 In 2005, Professor Bostaff was awarded both the Lawrence A. Fertig Prize and the Prague Conference on Political Economy Friedrich von Wieser Prize for Excellence in Economic Education. He's also won awards from the University of Dallas, including the Edmund R. Hager Presidential Awards, which he received three times. He's on the editorial board of the Quarterly Journal of Austrian Economics and is currently working on a new book, tentatively called the Early Austrian School, a Critical Comparison of Manger, Wieser, and Bomber. So please join me in welcoming Professor Sam Bostaff. I'm now a little hesitant about this because so far today, three different scholars whom I respect, two of whom I've known for about, well, I've known Doug Rasmussen for forty years at least, and Jeff Herberner, gosh, I'm not sure, twenty maybe, Doug this morning talked about the action axiom, which I will also mention, and Jeff Herberner talked about time reference. Then I find the Lawrence Fertig Prize, I routed to Christopher Hansen, who talked about Minger and Mises on Money, which is another topic I'm going to address, and unfortunately I didn't look at that issue, so I haven't read his article, and consequently I'm a little concerned that I might not make different points, but I hope so, we'll see. Well it is a great honor to deliver this year's Mises Memorial Lecture, and I thank the Ludwig von Mises Institute for inviting me to do so. I consider Ludwig von Mises to have been the premier economist of the twentieth century as was Carl Minger of the nineteenth. I also consider Mises to be Minger's intellectual heir. I will argue that Mises not only extended Minger's work, he greatly improved it, improved upon it. I have a little acid reflex from lunch, so if I cough occasionally, please don't think there's anything wrong with me, especially during this period of time, and I've had my vaccinations for some time. As this is a lecture rather than a paper, I intend to present a looser, more opinionated and celebrational oration than I would if this were a paper session, and I hope you can endure this approach. It's fitting to deliver the Mises Lecture here in Auburn at the Ludwig von Mises Institute because this institute nurtures cutting-edge research and new scholarship in the Austrian school tradition, and it is very gracious of Don Prince to sponsor his namesake annual lecture. Thank you so much, Don. There are many old friends and colleagues here today. I just turned seventy-nine this month, but I recall vividly my first participation with young colleagues like Joe Salerno in the Israel Kursner-led Mises seminar at NYU in the late 1970s. It was a stimulus to my research that has never died, although I haven't written much in the past two years. Instead, I've been reading the books that I accumulated but never read, like Jerome Tuchel's Radical Libertarianism, first published in 1970 and sitting on my shelf for fifty years. His contrast between conservatives and libertarians reminded me of an event at a meeting of the Philadelphia Society a decade or so ago. That society includes both conservatives and libertarians, among its members, and they're all united by the belief that honest discussion and argument can deepen the intellectual foundations of a free and ordered society. At one point in the meeting, Midge Dector stood up and announced that she viewed the United States as rightfully the world's policeman, and asked everyone who agreed with her to please stand up. Half the people in the room stood up, then she asked for those who disagreed to please stand up. Half the people in the room stood up, including my deeply conservative colleague, Melvin Bradford, alongside me. So there are some things conservatives and libertarians can agree upon and some they cannot. We're a mixed group of political and research orientations in this room today, but one subject that we no doubt all agree upon is the importance of the Austrian school tradition for the further development of economic theory, and I use that term narrowly. That tradition starts with Karl Minger's 1871 Principles of Economics, and by the way for convenience, I will state the titles of the words to cite in their English translation. In that book, Minger's primary focus is on the knowledge and subjective evaluations of individual economizers that drive all economizing activity in a market economy. And all the argument is set in a real-time causal genetic context. Causal connections are argued to be the focus of understanding the results of the actions of individual economizers. This was a methodological break with most of past economic theorizing. Strangely, his two most important mentees, Frifing von Wieser and Orgen von Baumdahlwerk, did not continue this methodologically individualistic emphasis. Wieser's first paper, quote, on the relationship of cost to value, end of quote, delivered to Karl Knie's seminar in Heidelberg in 1876, does introduce the concept of opportunity cost. However, Wieser then uses it, quote, in his words, to demonstrate the influence which the use of economic goods of a higher order to produce goods of a lower order has on the value of the latter, end of quote. He goes on to argue that the lower the opportunity cost of higher order goods, the lower can be the value of any unit of any specific first order good they are used to produce. This leads him into a Volrazian demonstration of a system of mutually determining and determined values, and thus a non-mathematical presentation of a timeless general equilibrium. von Baumdahlwerk chose to center his research efforts on production theory, which led to his focus on the assumed productivity of real capital, and all the errors of that approach which Ludwig von Mises identifies in human action. The foundation of Karl Minger's scholarship was his expressed belief that the purpose of science is to investigate reality, to attain a theoretical and a historical understanding of the phenomena