The Austrian School in the 20th and 21st Century: From Exile to Presidency

Added: 2026-05-28

[00:00:00]It's 1940. You have Ludwig von Mises, arguably the most brilliant economic mind in the world, sitting alone in a tiny apartment in New [music] York City.

[00:00:10]His library was just stolen by the Gestapo, and the entire academic establishment thinks he's a nut job.

[00:00:17]I've spent the last few weeks staring at a stack of biographies and historical notes that our researcher sent me, and I honestly can't get this one specific image out of my head. But imagine if you could fast-forward 80 years to 2023 and show him someone like Javier Milei, >> [music] >> a guy who wields a literal chainsaw at his rallies, screams about central banks, and wins. And his entire playbook, it's stuff Mises was writing in that tiny apartment when everyone else had written him off. Mises and the Austrian school has one of the greatest survival stories in intellectual history. We usually talk about ideas winning because they're popular or they're in fashion. But this is a story about what the sources call [music] the great displacement. In our previous video, I explored how Vienna was essentially the operating system for the entire 20th century. You had Freud redefining psychology, Wittgenstein redefining philosophy, and then you had the economists. [music] This is a journey into how a school of thought, the Austrian school, survived an attempt to physically wipe it off the map.

[00:01:30]>> [music] >> Lesson number one, the heart of the Austrian school wasn't actually the University of Vienna. It was Mises's private seminar. See, every 2 weeks, Mises would gather this incredible mix of people, economists, sociologists, and lawyers. They would argue in Mises's office, then in an Italian restaurant, then a cafe until the sun came up. And there was another group, too, the Geistkreis, or spirit circle, which included a young Friedrich Hayek. They were debating everything, music, history, the very nature of knowledge.

[00:02:10]It was this incredibly vibrant, organic ecosystem, but you have to realize how fragile it was.

[00:02:17]Mises was an outsider. He was Jewish, and he was a classical liberal in a world that was sprinting toward totalitarianism.

[00:02:26]He saw the writing on the wall before anyone else. There's a chilling line from his memoirs where [music] he says, "The fight for Austria remained lost.

[00:02:36]The enemy who was to destroy it came from the outside." And then in March 1938, that enemy walks right in. The Anschluss, the Nazi annexation of Austria. And this is where the story shifts. The night the Nazis arrived, they broke into Mises's tiny apartment.

[00:02:54]They con- confiscated his library, his correspondence, everything. And that moment stuck with me. It's not just that they wanted to kill the man.

[00:03:04]They wanted to delete the ideas themselves, and they effectively did, at least in Vienna. The seminar stopped, the circles dissolved, Mises barely escaped. He had to take what the sources call impossible routes through Switzerland, France, Spain, and eventually to Lisbon to catch a ship to New York. And speaking of Switzerland, that's where Learn Liberty spoke with the last Austrian Austrian economist.

[00:03:30]And when [music] this part of the region became part of a totalitarian German Reich, that was already a bit too late for many to go out, but a lot of the members of the original Austrian School had some premonitions and were prophetic about what was going to happen.

[00:03:47]And got out relatively early.

[00:03:50]Uh Ludwig von Mises got out last minute only. That was a really difficult time because it was hard to tell how far you would have to go away from Europe.

[00:03:58]>> And so he lands in New York in 1940. And here's where I think most people would expect some Einstein moment. The brilliant European refugee arrives and Harvard or Yale rolls out the red carpet, gives him a tenure chair, and listens to his wisdom.

[00:04:15]But Mises got a cold shoulder, as cold as the Michigan wind.

[00:04:19]>> [music] >> The Great Depression had convinced everybody that the free market was broken. Keynesianism was the new religion. The whole idea that government needs to spend money and manage the economy.

[00:04:33]That was it. And here comes Mises speaking with a thick accent saying, "No, government intervention is actually the cause of the problem." He was considered too radical. NYU didn't even pay a salary. It had to be paid by private donors and foundations. He was completely marginalized. But this is the pivot point of the whole journey because while the front door of academia was locked, Mises and his supporters basically decided to build a side door.

