Socialism: An Economic and Sociological Analysis
By Ludwig Mises
Ludwig von Mises (1881-1973) first published
Socialism in German, in 1922. The edition presented here is that published by Liberty Fund in 1981. It follows the text, with correction and enlargement of footnotes, of the Jonathan Cape, Ltd., edition published in London in 1969. The edition was based on the 1951 edition by Yale University Press which slightly enlarged the first English edition published by Jonathan Cape in 1936, translated from the German by J. Kahane. Only a few corrections of obvious typos were made for this website edition. One character substitution has been made: the ordinary character “C” has been substituted for the “checked C” in the name Cuhel.
J. Kahane, trans.
First Pub. Date
Indianapolis, IN: Liberty Fund, Inc.
First published in German. Foreword by Friedrich A. Hayek not available online
The text of this edition is under copyright. Picture of Ludwig von Mises: file photo, Liberty Fund, Inc.
- Part I,Ch.1
- Part I,Ch.2
- Part I,Ch.3
- Part I,Ch.4
- Part II,Ch.5
- Part II,Ch.6
- Part II,Ch.7
- Part II,Ch.8
- Part II,Ch.9
- Part II,Ch.10
- Part II,Ch.11
- Part II,Ch.12
- Part II,Ch.13
- Part II,Ch.14
- Part II,Ch.15
- Part II,Ch.16
- Part III,Ch.17
- Part III,Ch.18
- Part III,Ch.19
- Part III,Ch.20
- Part III,Ch.21
- Part III,Ch.22
- Part III,Ch.23
- Part III,Ch.24
- Part III,Ch.25
- Part III,Ch.26
- Part IV,Ch.27
- Part IV,Ch.28
- Part IV,Ch.29
- Part IV,Ch.30
- Part IV,Ch.31
- Part IV,Ch.32
- Part V,Ch.33
- Part V,Ch.34
- Part V,Ch.35
1 The Spatial Extent of the Socialist Community
National Socialism and World Socialism
Section II. The Foreign Relations of a Socialist Community
Early Socialism is marked by its predilection for a return to the simpler modes of production of primitive times. Its ideal is the self-sufficing village, or, at most, the self-sufficing province—a town around which a number of villages are grouped. Being averse to all trade and commerce, its protagonists regard foreign trade as something entirely evil which must be abolished. Foreign Trade introduces superfluous commodities into the country. Since it was once possible to do without them, it is obvious that they are unnecessary, and that only the extreme ease with which they can be procured is responsible for the unnecessary expenditure upon them. Foreign Trade undermines morality and introduces foreign ideas and customs. In Utopia the stoic ideal of self-mastery was transmuted into the economic ideal of self-sufficiency. Plutarch found it an admirable thing in Lycurgusan Sparta—as romantically conceived in his day—that no merchant ship ever entered her harbours.
This attachment to the ideal of economic self-sufficiency, and their complete incapacity to understand the nature of trade and commerce, led the Utopians to overlook the problem of the territorial limits of the ideal state. Whether the borders of fairyland are to be wider or narrower in extent does not enter into their considerations. In the tiniest village there is space enough to realize their plans. In this way it was possible to think of realizing Utopia tentatively in small instalments. Owen founded the New Harmony community in Indiana. Cabet founded a small Icaria in Texas. Considerant founded a model phalanstery in the same state. “Duodecimo editions of the New Jerusalem,” jeers the Communist Manifesto.
It was only gradually that socialists came to perceive that the self-sufficiency of a small area could provide no foundation for Socialism. Thompson, a disciple of Owen, remarked that the realization of equality among the members of one community was far from signifying the realization of equality between the members of different communities. Under the influence of this discovery, he turned to centralized Socialism.
*2 Saint-Simon and his school were thorough centralizers. Pecqueur’s schemes of reform claimed to be national and universal.
Thus emerges a problem peculiar to Socialism. Can Socialism exist within limited areas of the earth’s surface? Or is it necessary that the entire inhabited world should constitute a unitary socialistic community?
2 Marxian Treatment of this Problem
For the Marxian, there can be only one solution of this problem—the ecumenical solution.
Marxism, indeed, proceeds from the assumption that by an inner necessity, Capitalism has already set its mark upon the whole world. Even to-day Capitalism is not limited to a single nation or to a small group of nations. Even today it is international and cosmopolitan. “Instead of the old local and national isolation and self-sufficiency, world trade has developed and the interdependence of nations.” The cheapness of their commodities is the “heavy artillery” of the bourgeoisie. With the aid of this it compels all nations, on pain of extinction, to adopt bourgeois methods of production. “It forces them to adopt so-called civilization, i.e. to become bourgeois. In a word, it creates a world after its own image.” And this is true not only of material but also of intellectual production. “The intellectual productions of one nation become the common property of all. National narrowness and exclusiveness become daily more impossible, and out of the many national and local literatures a world literature arises.”