investigated, and to systematize results for use in the practical or applied sciences. As a social science, Minger listed five divisions of this investigatory program, economic morphology, economic theory, economic statistics, economic history, and practical or applied economics. He grouped economic statistics and economic history together as historical studies. As Murray Rothbard notes in his book, Ludwig von Mises Scholar Creator Hero, published by this institute in 1988, Mises first read Minger's principles in 1903, I think it was in December of that year. My colleague and friend Guido Holzmann points out in his masterful Mises biography, also published by this institute, that doing so changed Mises' whole direction in his study of the market economy. It made an economist of him. Like Minger, Mises focused his attention on the individual economizer as the directing force of the market. But unlike Minger, he did not see the economizer as driven by identifying the relationship between his or her needs, whether real or imagined. The pages are sticking together. Whether real or imaginary and the means to satisfy them. Minger had focused on need satisfaction, which needs he claimed arise from drives embedded in our nature. For he said to satisfy our needs is to live and prosper. Instead, Mises saw the purposefulness of human action as the more important focus and that the particular purposes are really not relevant to the question of how to act to achieve them. It is not the ends chosen, but the principles of purposeful action to attain them that matter. As he says early in human action, page 21 actually, the only standard which applies is whether or not the means chosen are fit for the attainment of the ends aimed at. As Ludwig Lachmann remarked over 40 years ago, and I quote him, it is a long way from Minger's theory of wants to Mises' doctrine of ends and means. Both Minger and Mises recognized that physical science laws and economic laws differ in nature, but both are compelling context within which people act. They are both independent of human will. Minger referred to economic laws as either empirical laws obtained by careful observation or what he called exact laws obtained by conceptualization. Of the latter, he argued that there is only one true economic way to attain any end. Mises' way of making the same point is to argue that people can ignore economic laws, but doing so frustrates the achievement of end sought. So obviously, he believed that those laws apply to the world in which we live. And yet, Mises argued that economic laws are obtained by a priori reasoning. Jeff Harbiner discussed Murray Rothbard's interpretation of this this morning. There's a long controversy concerning what Mises meant by a priori reasoning. Because he argued that this was a necessity given by the structure of the human mind. In the Ultimate Foundation of Economic Science, the book, he specifically says on page 15 that quote, the logical structure of the human mind and the a priori categories are the result of natural selection during the evolution of Homo sapiens, end of quote. His reference to mental categories caused some, including Murray Rothbard, to argue that Mises was inspired by Immanuel Kant. I frankly don't know. I'm not a philosopher. Don't know much about Kant. But as an Aristotelian in orientation, I accept the idea that the human mind has a logical structure. There are three basic epistemological laws of thought that are exemplified in all thinking. These are known as the law of identity, the law of contradiction, and the law of excluded middle. A thing is itself. Quoting from H.W.B. Joseph say a imminent Aristotelian philosopher turn of the century, turn of the 20th century, and his introduction to logic, he says the following. And I quote, if we think about anything, then one, we must think that it is what it is. Two, we cannot think it at once has a character and has it not. And three, we must think that it either has it or has it not. And he goes on to say that I cannot think at the same time that this page is white and not white. Lastly, it's because a thing must be something determinant that I can, in fact, think it and think about it. In Aristotelian epistemology, it's the determinateness in things that is the ground of the determinateness in thought. Similarly, cognition of causal relations is cognition of connections between determinant things, having determinant natures by means of their conceptualized natures, and without regard to mere repetition of the causal connection and experience. If Mises meant something like that by arguing that praxeological laws are obtained by a priori reasoning, then I have no problem with his use of the term. I do think that he used both extrospection and introspection in identifying praxeological and catalactic laws. Now, I apologize for overbelaboring this point. I've just wondered since I first read Mises what exactly he meant by a priori theorizing. Early in my career, I even wrote a paper examining the question, 50 pages. He was presented at a conference, received underwhelming interest, and sank beneath the waves. Surely, he couldn't have meant pure tautologizing, although he specifically says in human action, and I quote on page 38. This is the 1965 edition, third edition, quote, a priori reasoning is purely conceptual and deductive. It cannot produce anything else but tautologies and analytic judgments. All its implications are logically derived from the premises and were already contained in them, end of quote. By the premises he's referring, see Epistemological Problems of Economics, page 17, to quote the fundamental category of action, which contains the concepts of action, economizing, preferring, and relating ends to means. Karl Minger specifically rejected a priori theorizing in several places in his writings. Both men did clearly recognize the difference between theory and history. Minger became embroiled in the Metodenstzeit with