The Majesty of Markets

The Majesty of Markets
Profile photo of Chris Horlacher


[This is the text of a speech delivered by Mises Canada Vice-Chairman, Chris Horlacher, to the Rotary Club in 2014.]

In 1931, the International Rotary held its annual convention in Vienna, Austria.  For the meeting, Rotary issued a tabloid.  It contained information about Rotary’s agenda for that convention, its international activities, and articles by Rotary members in Vienna.  One of these short articles was “by Rotarian Dr. Ludwig Mises, professor at the University of Vienna.”[1]  In it, he stated that:

“‘Service’ is the device of the Rotarian.  In no sphere of human activity can this principle find an application on a larger scale than in economics. Human society being based on a division of labor, the work of individuals is of necessity piecework only.  Every human being performs one task only and his activity is limited to a narrow field.  Unaided by the work of others he cannot exist.”

The International Rotary was a natural place for Mises.  Its early motto “One profits most who serves best” was one he understood well.  At the time, Mises was leading the development of a groundbreaking school of thought known as Austrian Economics.  The founder of the school, Carl Menger, had revolutionized the field of economics with the introduction of the marginal theory of value, which is still used today, and Mises was hard at work developing what would become the most profound explanation of business cycles.  One that has performed flawlessly ever since.

Mises knew that profit is nature’s reward to individuals that are fulfilling the needs and wants of their fellow men and women.  While for most of the 20th century much of the world lived in societies that rejected this vision, recent decades have seen a reversal of this trend in parts of the world that previously lived under tyranny.  Deng Xiaoping, eager to replicate the success of Hong Kong, instituted a “One country, Two Systems” policy that has transformed China.  Market reforms in India, Singapore, Taiwan, Chile and many others have resulted in unprecedented economic growth.

An article published in the Economist on June 2013 reports that between 1990 and 2010 the number of people living in extreme poverty, defined by the United Nations as less than USD $1.25/day, dropped from 43% of the developing world to 21%; a reduction of almost 1 billion people.[2]  China alone pulled 680 million people out of misery from 1981-2010, and reduced its extreme-poverty rate from 84% in 1980 to 10% now.  This already far exceeds the Millennium Development Goals set by the UN for 2015.[3]

Much of this success has to do with greater integration of global trade, foreign investment and the mobility of labour, levels we have not seen since the beginning of the first World War.[4]  Last year, migrant workers from developing countries sent home roughly half a trillion dollars; more than quadruple the international aid provided by governments.  This is true financial assistance to the poor with dollars going directly to the pockets that need it most, with no political strings attached.

Beyond providing a solid explanation for wealth creation, Austrian Economics provides an elegant theory for what destroys it as well.  Austrian Business Cycle Theory, which received the Nobel Prize in 1974, has changed the way we view recessions and depressions.  Far from being random events inherent to the animal spirits of the marketplace they are totally predictable consequences of artificial booms brought about by unsustainable credit expansion.

On the eve of the crash of 1929, America’s leading economist, Irving Fisher, confidently reassured investors that:

“There may be a recession in stock prices, but not anything in the nature of a crash. Dividend returns on stocks are moving higher. This is not due to receding prices for stocks, and will not be hastened by any anticipated crash, the possibility of which I fail to see.”

Contrast this to Mises’s prediction of an impending crash and whose conviction in it was so strong that he refused a high position at a prominent bank to avoid being associated with those who failed to see what was obvious to him.  He was hardly the only Austrian economist to make such a warning, which was also taken up by F.A. Hayek, Felix Somary and several others familiar with Mises’s theories.

The next great crisis came in the 1970’s.  Coming off of the “Go-Go Years” of the 1960’s and the post-war “Nifty-Fifties”, mainstream economists became blinded to the deeply-rooted problems that had developed in the American economy.  The inflation-financed Korean and Vietnam wars, Kennedy’s New Frontier and Johnson’s Great Society were having predictable consequences on the economy, if you were privy to the right theories.  Then-advisor to President Johnson, economist Arthur Okun stated:

“The persistence of prosperity has been the outstanding fact of American economic history of the 1960s. The absence of recession for nearly nine years marks a discrete and dramatic departure from the traditional perfor­mance of the American economy.”

Okun declared the business cycle dead at the hands of scientific management of the economy as guided by the theories expounded by John Maynard Keynes.  In contrast to the Keynesians, Austrians were writing about the return of the business cycle.  In his last interview in 1969, Ludwig von Mises discussed our “Current Monetary Problems” and said that “What is needed in order to avoid all these unwelcomed effects of inflation is to restore honesty in the conduct of monetary affairs.” This implies that he viewed current monetary affairs as dishonest and he was, of course, correct.

Recent crises have played out no better for mainstream economists, still refusing to heed the warnings of the Austrians.  I can think of no better contemporary example than that of Peter Schiff.

Austrian Economics is arguably the most powerful tool available for understanding the world today.  Its theories are elegant, its insights profound, and its applications powerful.  It alone truly reveals the majesty of markets, the interdependence of every human being and the forces influencing our daily behaviours.  To know Austrian Economics is to realize the true potential of humanity.

Coming to this realization could be compared to being an astronaut, gazing back at the earth for the very first time.  Glimpsing the true meaning of the free market is an equally humbling and empowering experience.  The sheer complexity of the modern economy is so far beyond a single human mind that you see it as utter folly to claim to know how to control it.  Yet, the simplicity of its underlying principles reveals its truly natural functioning.

But achieving this knowledge is only the beginning.  You can then see the hidden forces of demand and supply moving underneath the surface of reality and subtly changing the course of entire civilizations.  You become mindful of the multitudes involved in producing the simplest of products you used to take for granted.  You can see millions of years in to the past and know that had our evolutionary ancestors never learned to shape rock into rudimentary tools we would never have inherited the knowledge they blazed trails to obtain.  You can even begin to see the future as unnatural credit expansions reach their inevitable conclusions.

This is the importance of Austrian Economics; the realization that we are all part of a fellowship – the Fellowship of Humanity.  We are all responsible and we all have the obligation to ourselves and the future to preserve the principles of the past that have led us to this present abundance.  In this journey through the ages, Mises Canada has devoted itself to spreading this knowledge to anyone willing to learn.  We hope you join us.

Thank you.




[4] Horowitz, S. “Reversing Globalization: Trade Policy Consequences of WWI”. European Journal of International Relations. March 2004, p33-59

Profile photo of Chris Horlacher

Chris began his career as an auditor at a Big 4 firm and before the age of 30 was the CFO of a start-up stock brokerage that now manages over $4 billion in assets. He went on to found his own management consulting firm and has been instrumental in numerous successful multi-million dollar start-ups and strategic initiatives for Canada’s largest companies, SME's and non-profits. Possessing Chartered Accountant and Chartered Professional Accountant designations, Chris is also certified by the Canadian Securities Institute as a partner, director and chief financial officer. His company website is

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