Ron Paul on How Austrian Economics Inspired his Political Career

By: Ron Paul
Ron Paul Rothbard Hanke.png

Today is Ron Paul’s 82nd Birthday! Dr. Paul is not only a Distinguished Counselor for the Mises Institute, but a founding member and perhaps the most influential advocate for Austrian economics the world has ever seen. 

In 1984, Dr. Paul wrote about the role Austrian economics and Ludwig von Mises played in his deciding to pursue politics, and how it equipped him with the “intellectual ammunition” he needed to stand up to the pressures of Washington, D.C.: 

[U]nder the predominance of interventionist ideas, a political career is open only to men who identify themselves with the interests of a pressure group…. Service to the short-run interests of a pressure group is not conducive to the development of those qualities which make a great statesman. Statesmanship is invariably long-run policy; pressure groups do not bother about the long-run. – Ludwig von Mises, Human Action

I decided to run for Congress because of the disaster of wage and price controls imposed by the Nixon administration in 1971. When the stock market responded euphorically to the imposition of these controls and the closing of the gold window, and the U.S. Chamber of Commerce and many other big business groups gave enthusiastic support, I decided that someone in politics had to condemn the controls, and offer the alternative that could explain the past and give hope for the future: the Austrian economists’ defense of the free market. At the time I was convinced, like Ludwig von Mises, that no one could succeed in politics without serving the special interests of some politically powerful pressure group.

Although I was eventually elected, in terms of a conventional political career with real Washington impact, he was absolutely right. I have not developed legislative influence with the leadership of the Congress or the administration. Monies are deliberately deleted from routine water works bills for my district because I do not condone the system, nor vote for any of the appropriations.

My influence, such as it is, comes only by educating others about the rightness of the free market. The majority of the voters in my district have approved, as have those familiar with free-market economics. And voters in other districts, encouraged by my speaking out for freedom and sound money, influence their representatives in the direction of a free market. My influence comes through education, not the usual techniques of a politician. But the more usual politicians in Congress will hardly solve our problems. Americans need a better understanding of Austrian economics. Only then will politicians become more statesmanlike.

My introduction to Austrian economics came when I was studying medicine at Duke University and came across a copy of Hayek’s The Road to Serfdom.

After devouring this, I was determined to read whatever I could find on what I thought was this new school of economic thought—especially the work of Mises. Although the works were magnificent, and clarified many issues for me, it was more of a revelation to find intellectuals who could confirm what I “already knew”—that the free market is superior to a centrally planned economy. I did not know how a free market accomplished its work, and so the study of economics showed me this, and how to build a case for it. But, like many people, I did not need to be convinced of the merits of individual freedom—for me that came naturally.

For as long as I can remember, I wanted to be free from government coercion in any form. All my natural instincts toward freedom were inevitably challenged by the established school system, the media, and the government. These systems tried to cast doubt on my conviction that only an unhampered market is consonant with individual liberty. Although reassured that intellectual giants like Mises agreed with a laissez-faire system, I was frustrated by knowing what was right, while watching a disaster developing for our economy. The better I came to understand how the market worked, the more I saw the need to implement these ideas through political action. Political action aimed at change can, of course, take various forms. In 1776, in America, it was a war for independence from British oppression. In 1917, in Russia, violence was used to strengthen oppression.

Fortunately, it is possible to accomplish the proper sort of change through education, persuasion, and the democratic process. Our rights of free speech, assembly, religion, petition, and privacy remain essentially intact. Before our rights are lost, we must work to change the policies of 70 years of government interventionism. And the longer we wait the harder it will be.

Because of my interest in individual liberty and the free market, I became closely associated over the years with friends and students of Mises, those who knew the greatness of Mises from a long-term personal friendship with him. My contact, however, was always through his writings, except on one occasion. In 1971, during a busy day in my medical office, I took a long lunch to drive 60 miles to the University of Houston to hear one of the last formal lectures Mises gave—this one on socialism. Although 90 at the time, he was most impressive, and his presentation inspired me to more study of Austrian economics. My subsequent meetings and friendship with the late Leonard Read and his Foundation for Economic Education also inspired me to work harder for a society unhampered by government intrusion into our personal and economic lives. My knowledge has been encouraged and bolstered through the extraordinary work of the Mises Institute, with its many publications and conferences, and its inspiring work among students choosing academic careers.