the German historicist Gustav Schmoller and trying to show that history cannot be written without a thorough knowledge of theory. And Mises addressed the same subject in his masterful book, Theory and History. And yet the argument continues today with the publication of attempts to present history as the basis of theory, such as in the work of Thomas Piketty. A decided difference between Minger and Mises is their respective treatments of the relationship between the division of labor and the economic progress of humankind. Minger argues that the progressive division of labor is not the most important cause of that economic progress. Instead, it's the progress of human knowledge united with the will to use that knowledge that is the key according to him. Mises sees a more central role for the division of labor. Knowledge and will are important, but the extension of the division of labor and use of knowledge and will require capital accumulation for economic progress. Less developed countries can be aware of the progress and technological knowledge, but without capital, it can't be used for their economic progress. In addition, human cooperation is enhanced by the division of labor, and its benefits are obvious to all participants. It removes any natural conflict of interest that, for example, are faced by most other animals, people, creatures who must fight each other to preserve their life. Some of you may be familiar with Deirdre McCloskey's trilogy on bourgeois ethics. She argues that economic process is also required, also requires, general cultural support of the bourgeoisie by society in the whole for them to create wealth. In Minger's on the theory, and I highly recommend that trilogy, especially the, I think the second book is the strongest, but the first book is really clarifying what he means by the bourgeois virtues. He lists all seven of the virtues as driving businessmen. In Minger's on the theory of capital, an article published in 1888, he defined capital as the money equivalent of money or goods employed for the purpose of increasing income by an enterprise. He adds that national capital is merely the concept of the amalgamation of all individual capitals. But such an amalgamation is no assumption that one can think of a nation as a single enterprise with a single capital stock, he says. This would be an erroneous concept. Just as the concept of the economies of individuals is very different from the erroneous concept of a national economy as something other than the sum of all individual economies. A mistake that many people who call themselves economies still make. Mises approaches similar at first, defining capital and human action as, quote, the whole complex of goods destined for acquisition. Evaluated in money terms, and this sum, the capital, is the starting point of economic calculation, end of quote. Mises also differentiates between capital goods and capital. He says socialist societies have capital goods, but there's no capital, because there's no meaningful way to assign prices to higher order goods, as he argued during the economic calculation debate of the 1920s and 1930s. This debate between Mises and Friedrich von Hayek on the one side and a number of theorists on the other, I'm not going to call socialist economists. They're not. They have no concept of what economizing means. Excuse me, socialist theorists on the other side, among whom was Oscar Lange, was inconclusive at the time because of the socialist ignorance of basic economic thinking. Just three years ago, this conference held a second economic calculation debate to discuss still unsettled issues. Throughout human action are critical remarks directed at Bumbawert's capital theory as a productivity theory, because capital goods, Mises says, have no productive power of their own. They are nothing but labor, nature, and time stored up. Mises also denies any mean fullest to the idea of a national capital or national wealth, because quote, the businessman can convert his property into money, but a nation cannot. The economics profession as a whole still does not grasp this point as witnessed by their widespread admiration of the musings of Thomas Piketty in his capitalism in the 21st century, where he compares something that doesn't exist, the interest rate in the aggregate, whatever the hell he thinks that is, in any event. There is no market for the sale of an entire country's capital. Those who seek to purchase the capital of an enterprise have a specific, potentially profitable plan for its use. No such purpose exists for the capital of a country. Well, if some little green man arrived and wanted to purchase the United States, we could return to this issue. Though I like that, excuse me, I doubt that. Maybe Europe might try to purchase the United States, but I don't think they can afford us. No intended insult to any European sitting in this room. Sprinkle throughout Minger's principles are conflicting statements concerning the measurability of value. On page 293 of the 1950 English translation, he asserts that it can be measured. Well, on pages 121 and 146, he terms it entirely subjective in nature. And of course, in his treatment of value imputation, he argues that the value of any given quantity of a higher order good is equal to the difference in the expected value of what can be produced, given its presence, and what can be produced in its absence. Now, this can be interpreted as implying either subjective or objective measurability, depending on how you think of value as subjectively conceived or objectively existent. Unfortunately for Frutig von Wieser, he thought there must be a way for objective measurement of value. And coupled with his desire to find a way for economic calculation in a socialist society, he invented a unit of calculation. He called it the natural value, or unit of utility. Mises cuts through all of this in human action, stating that values are ordinal and subjective, always. They