Sergei, the problem with Austrian economics in and of itself, just like with Keynesian economics, is that these are economic theories created a long time ago. They are currently front and center, one being applied by those in power, the other being touted by those who may or may not want to be the ones in power instead. Economic theories that do not apply to our modern world become ideology, no different than those believed by the Socialist Workers Party, the United States Communist Party if they still exist and the Libertarian Party. Having been around members of all these organizations, I found them all to be out of touch although I would say that ideally, Libertarianism makes more sense to me these days, but grabbing on to an ideology is never a good way to develop a full and healthy understanding of economics and our world today.
If there is any economist that I would tout as part of some ideological group and still be accurate with our modern times it would be the Peruvian economist Hernando De Soto, the author of The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else.
The Von Mises/Austrian/Libertarian camp has not traditionally had a good answer for why capitalism failed everywhere else before De Soto came on the scene, now the Mises Institute pushes his work, but before the publishing of this book? Before 2003? Mises was definitely around before then and yet in my readings of his work, I don't see any explanation of why capitalism has failed everywhere else, but I did see a lot of why socialism had failed.
So what did De Soto teach us? He taught us that in highly dysfunctional economies, entrenched elites tolerate the informal structures, meaning the black market, working under the table, doing business in a currency that is not legal to use and so on, because these are less impactful on their wealth than formalized welfare.
I love how racist/classist people will mention that Latin-Americans are accustomed to welfare and thats why they swarm to the United States. Aside from this being a generalization, the fact is Latin-American governments, most of them anyway, do not have the huge welfare system we have here in the United States, so the comments are made by ignorant people who do not study the government and economies of other nations. In fact, in places like Colombia and Venezuela (pre-Chavez), government giving you a check for doing absolutely nothing is unheard of and the elites and government officials of those nations would scoff and laugh at the idea and possibly even follow it up with "let them eat cake".
So, as a result, an informal economy is tolerated by elites because they are sure as heck are not going to spend their resources to establish a welfare system such as we have here in the United States and they do not want an open rebellion of the disenfranchised.
Less dysfunctional societies such as ours here in the United States keep a tight rein on informal alternatives, forcing everyone but the most marginalized into the formal structure of employment or as I mentioned before, welfare.
I am giving you a long-winded answer here because I am having to cite my sources in anticipation of those that disagree demanding I provide some citations.
So lets go from De Soto, the economist I would tout more than Von Mises if I were still a libertarian and lets look at Christopher Wickhams' book, The Inheritance of Rome: Illuminating the Dark Ages 400-1000 AD, it is not a work of economics but I often find that historians get it and prefer their analysis over an idealized economist from a century ago.
Wickham explains that after the demise of the Western Roman Empire, there was still loyalty to a central authority, after all, the people were afforded rights and limited self-rule within village councils and allowed ownership of land, but these rights were extinguished by feudalism, which bound the peasantry to the nobilities' persons and estates.
I am suggesting here that Von Mises is out of touch because in the current era, the old formal structures of feudalism mentioned by Wickham have been replaced by new structures of control, divestiture and disenfranchisement that others refer to as neofeudalism.
In other words, in this new neofeudalist economy that we exist in here in the United States, we technically have a political voice, but in reality the levers of governance and financial power are in the hands of global corporations and the top 1% of households and to a lesser degree in the top 10% managerial class that serves the interests of what others have called the New Nobility or New Aristocracy: technocrats, media editors/producers, professionals, lobbyists, etcetera.
Von Mises does not have much to say on the above does he? Of course not, he was living in a different time period, but ideology infused organizations insist on grabbing on to works of smart people with theories that no longer apply to our modern world.
The ideas of Von Mises and the other individual libertarians love, Ayn Rand are ideas that can only work in a system where there is broad-based ownership of productive capital, that is, capital that generates permanent income streams. This is the necessary foundation for political power to also be similarly broadly distributed.
Not only De Soto explains how capitalism has indeed not worked in places where asymmetry of ownership and power were present, but so does Daron Acemoglu, Killian professor of economics at MIT and University of Chicago professor James A. Robinson in their book Why Nations Fail. Again, more current, more relevant economists who explain that if this asymmetry of ownership and power were present since the birth of a nation, these societies are incapable of changing the power structure. Paid lackeys glorify the facades of democracy and free markets, but everyone knows these are facades.
How is Von Mises' theory working for the disenfranchised of Russia, not very well is it?
I do not know all the details of whats going on in Russia so I will stay focused on what I do know which is the United States. We are now in an advanced form of neofeudalism which is primarily financial which have generated enormous premiums for mobile capital, monopolies and specialized expertise in software and finance, while devaluing labor's value in the fields that can be profitably offshored or mechanized with software and robotics.
This is our modern situation, Von Mises will not help you understand this, he is long gone my friend. You need to do your own research and analysis of your situation and how to remedy it.
For example, I read this study from Princeton University:
https://scholar.princeton.edu/sites/default/files/mgilens/files/gilens_and_page_2014_-testing_theories_of_american_politics.doc.pdf
which found that voters have very little power here in the United States, effectively making the United States an oligarchy.
We do not live in a capitalist economy here in the United States or anywhere else for that matter. We have a dominance of state-controlled markets which is the foundation of a neo-feudal oligarchy, I suspect Russia to be no different than this. You see when you control the state, you can protect state-enforced cartels and monopolies such as institutions of higher learning and the health industry.
Control the market and you can buy political power with the profits. I will not be getting into what a neofeudal state-market structure looks like here.
Austrian economics does not speak on the divergence of formal rights and the actual structure of wealth and power as the core characterist of neofeudalism and oligarchy, so read on, the answers you seek are elsewhere. Although I focused on the United States because its what I know, neo-liberal globalization has us tightly coupled so I do not think it is much different in Russia.
Let me guess, much like United States citizens, you retain the right to cast a vote, but your vote has little actual influence over the government's decisions. Every citizen retains the legal right to acquire productive capital, but only the top 5% own meaningful amounts of productive capital and the majority of this capital is owned by the New Nobility, the top 0.1% of Russian households?
Most of my career has been in the non-profit sector because I always wanted to work in progressive organizations that were about solving pressing social problems, I became disillusioned, libertarians convinced me its because non-profits and governments are not the answer, the private sector and capitalism is the answer. Went through that whole process which I will not get into here, but in summary, today I understand that the problem was not that its a non-profit or a government agency and they don't work because they waste money and all that other ideology spouting.
The problem is in the current power structure, earning a university degree expecting to find secure employment, representatives expecting to make real change, progressive non-profits expecting to solve pressing social problems and so on do not work.
None of the above have the power to correct the structural sources of decay.
Don't believe me, just look at the reality of the situation. College graduates like myself these days find that their diplomas have little market value except for those of select universities. Newly elected representatives find that any independence is punished by the party machinery. Idealists find they cannot change systemic roots of the problems. Everywhere, people are co-opted or corrupted by perverse incentives, sclerotic bureaucracies, self-serving insiders, crushing debt loads and all the other realities of a highly asymmetric neofeudal oligarchy.
And those that will be offended by my answer are only serving to prove that indeed there is a tremendous divergence between the experiential reality of United States neofeudal power structure and the idealized expectations of its people, which will be a wellspring of non-linear social unrest in the end by the way.
So if you must have a "libertarian" point of view I would look to the Peruvian economist Hernando De Soto, his work seems to be acceptable in the eyes of the Mises Institute, but I would also look at Daron Acemoglu and James A. Robinson.
