Hulsmann’s impressive research begins to pay off in chapter 3 of his Ludwig Mises biography, which gives us a rich account of Mises university education. The key events here are (1) Mises’ research papers under historical economist Carl Grunberg and “Austrian” economist Eugen Philippovich; (3) Mises’ (likely) encounter with Friedrich Wieser and his subsequent reading of Carl Menger’s Grundsatze der Volkswirtschaftslehre; and (4) Mises’ participation in the economics seminar of economist Eugen Bohm-Bawerk.
Hulsmann doesn’t make much out of it from an economic point of view, but the way I see it Mises’ immersion in the nuts and bolts of economic law, specifically the changing laws governing the peasant class in Galicia and the changing laws governing the employment of children in Austria, gave the student Mises a rich historical and institutional grounding for the subsequent development of his theoretical understanding of the economy. Mises also did research on housing conditions and changes in the laws governing domestic servants. This sort of concrete knowledge of economic institutions and empirical conditions is today pathetically lacking among economic students, especially graduate students in economic theory. (The AEA has actually labeled these students “idiot savants” for their gross incompetence these areas, among others). Before he ever understood economic theory, Mises had some insight into how the variability of institutions could alter the incentives and environment of economic actors — he needed then only to acquire the improved lens of sound economic theory to better perceive what he was beginning to observe intuitively. Hulsmann characterizes Mises shift during this time as a “transition period from statism to liberalism” but I think it is better to characterize this as the nascent metamorphosis of a legal historian into a budding economist.
More later.
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I think you are making a trivial distinction as Dr. Hulsmann quotes directly and at length on these points from Mises’ Notes and Recollections:
“[C]arl Grunberg had worked for a while with professor Knapp in Strasbourg…His work slavishly followed in form, presentation, and method, Knapp’s book on the old provinces of Prussia. It was neither economic history nor administrative history. It was merely an extract from government documents, a description of policy as found in government reports. Any able government official could easily have written it.
“It was Professor Grunberg’s ambition to found in Vienna a center for economic history like that created by Knapp in Strasbourg…As fas as possible, I endeavored to free myself from to close an association with Knapp’s system. But I succeeded only in part, which made my study, published in 1902, more a history of government measures than economic history.” (p.6)
And,
“My first doubts about the excellence of interventionism came to me when, in my fifth semester, Professor Philippovich induced me to research housing conditions and when, in the following semester in the Seminar on Criminal Law, Professor Loffler asked me to research the changes in law regarding domestic servants, who at the time were still subject to corporal punishment by their employers. It then dawned on me that all real improvements in the conditions of the working classes were the result of capitalism; and that social laws frequently brought about the very opposite of what the legislation was intended to achieve.
“It was only after further study of economics that the true nature of interventionism was revealed to me.” (p.19)
Dr. Hulsmann also mentions that every student had to study law for two years even before they were able to study economics.
Historian of government measures and proponent of interventionism/statism to an economist with an understanding of the benefits of capitalism and liberalism. It all seems quite clearly layed out.
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