[00:05:03]They built their own networks. They found a home with the Foundation for Economic Education or FEE. Leonard Read founded FEE to keep free market ideas alive when they were practically extinct. They published Mises' books, organized lectures, they created an entire alternative ecosystem. And it was in this exile under these terrible conditions that Mises wrote his masterpiece, Human Action. He didn't call it the theory of money or Economics 101, he called it Human Action. And he introduces this whole concept of praxeology. And as I see it, he's basically saying that economics isn't about data, it's about logic. Mises argued that you don't discover economic laws by staring at charts or running regressions on historical data. He believed you discover them by analyzing the logical structure of human choice itself. I made a choice to travel to Grand Rapids, Michigan to see firsthand the impact Asher Bookstaber is making in his community and with his social media presence.

[00:06:13]This video, which I'm recording in his dorm room studio, and his videos, too, are made possible by Students for Liberty. Give Asher's channel a follow.

[00:06:22]QR code here, link below, and keep an eye out for my feature story on him on Students for Liberty's success story page.

[00:06:31]Alexander Linsbichler has spent years studying how Mises justified his approach and why it still matters. Well, there is a typical argument that you will oftentimes hear from critics of the Austrian School of Economics. And this argument goes roughly like this. Look at Mises' justification for his methodology, justification for the fundamental axiom of praxeology. But the standard reading of this justification that Mises gives is [music] not really tenable from the standpoint of 21st century philosophy of science. And then these critics say, "Well, look, Mises' epistemology and methodology is flawed.

[00:07:13]Therefore, we don't have to take the economic theory of Austrian economics seriously, and we don't have to take seriously what Austrian economists recommend when it comes [music] to questions of economic policy." And that's kind of cutting off the discussion on economic matters by criticizing Mises' epistemology. I think that there are ways to justify the fundamental axiom of praxeology in ways that are perhaps slightly different than Mises does it, but there are clear traces in Mises also pointing into this non-standard justification. And that is perfectly compatible with 21st century philosophy of science.

[00:07:59]So, take the law of supply and demand. A data-driven economist might say, "We looked at the price of butter for the last 10 years, and when the price went up, people bought less. Therefore, it's likely they will buy less tomorrow."

[00:08:12]Mises would say, "No, that's not strong enough. We know, without looking at a single piece of data, that humans act to remove uneasiness. Therefore, it's logically necessary that if the price of something goes up, meaning you have to give up more to get it, you'll do it less often, all else being equal." But then he says something else.

[00:08:35]"You can never get inside someone's head to know just how much they'll pay for butter." And that drove the American establishment crazy.

[00:08:44]>> [music] >> They wanted to measure things, predict things, control things. Mises was saying, "You can't treat humans like atoms in a lab and [music] predict what they'll do in advance. You can only see after the fact what they did, and draw conclusions from that." Now, while Mises is fighting this lonely battle in New York, his old student from the Vienna days, Friedrich Hayek, is fighting a different kind of battle in London. And honestly, he's taking even more heat.

[00:09:14]Hayek was at the London School of Economics, and he went toe-to-toe with Keynes, but he lost the public relations war, plain and simple.

[00:09:23]>> [music] >> And let me play devil's advocate for a second. It was the Great Depression, people were starving. Unemployment massive. Keynes was saying, "The government should do something." And Hayek was basically saying, "The boom was the mistake, the bust is just the hangover. Let it happen."

[00:09:39]You can see why people hated that message.

[00:09:42]We also spoke to Hans Klausinger, who co-wrote the definitive biography of F.A. Hayek. But there was also another group who very much believed in the benefits of planning. [music] And this is what we in our book are called the men of science. A group of scientists, natural scientists, who were so convinced [music] from the success of their methods that they believed that the society could only be salvaged from all the many ills that they found, poverty and unemployment and inequality, if the same methods of the natural sciences could also be applied to society. [music] They imagined society to be just a machine which waited for engineers to be steered by them. [music] Hayek himself admitted later, "Keynes had the ear of the world. I did not."