My friendships with two important students of Mises, Hans Sennholz and Murray Rothbard, were especially helpful in getting firsthand explanations of how the market functions. They helped me to refine my answers to the continual barrage of statist legislation that dominates the U.S. Congress. Their personal assistance was invaluable to me in my educational and political endeavors.

Such friendships are valuable, but the reassurance that sound thinkers were on my side was inspirational. It gave me the confidence I needed to intellectually defend my political and economic positions on the campaign trail and on the House floor….

Austrian economics has provided me with the intellectual ammunition to support my natural tendency to say “no” to all forms of government intervention. Mises provides an inspiration to stick to principle and to argue quietly and confidently in favor of the superiority of a decentralized, consumer-oriented market, in contrast to a bureaucratic centrally planned economy.

Mises is clear about the responsibility we all have in establishing a free society. He concludes Socialism with this advice: Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.15

And in Human Action he states:

There is no means by which anyone can evade his personal responsibility. Whoever neglects to examine to the best of his abilities all the problems involved voluntarily surrenders his birthright to a self-appointed elite of supermen. In such vital matters blind reliance upon “experts” and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people’s domination. As conditions are today, nothing can be more important to every intelligent man than economics. His own fate and that of his progeny is at stake.16

I’m convinced, as was Mises, that the solutions to the crisis we face must be positive (which is just one reason I am so pleased by the establishment of the Ludwig von Mises Institute). He stated in The Anti-Capitalistic Mentality that the “anti-movement” has “no chance whatever to succeed” and that “what alone can prevent the civilized nations of Western Europe, America and Australia from being enslaved by the barbarism of Moscow is open and unrestricted support of laissez-faire capitalism.”17

Without Austrian economics, I would not have had my political career. The strongest motivating force in my political activities is to live free since I was born free. Liberty is my first goal. The free market is the only result that can be expected from a free society. I do not accept individual freedom because the market is efficient. Even if the free market were less “efficient” than central planning, I would still prefer my personal freedom to coercion. Fortunately, I don’t need to make a choice. Austrian economics upholds the market’s efficiency, and that reinforces my overwhelming desire and right to be free. If no adequate intellectual explanation existed as to the efficiency of the free market, no political activism of any sort would be possible for any pro-freedom person. Our position would only be a theoretical pipe dream.

I see no conflict however between a utilitarian defense of the market economy and the argument for a free market as a consequence of a moral commitment to natural God-given rights, for there is no conflict.

The economist’s approval of the market for purely utilitarian reasons actually becomes a more “objective” analysis if not approached from a natural rights standpoint. But when combined with a natural-rights philosophy, it is even more powerful. No choice must be made. The utilitarian argument does not exclude the belief that life and liberty originates with the Creator. When they are added together they become doubly important.

When one argues for the free market on utilitarian grounds, one starts with particular actions by the individual. In starting with a natural rights argument the “a priori” becomes “the gift of life and liberty” as natural or God-given.

The utilitarians may be neutral or antagonistic regarding the origins of life and liberty, but this in no way weakens their explanation of the technical advantages of a free economic system. However, those who accept a natural rights philosophy have no choice whatsoever but to accept laissez-faire capitalism.

Mises’s utilitarian defense of the market opens political careers for those who believe in liberty, courage, and even dares one who truly believes in the system to present it in political terms.

Mises in Human Action says:

The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority.

Ludwig von Mises certainly provided sound economic and social theories. I hope that my modest success in politics may encourage others to try it, and help prove Mises “wrong,” showing that a political career is open to men and women who do not identify themselves with the interests of a pressure group, but with the liberty of all.

Excerpted from Mises and Austrian Economics: A Personal View

Powered by WPeMatico