The First World War carries a special significance in the history of Austrian economics. It not only symbolized the triumph of militarism and nationalism over the all-too-brief flourishing of liberalism, but also sowed the seeds of fascism, socialism, and the Second World War that ultimately forced the emigration of the Austrians from their native country. The early Austrians were first-hand witnesses to the Great War, and Mises wrote about it in detail in his early book Nation, State, and Economy (1919), in which he tried to explain the ideological and economic causes of the conflict.
Beyond its global consequences, however, the war also held a personal significance for the Austrians, many of whom took an active part in it through government work or military service. In fact, economists associated with the Austrian school were involved in the war on both sides. Their experiences in it are not discussed much compared to their scholarly work, but nevertheless influenced them profoundly, and helped shape the fortunes of the Austrian school.
The Older Austrians
In 1914, the Austrian school was transitioning from the leadership of Menger, Böhm-Bawerk, and Wieser to a new generation inspired by younger economists like Mises and Schumpeter. Menger, though still living, was retired and living quietly, and Böhm-Bawerk died several weeks after the outbreak of hostilities. Out of the founders then, only Wieser was capable of playing any role in the war. This he did, and amongst other public duties, served as Minister of Trade in the Austrian government until the end of the conflict.
Many of Menger’s early, lesser-known students were likewise too old for military service, but several—including Gustav Gross, Viktor Mataja, and Eugen Schwiedland—proved useful to the government by assisting with its wartime economic planning and public administration. This foreshadowed the Second World War, in which economists took on countless roles in national planning schemes, and thereby helped to shape the modern economics profession. On the other side of the Atlantic, the American economist Frank Fetter provided a slightly different case: his Quaker beliefs prevented him from taking an active part in the conflict, so he worked instead for several years for the War Camp Community Service, a support organization for the troops.
Ludwig von Mises
Several younger Austrian economists were involved in active military service, including Mises. Though he strongly opposed the rising tides of nationalism and collectivism, he believed he had no choice but to take up arms in defense of Austria-Hungary against Russia. He was swept up in the general mobilization of August 1914, accepting the rank of lieutenant (and later captain) in the artillery (most of the Austrians who saw action in the war served in the artillery).
The early months of the war were particularly difficult, as the Austrian army quickly became bogged down in a delaying campaign against the Russians. Mises saw the death and destruction of war for himself, as he and his unit were exposed to the enemy and the elements for several gruelling months. The living conditions were also trying, and foreshadowed those on the Western Front:
Mises’s battery constantly had to change position, often under fire. Heavy rainfall set in, hampered their movements, and proved that k.u.k. uniforms were not waterproof. There was no hope of relief any time soon from the military bureaucracy, so Mises resorted to private initiative: he had his mother send clothes for his men.
After months of battle, Mises left the front in 1915 with a hip injury, receiving two commendations for performance in the face of the enemy and several other medals. He spent much of the rest of the conflict working for the War Ministry in Vienna. He did, however, see action again on the Eastern Front in Romania from 1916-1917, after which he was sent to the Southern Front in Italy. His troubles there were less about the dangers of battle and more about the terrible living conditions in the freezing mountainous terrain.
F. A. Hayek
F.A. Hayek was not yet eighteen years old when he joined a field artillery regiment in 1917, and, after seven months’ training, was sent to the Italian Front. He later remarked that although he had no “natural aptitude” for the work, he still performed among the best of his fellow cadets. In Italy, he just missed the battle of Caporetto, and spent a relatively quiet year near the Piave River, until the Austrian army collapsed in October 1918 and began a retreat. Here, Hayek experienced his own real dangers. During one march, for example, he was pressed into leading the rear guard, and then into attacking a firing machine gun. Hayek says the gun was gone by time he and his men reached it, but that the operation was nevertheless an “unpleasant experience.”
He contracted malaria during the retreat, which ensured an end to his part in the war. However, the experience did leave a lasting impression: in fact, Hayek attributed his interest in the social sciences to his time in the military. As he explained,
I think the decisive influence was really World War I, particularly the experience of serving in a multinational army, the Austro-Hungarian Army. That’s when I saw, more or less, the great empire collapse over the nationalist problem. I served in a battle in which eleven different languages were spoken. It’s bound to draw your attention to the problems of political organization.
Hayek’s future friend and colleague Lionel Robbins also fought in the war, though naturally on the other side. Of all the Austrian economists, his account of his wartime experiences is actually the most detailed. Robbins came from a liberal family who believed, as so many did, that the advances of modern society were making war impossible. The shock of it severely upset this optimistic worldview. Robbins later recalled a day in early summer 1914, when he “had the sense of something cracking and collapsing, of the disappearance of a solid basis for life and anticipations which was never thereafter to be re-established.”
Eager to take part, however, Robbins managed to enlist despite being under the normal legal age, and was eventually sent to France as a second lieutenant of artillery. He soon arrived at the Ypres Salient, after the main fighting had died down, but in time to see its appalling consequences:
A flat desolate expanse of shell-holes filled with water, ruins, duckboards and mud. Mud, endless, polluted mud where the best brains, save the mark, of the General Staff could think of no better way of winning the war than to fling the flower of British youth against barbed wire and machine guns to perish choking in the swamps… No wonder what was left of my generation tended to become cynics.
His true “baptism of fear” occurred one night when his unit came under heavy shelling, and after a mad scramble to help a wounded friend, he found himself covered in the man’s blood and brains.
Events deteriorated from there. Robbins’ position was overrun during the German offensive of March 1918, and he and his unit lost contact with command for three days while they were forced to retreat. On the third day, while returning from a reconnaissance mission, his group came under fire from German snipers, and Robbins was shot in the arm. He returned home to England and eventually made a full recovery, unlike so many others of his generation.
Robbins’ would go on to become a firm advocate for peace, especially in the interwar period. In his later years, however, he reflected on his time in the war and arrived at a surprising conclusion:
[T]rench warfare, sitting about waiting to be killed… never could teach me, that war, moving war, can be exciting and even enjoyable—however disgusting in retrospect. I can honestly say that I relished nearly every minute of it; and that when at last I was wounded and had to leave the field, I felt a sense of bitter deprivation. Doubtless this was partly due to the mere relief fr