Ludwig von Mises died 40 years ago today at the age of 92 in a hospital in New York. To me, he was the most important economist of the 20th century because he addressed the most important economic issue of the century: capitalism versus socialism. His essay "Economic Calculation in the Socialist Commonwealth" (1920) and his book Socialism (1922) staked out a controversial position on the feasibility of complete central planning. Mises claimed that it was impossible for any society that wanted more than a primitive standard of living. The centrally planned economies that have existed have proved him right: they have had extensive but not complete central planning. Complete central planning involves the abolition of money. The two countries that have tried it, the Soviet Union from 1920-1921 and Cambodia under the Khmer Rouge, found that the result was a rapid descent towards economic backwardness. Centrally planned economies therefore have grudgingly had to allow a sphere for individual initiative in exchange to correct in part the mistakes of the planners, and so they have had money, though it has been bad money. As the late Don Lavoie stressed in Rivalry and Central Planning (1984), a book that builds on Mises's ideas, "actually existing socialism" after the Soviet Union's attempted abolition of money marked a retreat from complete central planning. (Sorry, no link to Lavoie's book because it's out of print. You can find expensive used copies online, or go to the library.)
At the time of Mises's death, the reputation of capitalism was near its lowest ebb since the Great Depression. Inflation was starting to become a problem in the advanced capitalist countries. In the remainder of the 1970s, central planning spread to South Vietnam, Cambodia, Laos, Ethiopia, Angola, Mozambique, Nicaragua, and Afghanistan. It looked as though the Third World countries were moving closer to the Second World than to the First World.
And yet, cracks were appearing in the socialist façade. The first volume of Aleksandr Solzhenitsyn's The Gulag Archipelago was published in 1973. In 1978, local government officials and 18 Chinese farmers made a secret agreement to spur individual initiative in production through a partial de faco privatization of communal farmland. The success of this and other such arrangements elsewhere became the foundation of China's momentous official turn toward (though not all the way to) capitalism under Deng Xiaoping. Poland's Solidarity movement formed in 1980. By 20 years after Mises's death, socialism had collapsed, retreating to small redoubts in Cuba and North Korea.
The underlying lesson of Mises's thought on socialism has nonetheless failed to penetrate deeply into economic policy making. Few people regard the collapse of extensive central planning as an argument against piecemeal central planning in monetary policy, transportation, education, health care, and other areas (including toilet paper in one country).
Mises did his major work on monetary theory before his work on socialism, and in my view his subsequent writings, especially Human Action, did not meld the two bodies of work as successfully as they might have. If Mises had done everything himself, though, there would be nothing left for us. The body of writing on free banking that has arisen since Mises's death has at its foundation an application of Mises's socialist calculation argument. George Selgin's book The Theory of Free Banking has done the most to make application explicit.
For more on Mises, the place to go is of course the Ludwig von Mises Institute, which has done a great service by putting online the works of the man himself as well as many writings by other members of the Austrian School and thinkers who have influenced the school. ADDENDUM: Liberty Fund also has a lot of Mises's writings.