[00:10:31]So, he took a new approach with The Road to Serfdom >> [music] >> in 1944.

[00:10:37]It completely changed the argument. He said you can't have central planning of the economy without eventually getting a totalitarian government.

[00:10:47]If the state controls your livelihood, it controls your ability to dissent, which was a massive accusation to make in 1944, considering Britain and America were building up these huge government machines to fight the war.

[00:11:02]But Hayek was warning them, "Be careful you don't become the thing you're fighting." And it struck a nerve.

[00:11:09]Reader's Digest published a condensed version, and suddenly Hayek wasn't just an obscure professor. [music] He was a celebrity. But he did something crucial with that fame. In 1947, he organized the Mont Pelerin Society. He brought Mises, Milton Friedman, Karl Popper, all these isolated thinkers to a mountain in Switzerland. The goal was to create a society of scholars. He was ensuring these people weren't alone anymore. So, now we have the survival infrastructure. Mises has FEE in New York. Hayek has the global Mont Pelerin Society. But then we get to the 1960s and 70s and the ideas start to get more radical. They get sharper. Enter Murray Rothbard. Mises called him the one who would take full account of the theories.

[00:12:00]But reading about Rothbard, he seems like a different beast entirely. Mises was this formal, old-world, European gentleman. Rothbard was a Bronx-born fire-breather who [music] wanted to tear the whole system down. Rothbard took Mises' economics and fused it with a truly radical system of ethics. If you compromise too much, Austrian school just gets lost and evaporates into the mainstream. If you just have the hardcore radical version of Austrian economics, then you don't engage in any communication with other schools anymore and it [music] becomes kind of a cult and critical arguments, testing Austrian ideas, are not admitted anymore and [music] that isn't helpful for the development and the dissemination of and the application of Austrian ideas either. So, keeping both around and checking one with the other, I think that's a useful strategy that the Austrian school has used and should continue using. This is the birth of modern libertarianism and I think this is where some people get confused. They hear free market and they think Chicago school, Milton Friedman, Ronald Reagan, that whole vibe. I think the the the Austrian school to some extent just immigrated [music] from from the German-speaking countries and I think in >> [music] >> in Germany there was also liberalism, the specific type of liberalism in Germany was shaped by the older school and by by Walter Eucken and by other liberals like Wilhelm Röpke. And I think Hayek taught at Freiburg in Germany for more than 20 years or so and to some extent Hayek had some influence again in Germany [music] but more on the intellectual level and not so much in practical politics. I [music] think he always when when when he spoke about his impact on practical policies he always pointed to [music] America to Ronald Reagan and to to Britain to to Lady Thatcher and not so much to Germany. But the sources I read highlight major disagreements between the Chicago and Austrian schools and it goes right back to that logic versus data debate. The Chicago school people cared most about efficiency. So Friedman would say don't tax this because it's inefficient and it slows down economic growth. But Rothbard and the Austrians said that might be true but it's a weak argument or at least it's not as strong as it could be. Rothbard then argued you shouldn't tax because taxation is theft.

[00:14:39]It is a violation of property rights.

[00:14:41]One is a policy suggestion, the other is a moral condemnation. At the one or two occasions Hayek refers to Friedman and he says that he agrees with almost all that Friedman is saying except on monetary theory because monetary theory is such a big part of what Friedman was saying that she's not specifically a compliment and there's also another remark by Hayek where he said that he considers Friedman's methodological position very very dangerous and he should have spoken [music] out earlier against Friedman on methodological grounds. Rothbard didn't want to make the state more efficient, he wanted to dismantle it. He viewed the state as a gang of thieves writ large.

[00:15:28]This is where the school moves from economic theory to anarcho-capitalism, but they're still on the fringe. The Chicago guys are advising presidents.

