them. He cannot attach either to the waiting time (period of production) or to the duration of serviceableness a definite numerical expression. In short, he cannot in comparing costs to be expended or gains to be earned, resort to any arithmetical operations. 6

Mises is concerned above all with the issue of the choice of techniques to be used in the production process. The claim is that only a market, by reducing all costs and benefits to the common denominator money allows rational comparison of alternative possibilities.

He reviews various possible ways in which this could be done and rejects them all.

1. Calculation in kind is rejected because one can not add together quantities of different inputs unless one first converts them to a common unit of measurement like money. This is at first sight a reasonable argument but it involves certain presuppositions about the nature of calculation to which we will return.
2. Calculation in terms of the labour theory of value is rejected in a single sentence:

This suggestion does not take into account the original material factors of production and ignores the different qualities of work accomplished in the various labor-hours worked by the same and by different people. 7

This is a somewhat brief treatment of the issue so our reply can also be concise. We have shown in other chapters that the labour theory of value does allow one to assign definite measures to the different value creating powers of labours of different degrees of skill. The essence of the method is to cost the training of workers in terms of labour also and impute this to the work they do once they have been trained. As for the failure to take into account the original material factors of production, the classical theory of rent shows how the level of differential ground rent is governed by the marginal labour costs of production. There is no reason why this calculation can not be applied directly in a socialist economy. If this basis were followed, then the resulting environmental destruction should be no worse than that routinely produced by the application of the same principle in market economies.

Given the widespread environmental damage produced to the world’s natural ecosystems from the bourgeois principle of valuing natural resources on the basis of marginal costs of production, we hope that a socialist planning agency would adopt somewhat stricter rules.
3. He rejects the suggestion that the unit of measure be utility on the grounds that this is not directly measurable. We would agree with this.
4. He rejects what is essentially the market socialist approach on the ground that the market is essentially the pursuit of self interest and that its effective operation implies the existence of risk taking entrepreneurs. If one accepts that the pursuit of self interest through the market is necessary for economic calculation then it is inconsistent to try and exclude the function of the entrepreneur. In the view of what has happened in USSR since Gorbachov, this was a politically astute observation. Once the socialists have conceded the virtue of the market it is hard to denounce the vice of the exploiter clothed as it now is in the shining raiment of enterprise.
5. He argues against the use of “the differential equations of mathematical economics” as a technique of socialist economic calculation. It is not clear exactly which differential equations he means, but they appear to be those of comparative statics. Modern economics tends to assume that a differential equation will involve derivatives with respect to time, and thus that its function is to capture the dynamics of an economy. We assume that Mises means simply the differential calculus which is used in neo-classical economics to deduce static equilibrium conditions. The gist of his argument is that the equilibrium condition dealt with in comparative statics is an entirely abstract construction which never really occurs. The economy is constantly in a process of change and current resources available to it are always a hangover from the past unsuited to current wants.

This is all true enough, but it does not prove that it is impossible to plan how best to use current resources to achieve a given future output. Our algorithm for plan balancing taking into account current stocks is one of probably many mathematical procedures that could be followed to achieve this end.
6. He also rejects what he calls the method of trial and error. This is the most interesting in our current context because it bears some relationg to what we advocate.

We may assume that in the socialist commonwealth there is a market for consumers goods and that money prices for consumers goods are determined on this market. We may assume that the director assigns periodically to every member a certain amount of money and sells the consumer goods to those bidding the highest prices. … But the characteristic mark of the socialist system is that the producers’ goods are controlled by one agency only in whose name the director acts, that they are neither bought nor sold, and that there are no prices for them. Thus there can not be any question of comparing input and output by the methods of arithmetic. 8

This mechanism is similar to that which we advocate for the distribution of personal consumer goods. Mises again concentrates on the alleged impossibility of applying arithmetical methods to comparing inputs with outputs in the absence of markets for means of production. Our answer is simple, the planning agency knows:
1. the labour contents of the different means of production,
2. the number of labour tokens that each consumer good will fetch on sale to individuals
from this it is possible to compare the social cost of producing something with the valuation put on it by consumers. Dealing with producer goods is a little more complicated. In this case we have no market to give us a measure of demand for the good, but we do have the more direct information derived from input/output analysis. We know how much of each intermediate good will be required to meet a given mix of final consumer goods. We do not need a market in intermediate goods to determine how much should be produced.

