I’d like to begin by telling you something about how I founded the Mises Institute in 1982 and what we are trying to accomplish. Thirty-five years ago, when I was contemplating the creation of a Ludwig von Mises Institute, the Austrian School of economics, and its Misesian branch in particular, were very much in decline. The number of Misesian economists was so small that all of them knew each other personally and could probably have fit in Mises’s small living room. This is a world that young people today, who find Austrian economics all over the place, can hardly imagine.
I wanted to do what I could to promote the Austrian School in general and the life and work of Mises in particular. Mises was a hero both as a scholar and as a man, and it was a shame that neither aspect of his life was being properly acknowledged.
I first approached Mises’s widow, Margit, who was what Murray Rothbard called a “one-woman Mises industry.” After her husband’s death, she made sure his works stayed in print and continued to be translated into other languages. She agreed to be involved and to share her counsel as long as I pledged to dedicate the rest of my life to the Institute. I have kept that pledge. Margit von Mises became our first chairman. How lucky we were to have as her successor, the great libertarian businessman Burt Blumert, who was also a wise advisor from the beginning.
When I told Murray Rothbard about the proposed institute, he clapped his hands with glee. He said he would do whatever was necessary to support it. He became our first Academic Vice-President and inspiration.
Murray would later say, “Without the founding of the Mises Institute, I am convinced the whole Misesian program would have collapsed.” Of course, we can’t know how things would have turned out had we made different choices. I simply wanted to do what I could, with the help of dear friends like Murray and Burt, to support the Austrian School during some very dark times, and I was prepared to let the chips fall where they may.
At the Mises Institute, we aim to introduce students to the thought of Mises and his great student Murray Rothbard. I am glad to be able to tell you that Mises University 2025, which took place from July 20 to July 26, was the best ever. I was excited to see 125 students from universities all over the world listening with rapt attention to topics in Austrian economics that were often of daunting complexity, such as the time preference theory of interest and Austrian Business Cycle Theory. You don’t have to take my word about how great the lectures were. You can watch the videos on the Mises Institute YouTube channel.
But that’s not all. The students continued to discuss Austrian topics at lunch, in which they could sit with a faculty member of their choice and at dinner. Many of the students took the voluntary written exam, and those who passed had the opportunity to compete for cash prizes and honors.
I don’t have space to sum up all the lectures, but here are a few highlights. In the opening lecture on Sunday night, the great Tom Woods spoke about “Austrian Economics in the Age of MAGA.” He began by recalling the Ron Paul for President Campaign, in which he and I had the honor to be major participants. Dr Paul is of course a great libertarian hero, and Tom mentioned that one thing that had impressed him about the students in the campaign was that, as he put it, “they had done the reading.” The students had studied Mises and Rothbard, in large part through the materials available on the Mises.org website and through their attendance, many more than once, at Mises University and at other programs we feature, such as the Rothbard Graduate Seminar and the Mises Summer Fellows program. To them, “End the Fed” was more than a slogan. They knew exactly what was wrong with the Fed and what needed to replace it.
Unfortunately, Tom continued, this was not true of the young people attracted to Trump’s MAGA movement. It was futile to try to convince them of free market economic policies by explaining the irrefutable arguments of Mises and Rothbard. They would not understand them and would not care even if they did.
But there is another way that has a better chance of success. The MAGA supporters profess to be conservatives, and if we can show them that our policies are more in line with conservative values than theirs are, maybe we can win them over. To that end, Tom noted that American conservatives often oppose Big Government. They correctly see that the State is likely to act in the interests of the elite groups that control it rather than in the interest of ordinary people. Was it likely that Trump’s supposedly rightwing government would do things differently? Far better to trust the voluntary actions of people on the free market. We at least know that voluntary exchanges are in the interest of the people who make them; otherwise, they would not have engaged in them. Maybe they will regret what they have done afterwards, but they have a better chance of being right than the State. Further, another important conservative value is self-reliance. Is it really “conservative” to seek special favors from the State, like tariff protection that harms American consumers, instead of trying to build up your business through your own efforts? Tom, for one, did not think so.
Tom spoke about the insights of the Austrian School, and the opening talk on Monday by our Academic Vice-President Joe Salerno appropriately began with a great talk about “The Birth of the Austrian School.” He began by praising the insights of the Classical School, the predecessors of the marginalist revolution of 1870 and 1871. The great economists of this school, David Hume, Adam Smith, and David Ricardo, realized that market prices shift to meet the changing demand of consumers. They also supported free trade and, for the most part, favored laissez-faire. But although they knew that people wouldn’t voluntarily exchange goods unless both parties expected to benefit, they thought that you couldn’t come up with a theory of value that was based on people’s subjective preferences. The trouble was the diamond-water paradox. Which is more valuable to people, water or diamonds? Obviously, water. People couldn’t survive for more than a couple of days without it, but diamonds are a luxury good that some people enjoy. If goods were valued according to their subjective value, water would have a much higher price than diamonds. But in fact diamonds are extremely expensive, and water is normally free. Even bottled water is very cheap. How can this be?
The answer, Joe explained, is that the economists of the Classical School made a fundamental mistake. They failed to realize that the people are not choosing between the total supply of water and diamonds when they want to make an exchange. They are choosing between individual units of the goods. If this is taken into account, the diamond- water paradox is easily solved. When you buy a good you use the first unit of the good for the use of the good you find most valuable. If, for example, someone stranded in the desert was buying water, he would pay an extremely high price for a small amount of water, since his life depended on it. But after this, as he purchased more and more units of water, the price he would be willing to pay for each additional unit would drop. This is an example of what is called the law of diminishing marginal utility. Carl Menger, the founder of the Austrian School, didn’t call the law by that name, but he clearly understood the idea. Moreover, and this is the key point, the price of the good demanders are willing to pay is the value of the last, or marginal, unit. This is true because the law of one price requires that all units of a good be sold at the same price.
Although the other great marginalist revolutionaries of the 1870s, William Stanley Jevons and Leon Walras, defended the subjective theory of value, the Austrians had an insight that was lacking in the others. They realized that subjective utility cannot be measured. Goods can only be ranked ordinally, i.e., first most valued use, second most valued, etc. As Austrians put it, utility is ordinal, not cardinal.
Our great President of the Mises Institute, Tom DiLorenzo, gave another brilliant lecture on “Competition and Monopoly.” He showed that Mises and Rothbard both rejected the unrealistic notions of perfect competition and it variants, like monopolistic competition. Perfect competition, which assumes a large number of firms that cannot influence price, isn’t competition at all. Real competition involves rivalry between firms that can influence price. The only valid definition of “monopoly” is a grant of privilege by the state. There cannot be a monopoly on the free market. Furthermore, Tom pointed to his own research that showed that firms accused of being monopolies, like John D. Rockefeller’s Standard Oil, gained their dominant position by supplying better quality and cheaper products than their less successful rivals, who sought to use the Sherman Antitrust Act and other measures to compel them to break up.
I have had space to discuss only a few of the many outstanding lectures, but all of the faculty did an outstanding job. A feature of the faculty that especially delighted me was how many of them, including Mark Thornton, Peter and Sandra Klein, Jonathan and Patrick Newman, Bob Murphy, and Dave Howden were former students at Mises University and our other programs.
I look forward eagerly to Mises University 2026! Let’s do everything we can to encourage promising students we know to attend it.