cannot be calculated. Valuing is confined to the question of the preference of A to B. So far as calculation is concerned, and I quote Mises, economic calculation always deals with prices, never with values. The market determines prices of factors of production in the same way in which it determines the prices of consumer goods. And economic calculation always deals with the future. Yet another quote reaches its full perfection in capital accounting, where it makes success and failure profit and loss ascertainable. A central focus of Minger's principles is the theory of exchange, and of price formation in competitive and monopoly markets. Minger concluded that price itself is a historical datum, as also does Mises. As Minger then says, quote, from his principles, prices are only incidental manifestations of an economic equilibrium between the economies of individuals. I think this may be what Mises later characterized as a plain state of rest. But Mises sees market prices as more importantly a portent of relative scarcity and a means of anticipating expected future profits or losses. Prices of higher order goods are ultimately determined by prices of lower order goods. The process of doing so involves transferring appraisements of expected prices of lower order goods to those of higher order goods, and then a competition to obtain the higher order goods between those who wished to use those higher order goods in the expectation of profitable production of lower order ones. That competition determines their prices. This understanding led Mises to his famous 1920 article, Economic Calculation and the Socialist Common Wealth, and subsequent 1922 book, Socialism and Economic and Sociological Analysis, both critical of socialism. A socialist planned society deliberately excludes private property rights for higher order goods, the use of which are to be controlled by the state. As Mises recognized, this means that they are not traded on markets, and thus have no market-determined prices to reflect their relative scarcities, in the opinion of those who wish to employ them. Without market-determined prices for higher order goods, it is not possible to economize in their uses. To economize is to calculate in prices. It is to seek the lowest expected opportunity cost of the means to achieve the end for which one is economizing. So it's not possible to make decisions concerning which production process are to be used in the socialist society. Production processes become ad hoc. There is much more in Mises' critique of socialist society, including its effects on incentives, international relations, the family, and so forth. However, the inability to rationally organize production is the heart of the critique. And we all know that the poverty-stricken histories of the Soviet Union, of Cuba, of North Korea, and now Venezuela historically exemplifies that theoretical critique. Minger ably argued that money originated now, we're turning to the thing that I'm trespassing on Christopher Hanson's ground. Minger ably argued that money originated as a commodity more saleable than other commodities. And the holding of which became so universally desired that it became the basic tool for trading. Misa extended this argument in two directions. First, he saw that money prices of the present become one basis for the expectation of future prices and for planning cash balances to be held in the future. But money prices and cash balances of the present are based on those of the recent past, which in turn were based on those of the not so recent past. And this process stretches all the way back to the point at which a highly desired commodity that in the past had been traded as a commodity became so saleable that it began to be used as a medium of exchange, Minger's point on money. Of course, this is on the origin of money. Of course, this is Misa's regression theorem, which solved the problem of the alleged circularity of the idea that the demand for money depends on its purchasing power, while its purchasing power is determined by the demand for it. Actually, it's the purchasing power of the immediate past that affects the termination of the demand for money to hold for expected future purchases. Misa's first book, The Theory of Money and Credit, not only presented these key arguments but examined the whole structure of the banking system and credit markets. Two of the most important results in his treatment of the banking system were the recognition that it is important where money enters markets and where it goes from that point on. The whole market changes its structure as money passes from hand to hand, and there is a redistribution of wealth. There is no such thing as the neutrality of money, which many neoclassicals still argue. The other result is the kernel of what became known as the Austrian Business Cycle Theory, as it later developed in the hands of Misa's Friebe Van Hayek and other scholars up to the present day. One only has to look at the history of the Federal Reserve system to see the consequences of the Fed's attempts to manipulate the supply of money and the level of interest rates. Margaret von Mises relates in her book, My Years with Ludwig von Mises, that Mises illustrated the courage of his convictions in the 1920s by refusing a high position offer from the credit on Stalt, the most important banking institution in Vienna. He told her that a great crash was coming, and he did not want to be associated with it. In his America's Great Depression, Murray Rothbard explains how the alleged price stability of the United States in the 1920s, which I still see people arguing, well, prices didn't change in the 1920s. Rothbard shows this was actually inflationary of the money supply. As the economy expanded, price levels would have declined if the Fed had not been inflating the money supply. And now we see economists at the Federal Reserve Board concerned about the possibility that average prices