It follows, therefore, from the logic of the materialist interpretation of history that Socialism too can be no national, but only an international phenomenon. It is a phase not merely in the history of a single nation, but in the history of the whole human race. In the logic of Marxism the question whether this or that nation is “ripe” for Socialism cannot even be asked. Capitalism makes
the world ripe for Socialism, not a single nation or a single industry. The expropriators, through whose expropriation the last step towards Socialism must be taken, must not be conceived save as major capitalists whose capital is invested throughout the whole world. For the Marxian, therefore, the socialistic experiments of the “Utopians” are just as senseless as Bismarck’s facetious proposal to introduce Socialism experimentally into one of the Polish districts of the Prussian State.
*5 Socialism is an historical process. It cannot be tested in a retort or anticipated in miniature. For the Marxian, therefore, the problem of the autarky of a socialist community cannot even arise. The only socialist community he can conceive comprehends the entire human race and the entire surface of the globe. For him the economic administration of the world
must be unitary.
Later Marxians have, indeed, recognized that, at any rate for a time, the existence of many independent socialist communities side by side must be anticipated.
*6 But, once this is conceded one must go further and also take into account the possibility of one or more socialist communities existing within a world which, for the most part, is still capitalistic.
3 Liberalism and the Problem of the Frontiers
When Marx and, with him, the majority of recent writers on Socialism consider Socialism only as realized in a unitary world state, they overlook powerful forces that work against economic unification.
The levity with which they dispose of all these problems may not unreasonably be attributed to what, as we shall see, was an entirely unjustifiable acceptance of an attitude with regard to the future political organization of the world, which was prevalent at the time when Marxism was taking form.
At that time, liberals held that all regional and national divisions could be regarded as political atavisms. The liberal doctrine of free trade and protection had been propounded—irrefutable for all time. It had been shown that all limitations on trade were to the disadvantage of all concerned: and, arguing from this, it had been attempted with success to limit the functions of the state to the production of security. For Liberalism the problem of the frontiers of the state does not arise. If the functions of the state are limited to the protection of life and property against murder and theft, it is no longer of any account to whom this or that land belongs. Whether the state extended over a wider or a narrower territory, seemed a matter of indifference to an age which was shattering tariff barriers and assimilating the legal and administrative systems of single states to a common form. In the middle of the nineteenth century, optimistic liberals could regard the idea of a League of Nations, a true world-state, as practicable in the not too far distant future.
The liberals did not sufficiently consider that greatest of hindrances to the development of universal free trade—the problem of races and nationalities. But the socialists overlooked completely that this constituted an infinitely greater hindrance to the development of a socialistic society. Their incapacity to go beyond Ricardo in all matters of economics, and their complete failure to understand all questions of nationalism, made it impossible for them even to conceive this problem.
Geschichte der sozialen Frage und des Sozialismus in der antiken Welt, Vol. I, pp. 110 ff.; 123 ff.
Der moderne Sozialismus in seiner geschichtlichen Entwicklung (Dresden, 1908), p. 136.
Théorie nouvelle d’Économie sociale et politique, p. 699.
Das Kommunistische Manifest, p. 26. Publisher’s Note: p. 325 of the Eastman anthology edition.
Fürst Bismarcks Reden, edited by Stein, Vol. VII, p. 34).
Die Nationalitätenfrage und die Sozialdemokratie (Vienna, 2907), p. 519.
Nation, Staat und Wirtschaft (Vienna, 1919), pp. 45 ff., and
Liberalismus (Jena, 1927), pp. 93 ff. Publisher’s Note:
Nation, Staat und Wirtschaft is not in English.
Liberalismus is in English as
The Free and Prosperous Commonwealth: An Exposition of the Ideas of Classical Liberalism. Translated by Ralph Raico. Edited by Arthur Goddard (Princeton, N.J.: D. Van Nostrand, 1962). This book was republished in 1978 under the title
Liberalism: A Socio-Economic Exposition. Foreword to the Second Edition by Louis M. Spadaro. (Kansas City: Sheed Andrews and McMeel, Inc., 1978). The pages in the German work referred to here (93 ff.) are pp. 105 ff. in both English editions.
Liberalismus, p. 107 ff. Publisher’s Note: pp. 121 ff. in both the 1962 and 1978 English editions of this work.
litterateurs of the “Tat” circle (Fried,
Das Ende des Kapitalismus, Jena 1931). Autarky would probably depress the standard of life of the German people incomparably more than could the Reparations burden multiplied a hundred-fold.
Die Akkumulation des Kapitals (Berlin, 1913), pp. 363 ff. reproaches the English and French that it was no heroic act to defeat with European weapons the Chinese, who were provided only with out of date arms. Ought the French and English also to have taken the field only with ancient guns and spears?
Herrn Eugen Dührings Umwälzung der Wissenschaft, p. 299. Publisher’s Note: p. 385 in the English edition.
Das Erfurter Programm, 12th ed. (Stuttgart, 1914), p. 129.
Herrn Eugen Dührings Umwälzung der Wissenschaft, pp. 298 ff. Publisher’s Note: p. 385n in the English edition.