Throughout, Mises identifies calculation with arithmetic. This is understandable since commercial calculation and arithmetic have been strongly associated. Calculation 9 and arithmetical operations are practically synonymous. But calculation can be seen as a particular instance of the more general phenomenon of computation or simulation. What a control system requires is the ability to compute. This is true whether the control system in question is a set of firms operating in a market, a planning agency, an autopilot on an aircraft or a butterfly’s nervous system. But it is by no means necessary for this computation to proceed by arithmetical means.

The important thing is that the control system is able to model significant aspects of the system being controlled. Firms do this by means of the procedures of stock control and accountancy in which marks on paper model the location and movement of commodities. In preparing these marks the rules of arithmetic are followed. The applicability of arithmetic to the problem relies upon number theory being a model for the properties of commodities. A butterfly in flight has to control its thoracic muscles to direct its movement towards objects, flowers or fruit, that are likely to provide it with energy sources. In doing this it has to compute which of many possible wing movements are likely to bring it nearer to nectar. As far as can be determined it performs these computations without the benefit of a training in arithmetic.

To use economic terminology the butterfly has many choices open to it. Different sequences of muscle movement have different costs in terms of energy consumption and bring different benefits in terms of nectar. Its nervous system has to try to minimise the costs and maximise the benefits using non-arithmetical methods of computation. The continued survival of butterflies is evidence of their computational proficiency. A planning agency is likely to make widespread use of arithmetic and indeed, if one wants to make localised decisions on the optimal use of resources by arithmetic means, then Mises arguments about the need to convert different products into some common denominator for purposes of calculation are correct. This is exactly the role played by labour values in our proposal: they allow engineers to have a good estimate of what is likely to be a cheap method of production.

If, however, one is wanting to perform global optimizations on the whole economy, other computational techniques having much in common with the way nervous systems are thought to work are appropriate. These can in principle be performed without resort to arithmetic. Indeed Oskar Lange pioneered such approaches in the 1950′s when he constructed a hydraulic model of the Polish economy for planning purposes. Mises, like many bourgeois theorists confuses the particular historical form in which a function is carried out with its essence. He reasons that :

1. Economies must optimize.
2. Arithmetic allows us to construct ordering relations over numbers, which can be used for optimization.
3. If one is to order numbers they must be of the same sort.
4. This requires conversion into a common unit of measure.
5. Money is a method of converting into a common unit of measure.
6. Hence all economies need money.

The problems with this argument lie in the steps 2 and 5. While propositions 2 and 5 are true, they do not support conclusion 6. To reach that conclusion we sould need stronger claims:

2¢. Arithmetical orderings are the only way of achieving optimization.

5¢. Money is the only practical metric.

As we have shown, these stronger claims are false: there are non arithmetical methods of optimsation and money is not the only method of converting into a common unit of measure.

5 The ‘director’ is von Mises term for the dictator of a socialist state: a peculiar adoption of capitalist corporate terminology that is perhaps understandable for a book published in 1940. His argument however is not dependent on the planning process being subordinated to the will of a single individual, but is more general so that for ‘director’ one could read: planning agency.

6 Human Action, p694

7 Human Action,p 699.

8 Human Action, p 701

9 From calculus a pebble or stone used in counting.

Yuri Maltsev March 7, 2010 at 3:36 pm

Really funny! What happened with Lange’s hydraulic model of the Polish economy? Run out of water? Or Stalin’s stooge and murdere of Polish people Boleslaw Bierut had stolen all the water? We know what happened with Polish economy and Polish people in the 1950s.

Tomislav March 7, 2010 at 6:23 pm

„Comrade“ Maltsev, I cannot explain what relates to Lange’s theory here. If you want to know more about that please research the articles of Paul Cockshott and Allen Cottrell.
You really think that Stalin was a communist? How he could be that if he accepted an economic basis of stock-money production for USSR society? The fact that the governments in USSR did not accept to implement Marx’s labor theory of value on the economic calculation says enough that they were dogmatic Marxists.
We will ask ourselves why Marx’s labor theory of value was ignored and was not put into practice? Cockshott and Cottrell argue that one reason why the distribution based on the calculation time was never seriously applied in the former Soviet Union are its radical egalitarian implications. Indeed, the ruling class (the party bureaucrats, military structure and social intelligence) in the former Soviet Union feared that its privileged revenue would be threatened if the distribution based on the calculation of working time would be literally, not just rhetorically imposed.

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