might fall. Instead, they want inflationary increases in what they calculate as the price level, which is another question whether one can even do such a thing. It's 2%. They want 2% target. They want to rob us 2% a year. Well, then we turn to the concept of time preference, which both Minger and Mises included in their work. In this morning, Jeff Herbiner discussed the changing rationale for assuming it. Minger's explanation in his principles is pretty bare bones. He just says that time preference means that the satisfaction of earlier needs must necessarily precede attention to later ones. Actions that preserve life and well-being in the present make possible actions that preserve life and well-being in the future. A present satisfaction is therefore more important than a later one of equal intensity, Minger says. Minger also says that experience shows us to be the case. But in the place in the book where he makes his argument, he leaves out some stuff. Left out of his argument is an earlier stated fact that the future is uncertain. In contrast, the satisfaction of a need in the present is a virtual certainty that it will be satisfied in the same way to the same extent and with the same intensity at some point in the future is not. In fact, the complexity of causal relationships among phenomena assures that uncertainty will be greater the further in the future it is necessary for a need to be satisfied. As Minger had noted earlier, this is the result of our lack of knowledge of the causal relations of the future and our inability to totally control them. Expanding this knowledge and extending the control of the less proximate conditions of production are the major factors in increasing the productivity, he had argued, when downplaying the role of the division of labor and generating economic progress. The uncertainty of future conditions, the relative lack of knowledge about them, and relative inability to control them as compared to those of the present provide a more supportive argument for time preference that is implicit in Minger's text, although not stated in one place. Despite the weakness of his bare bones argument, Minger identifies time preference as an actual restraint on economic progress. Providing for the needs of the present dominates provision for those of the future. Resources available must first be used to assure the satisfactions of the needs of the present. Given that he also argues elsewhere that more extensive use of higher order goods in production is directly related to greater production of first order goods and that longer time periods of production are also directly related to greater production of first order goods. Minger concludes that time preference requires the amassing of ever greater quantities of higher order goods in ever longer time periods of production as production planning is extended into the future. Now the argument gets ever more complicated from that point, but I will spare you from it. Mies's argument for time preference is a purely logical construct. He argues, quote, time preference is a categorical requisite of human action. If he, the actor, were not to prefer satisfaction in a nearer period of the future to that in a remote period, he would never consume and so satisfied once. He would always accumulate, end of quote. It applies to choosing between the immediate consumption of a quantity of goods and the later consumption of the same quantity. And two, it also applies to the case of capitalist saving in which the choice is to be made between the immediate consumption of a quantity of goods and the later consumption either of a greater quantity of goods or of goods which are fit to provide a satisfaction which except for the difference in time is valued more highly. That's from Human Action pages 486. Saving and investment are limited by time preference. Now we turn to the theory of the entrepreneur which Mies has characterized as the driving force of the market, one of Israel Kroesner's book titles. Minger's comments on the entrepreneur and his principles are also pretty bare bones. He characterizes entrepreneurship as economic calculation coupled with the will to initiate a production process. The entrepreneur exercises, he says, the functions of obtaining information, engaging in economic calculation, engaging in the act of will that creates the production process and supervising the process to its conclusion. This defines entrepreneurship as a particular kind of labor effort. Nevertheless, he argues that entrepreneurship services have no price because those services are not commodities to be exchanged for other commodities. Profit is the entrepreneur's reward for those labor services as Minger. A second peculiarity of entrepreneurial services according to Minger is the necessary perquisite of their having the command of capital services. They cannot be supplied without it. The availability of capital is thus a limitation on the amount of entrepreneurship in a society. Further, money interest as a price of capital services paid to the owners of capital includes a risk premium because those who buy the services of capital obtain the physical command of them in order to use them in production. Minger specifically rejects risk bearing as the essence of entrepreneurship. To Mises, the market economy cannot exist without the purposeful entrepreneur. He says, and I quote, entrepreneur means acting man in regard to the changes occurring in the data of the market. End of quote. The term entrepreneur is also used by Mises for those actors who hope to profit from adjusting production to expected changes in market conditions. Minger prefers the term promoter for this narrower view. In the pure view, the entrepreneur gets his capital from a capitalist, from the capitalist, and quote Minger, a capitalist is also virtually an entrepreneur and speculator. Entrepreneurs earn profits, capitalists earn land, I'm sorry, this is Mises, I didn't, not