Das Erfurter Programm, p. 129.
Das Erfurter Programm, p. 130
Vorläufiger Bericht vom 15 Februar 1919 2nd ed. (Berlin, 1920), pp. 32 ff.
Vorläufiger Bericht vom 15 Februar 1919, 2nd ed. (Berlin, 1920), p. 37. 216 245
Ideen zu einer vollständigen landwirtschaftlichen Buchhaltung, 1805, p. vi (quoted by Waltz,
Vom Reinertrag in der Landwirtschaft, p. 20).
Ideen zu einer vollständigen landwirtschaftlichen Buchhaltung, 1805, p. 2 (quoted in Waltz,
op. cit., p. 21). See also Lenz,
Agrarlehre und Agrarpolitik der deutschen Romantik, Berlin, 1912, p. 84. See similar remarks of Prince Alois Liechtenstein, a leader of the Austrian Christian Socialists, quoted in Nitti,
Le Socialisme Catholique (Paris, 1894), pp. 370 ff.
Die Soziale Revolution, II, p. 33.
Die sozialistischen Systeme, pp. 62 ff.
Les Origines du Socialisme d’Etat en Allemagne, 2nd ed. (Paris, 1911), p. 2, specially stresses this character of state Socialism.
Geschichte der sozialen Frage und des Sozialismus in der antiken welt, Vol.I, pp. 44 ff.
(Jahrbücher für Nationalökonomie und Statistik, Vol. XXVIII, 1904, p. 445).
De bello Gallico, iv, 1.
Die Prinzipien der Soziologie, trans. Vetter, Vol. II (Stuttgart, 1899), pp. 720 ff. Publisher’s Note: In English,
The Principles of Sociology (New York: Appleton, 1897), Vol. II, Part V, pp. 610 ff.
Nation, Staat und Wirtschaft, pp. 115 ff.; 143 ff.
Essai sur les Institutions Politiques, Religieuses, Économiques et Sociales de l’Empire des Incas (Paris, 1874), pp. 64, 90 ff. attributes Pizarro’s easy conquest of Peru to the fact that communism had unnerved the people.
(Jahrbücher für Nationalökonomie und Statistik, Vol. XXVIII, 1904), p. 445.
Die Aufhebung des Befähigungsnachweises in Österreich (Leipzig, 1894), especially pp. 124 ff.
Nation, Staat und Wirtschaft, pp. 140 ff.
Chaos and Order in Industry (London, 1920), p. 58 ff.
Self-Government in Industry, 5th ed. (London, 1920), pp. 235 ff.; also Schuster, “Zum englischen Gildensozialismus”
(Jahrbücher für Nationalökonomie und Statistik, Vol. CXV), pp. 487 ff.
Self-Government in Industry, p. 255.
The Meaning of Industrial Freedom (London, 1918), p. 30.
The Acquisitive Society (London, 1921), p. 122, considers that the advantage of the Guild System for the worker is that it puts an end to “the odious and degrading system under which he is thrown aside like unused material whenever his services do not happen to be required.” But just this reveals the gravest defect of the system recommended. If one needs no more building because relatively sufficient buildings exist, yet must build so as to occupy the workers in the building trades who are unwilling to change over to other branches of production that suffer from a comparative scarcity of labour, the position is uneconomic and wasteful. The very fact that Capitalism forces men to change their occupations is its advantage from the standpoint of the General Best, even though it may directly disadvantage the special interests of small groups.
Lehrbuch der Nationalökonomie, Vol. I, 2nd ed. (Freiburg, 1914), pp. 392-438. In France there is a conflict between catholic and freethinking solidarists—about the relation of the Church to the State and to society, rather than about the real principles of social theory and policy—which makes Church circles suspicious of the term “solidarism.” See Haussonville, “Assistance publique et bienfaisance privée” (
Revue des Deux Mondes, Vol. CLXII, 1900, pp. 773-808); Bouglé,
Le Solidarisme (Paris, 2907), pp. 8 ff.
Solidarité, 6th ed. (Paris, 1907), pp. 115 ff.; Waha,
Die Nationalökonomie in Frankreich (Stuttgart, 1910), pp. 432 ff.
op. cit., Vol. I, p. 420.
Arbeiterfreund, 5 Year, 1867, pp. 129-154). A survey of the German literature on profit sharing is given in the memorandum of the German “Statistisches Reichsamt”:
Untersuchungen and Vorschläge zur Beteiligung der Arbeiter an dem Erträge wirtschaftlicher Unternehmungen, published as a supplement to the
Reichs-Arbeitsblatt of March 3, 1920.
Schriften des Vereins für Sozialpolitik, Vol. CLIX, pp. 132 ff.).
Nation, Staat und Wirtschaft, p. 164.
Kritik des Interventionismus, pp. 1 ff. Publisher’s Note: In English,
A Critique of Interventionism, trans. Hans F. Sennholz (New York: Arlington House, 1977), pp. 15 ff.