[00:15:37]The Austrians are still outsiders. But that had advantages. It kept the doctrine pure and it allowed them to appeal to people who felt completely alienated by the system, which brings us to the most surprising resurrection in this whole story, Argentina. Mises had visited Argentina back in 1959. They had just ousted Juan Peron. The economy was a total disaster, which is kind of a recurring theme in Argentinian history.

[00:16:05]Mises spoke at the University of Buenos Aires and [music] the students described it like fresh air in a stale room. But what made the ideas finally sprout, according to our research, wasn't a new university program. It was the internet.

[00:16:20]This is the most fascinating part to me because in 1950, if you wanted to learn this stuff, you had to physically be in New York or get some rare book. But in 2010, all of Mises' books, all of Rothbard's newsletters, all of Hayek's essays, [music] they were all digitized and put online for free. Suddenly, a kid in Cordoba or Buenos Aires didn't need a professor to teach him economics. He could bypass the university gatekeepers entirely. He could just download the PDF. And one of the people downloading those PDFs was Javier Milei. He started out as a standard neoclassical economist. He liked math, he worked for banks, but around 2014, he stumbles upon an article by Rothbard about monopolies and he says it just floored him. He couldn't find the error in the logic. He went down the rabbit hole. He read human action. He was reading the books that were kept in print by the network Mises built up when he was an unpaid refugee. It was a long game for Mises and it paid off. And Milei did something Rothbard never could. He had charisma. He took these dry, logical, ethical arguments and he turned them into a movement. That's where the chainsaw comes in.

[00:17:38]It's a symbol of cutting the political caste. Milei is constantly talking about the caste, the politicians and bureaucrats who live off the taxes of the productive people. That's pure Rothbard. The state is a parasite. He wasn't just saying, "I'll lower taxes."

[00:17:56]He was saying, "The system is robbing you." And it resonated. In 2023, Milei wins. Ideas that were expelled from Europe by force, literally at gunpoint, crossed the ocean, survived in the margins of American academia, and returned [music] to power in the Southern Hemisphere.

[00:18:15]Will it ever return again to Europe?

[00:18:17]Prince Michael of Liechtenstein, whom we spoke to, thinks it can. We can show as actually President Milei does, what to do. It's has become dangerous [music] to do it because most people are afraid of change. So, it needs to have a big change because we have gone a long way to socialism already. Argentina went to this [music] different path and it was really bad and that they really agreed to to change. I would [music] say to everybody, try to be the master of your own lives.

[00:18:51]It completely validates Mises' belief that ideas are more powerful than armies. In 1938, the Nazis had the army.

[00:18:59]They had the power to burn the books and steal the libraries, but they couldn't kill the logic. And for me, it really makes me think about the concept of exile [music] differently.

[00:19:09]We usually see exiles as defeat, but in this case, the so-called great displacement was necessary.

[00:19:17]If Mises had stayed in Vienna, maybe the Austrian school just becomes another dusty chapter in economic history.

[00:19:24]But because they were forced out, they had to build FEE. They had to build the Mont Pelerin Society. They had to build an infrastructure. [music] And that infrastructure is what allowed the ideas to survive the Keynesian dominance and eventually reach a guy like Malice through the internet. So, we've looked back 80 years, but if we look around right now, I mean, the mainstream institutions are pretty overwhelming, right? They control the narrative, the funding.

[00:19:52]So, here's what I'd ask you.

[00:19:54]Who are the exiles today?

[00:19:57]Where is the modern private seminar?

[00:19:59]It's probably not in a major newspaper.

[00:20:02]It's probably on a Discord [music] server or a Substack or a crypto forum somewhere.

[00:20:08]Somewhere where people are debating marginal ideas that the establishment thinks are obsolete or crazy or dangerous. If you like this kind of video, tell me in the comments where I should look. We'll do the research and [music] report back. Thank you to Asher Bookstaber for the huge impact he's making and for letting me borrow his studio.

[00:20:33]>> [music]