Minger. Lost my thought there. Entrepreneurs earn profits, capitalist and land owners earn originary interest, workers earn wages. Originary interest is the discount of future goods as against present goods. It is not a price paid for the services of capital and it never appears unalloyed, but it's contained in market interest rates, which are gross rates that are determined by many factors. A few words, no, yeah, quickly. On differences between Carl Minger and Ludwig von Mises on the role of government in the economy. Both were raised as subjects of an emperor, yet Minger was a classical liberal and Mises became libertarian, an advocate of laissez-faire market economies with minimal governments. In Minger's case, he was even appointed by Emperor Franz Josef as tutor to Crown Prince Rudolph, in which capacity he joined Rudolph in writing critically of the Austrian aristocracy. Nevertheless, he approved a certain functions of the state in the last section of his principles. He argued that although money came into existence because economizing individuals were led by their interests without any agreement, without legislative compulsion, and even with regard to the public interest, to see that they can trade their commodities for more saleable ones and more easily find advantageous trades. The state can improve the character of money. How? Minger says by coin it and sanctioning its use. Of course, money in his days was gold. In contrast, as you know, Mises wanted a completely private gold standard to serve as a free economy's money. So far as monetary policy is concerned, he argued that the key was for government to refrain from inflating the money supply or from creating conditions that encourage credit expansion by banks. The monetary theory of the trade cycle or what has come to be called the Austrian business cycle theory argues that cycles of boom and bust in a market economy where government controls the money supply and interest rates are created by recurring government attempts to lower the gross market rate of interest by credit expansion. If gold was money and privately mined and coined, cycles would be muted by problems in gold mining. As gold was mined and flowed into the economy, commodity prices and wages would be affected first, and the loan market and interest rates later. Although he viewed democratic government as necessary to preserve the social order against disruptors and to maintain peaceful inter-human relations, Mises also recognized that its essential feature is enforcement of its decrees by beating, killing, and imprisoning. This is admittedly a brutal conception of government, one that fully lives up to Mao Zedong's view that political power grows out of the barrel of a gun. Perhaps we should attempt to envision democratic government as it could be. Such an envisioning is approached by Mises' 1927 book, Liberalism. There he presents a model of a world that could be if all countries in it followed liberal or as I would say now, libertarian principles. It would be a world where the task of the state consists solely and exclusively in guaranteeing the protection of life, health, liberty, and private property against violent attacks. Modern libertarians say instead, not all of them now unfortunately, that it should be the task of government to act to curb the initiation of violence by anyone against another's life, liberty, or property. Private property rights are the key. For private property creates for the individual a sphere in which he is free of the state. It sets limits to the operation of the authoritarian will. Excuse me. Or of anybody else's initiation of coercion. For Mises, the division of labor makes people into social animals. And as it extends, the progressive specialization of production tends towards the development in every field of enterprises that have the whole world for their market. Of course, this requires the absence of protectionism and the existence of liberal regimes in all trading countries. Further in such a capitalist liberal world, the whole of the Earth's surface forms a single economic territory. If there were completely free trade and no barriers to the free movement of capital and labor, then they would be employed wherever conditions were most favorable for production. Every person would be free to live and work wherever he or she wanted. With no intervention of states and worldwide liberal governments, productivity and standards of living would be higher worldwide. And wages and incomes would tend to equality between countries or among countries. Borders would be incidental and subordinate. And there would be no distinction between domestic commerce and international commerce, except for exchange frictions like transportation costs, for example. There would be no colonialism or tendency for states to attempt to expand their territories and no stimulus to wars. Wars restrict the international division of labor and thus prosperity and produce lower levels of the standard of living within warring nations, as well as senseless destruction. Liberal regimes prosper through peace and social cooperation, Mises argues. As he says, liberalism is from the very outset a world embracing political concept that makes the goal of domestic policy the same as that of foreign policy, peace. After all, all men really desire prosperity and abundance, or they should. Socialist regimes always promise prosperity, but they don't deliver it, because they can't. Why do they promise it? So that people will accept the socialist regime. Until the last two decades, I thought we were headed in that direction as a world. At this point, my optimism is fading. And I consider it possible. I don't know how possible, but I consider it possible that modern civilization could self-destruct. Nevertheless, I cling to Mises' vision of the world that he expressed in liberalism, the world that could be. It gives me hope. Thank you for listening and I will take questions if you like.