In his short article Ludwig von Mises: Setting the Record Straight, Mark W. Hendrickson not only accomplishes an admirable summary of large parts of von Mises work, he also aptly defends the Austrian thinker against the Etikettenschwindel (false labeling) that sadly is being committed by some of his most superb supporters.
... the strangest misconception today involves anarchism. One of my colleagues now avoids labeling himself an Austrian economist because his interlocutors then assume that he is an anarchist.
Mises, the definitive Austrian economist, rejected anarchism.
But today, Austrian economics and anarcho-capitalism are often regarded as two sides of the same coin.
Here is Mises on anarchism:
Society cannot do without a social apparatus of coercion and compulsion, i.e. without state and government. The Anti-Capitalist Mentality, p. 90.
There are people who call government an evil, although a necessary evil. However, what is needed in order to attain a definite end must not be called an evil ... Government may even be called the most beneficial of all earthly institutions as without it no peaceful human cooperation, no civilization and no moral life would be possible. Economic Freedom and Interventionism, p. 57.
Anarchism misunderstands the real nature of man. Liberalism, pp. 36-7.
Liberalism [in the European sense-the philosophy of free markets and limited government] differs radically from anarchism. It has nothing in common with the absurd illusions of the anarchists... Liberalism is not so foolish as to aim at the abolition of the state. Omnipotent Government, p. 48
[Anarchists are] shallow-minded, dull, [and suffer from] illusions and self-deception. The Ultimate Foundation of Economic Science, pp. 98-9.
How, then, did Austrian economics — and by extension, Ludwig von Mises — come to be painted with an anarchist brush? Ironically, from the success of the Ludwig von Mises Institute. Lew Rockwell founded The Mises Institute in 1983. (I attended its inaugural dinner.) As the Institute evolved, it came to be dominated by Murray Rothbard. Rothbard's economic thought was derived from Mises, but his anarcho-capitalist political philosophy was drawn from other sources. The Mises Institute is doing a lot of excellent work in exposing the counterproductive nature of government intervention into economic matters. Indeed, I wish them continued success in their fight against economic illiberalism. In retrospect, though, it seems that there would be less confusion about Austrian/Misesian economics today if Rockwell had named his think-tank "The Rothbard Institute." I think Mises would be disappointed that the institute named after him would be known as a center of anarchist thought, but what's done is done. I am sure that if Mises were here today, his energies would be focused on the fight for economic rationality — i.e., free markets — rather than defending his personal reputation.
Personally, I consider the anarchist deviation in libertarians a form of (largely unconscious) cowardice born from a hankering for an implied perfection that liberty will never be able to achieve. Liberty will always be a struggle for liberty, a very precarious struggle.
See also the motto of RedStateEclectic, which Laura, our wonderful hostess, has chosen so felicitously.