Does Morality Hamper the Market Process? A Reappraisal of the Mises Thesis

Ludwig von Mises pioneered the praxeological critique of economic interventionism. He argued that the state's manipulation of market processes through wage and price controls, taxes and subsidies, central bank credit manipulation, and other regulatory policies would create unintended and undesirable consequences, and, therefore, further rounds of intervention. Mounting interventions would systematically disturb market processes and tend toward central economic planning. But Mises erred in his later attempt to equate moral reformism, especially the call for a morally improved capitalism, with interventionism. He claimed that moral reforms would, like any kind of economic intervention, hinder market processes and logically lead toward authoritarian control of the economy. Mises therefore insisted that a morally improved capitalism is unworkable. If Mises is correct, the effort of this Journal is not only in vain, it might unwittingly point in the direction of authoritarianism. This article puts Mises' praxeological reasoning to the test. We argue that his conclusions cannot be accepted as deduced from solid economic analysis and praxeological reasoning. Mises failed to provide a successful a priori argument showing that the logic of moral persuasion necessarily hampers market processes and logically tends toward authoritarianism