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 Marxian Theory of Concentration
Section II. The Concentration of Capital and the Formation of Monopolies as Preliminary Steps to Socialism
Marx seeks to establish an economic foundation for the thesis that the evolution towards Socialism is inevitable, by demonstrating the progressive concentration of capital. Capitalism has succeeded in depriving the worker of private ownership in the means of production; it has consummated the “expropriation of the direct producers.” As soon as this process is completed “the further socialization of labour and the further transformation of land and other agents into socially exploited and therefore collective means of production, together with the ensuing expropriation of private owners, assume a new form. That which is now to be expropriated is no longer the worker labouring independently but the capitalist exploiting the worker. This expropriation is carried out by the play of the inherent forces of capitalist production itself; by the centralization of capital, each individual capitalist deals the death-blow to a number of others.” Hand in hand with this goes the socialization of production. The number of the “capitalist magnates” is continually decreasing. “The centralization of the means of production and the socialization of labour reach a point where they become incompatible with their capitalist framework. They burst it. The last hour of capitalist private property has arrived. The expropriators are expropriated.” This is the “expropriation of the few usurpers by the mass of the people,” through the “transformation of capitalist ownership, which actually rests already on social production, into social ownership,” a process much less “lengthy, hard, and difficult” than was, in its own time, the process that transformed the private ownership of individuals doing their own work into capitalist ownership.
Marx gives a dialectical turn to his contentions. “Capitalist private ownership is the first negation of the individual private ownership created by the workers’ toil. But, with the inevitability of a natural process, capitalist production brings forth its own negation. It is the negation of the negation. This does not re-establish private ownership, by only individual ownership based on the achievements of the capitalist era: co-operation and the collective ownership of land and of the means or production produced by labour.”
*2 Strip these statements of the dialectic accessories and there remains the fact that the concentration of establishments, enterprises, and fortunes is inevitable. (Marx does not distinguish between these three and obviously regards them as identical.) This concentration would eventually lead to Socialism, as the world, once it was transformed into one single gigantic enterprise, could be taken over by society with perfect ease; but before that stage has been reached, the result will have been achieved by “the revolt of the ever-expanding working class which has been schooled, united, and organized by the very mechanism of the capitalist production.”
To Kautsky it is clear that “capitalist production tends to unite the means of production, which have become the monopoly of the capitalist class, into fewer and fewer hands. This evolution finally makes all the means of production of a nation, indeed of the whole world economy, the private property of a single individual or company, which disposes of them arbitrarily. The whole economy will be drawn together into one colossal undertaking, in which everything has to serve one master. In capitalist society private ownership in the means of production ends with all except one person being propertyless. It thus leads to its own abolition, to the lack of property by all and to the enslavement of all.” This is a condition towards which we are rapidly advancing “more rapidly than most people believe.” Of course, we are told, the matter will not go so far. “For the mere approach to this condition must increase the sufferings, conflicts, and contradictions in society to such an extent, that they become intolerable and society bursts its bounds and falls to pieces” unless evolution has previously been given a different direction.
It should be observed that, according to this view, the transition from “High” Capitalism to Socialism is to be effected only by the deliberate action of the Masses. The Masses believe that certain evils are to be ascribed to private ownership in the means of production. They believe that socialist production is likely to improve their condition. It is therefore a theoretical insight which guides them. According to the materialist conception of history, however, this theory must itself be the inevitable result of a certain organization of production. Here we observe once more how Marxism moves in a circle when it tries to demonstrate its propositions. A certain condition must arise because evolution leads to it; evolution leads there because thought demands it; but thought is determined by being. This being, however, can be nothing more than that of the existing social condition. From the thinking determined by the existing condition the necessity of another condition follows.
There are two objections against which this whole chain of reasoning has no defence. It is unable to refute the contention of anyone who, though arguing on the same lines, regards thought as the cause, and society as that which is caused. And it has similarly no reply to the objection that future conditions may very well be misconceived, and that that which now seems so desirable may prove to be less tolerable than existing conditions. This, however, re-opens discussion on the advantages and disadvantages of types of societies, those existing and those sketched out by would-be reformers. But this is the very discussion which Marxism desired to suppress.
Let no one suppose that the Marxian doctrine of the concentration of capital can be verified by the simple method of consulting the statistics of establishments, incomes, and fortunes. The statistics of incomes and fortunes utterly contradict it. This can be definitely asserted in spite of all the imperfections of present statistical methods and all the difficulties which fluctuations in the value of money place in the way of using the material. With equal confidence one can say that the counterpart of the theory of concentration, the much discussed theory of increasing poverty—in which even orthodox Marxists can hardly continue to believe—is incompatible with the results of statistical investigation.
*5 The statistics of agricultural holdings also contradict the Marxian assumptions. Those giving the number of the establishments in industry, mining and transport appear to confirm it. But figures that indicate a particular evolution during a limited period cannot be conclusive. The development in this brief span might run contrary to the long term trend. We shall do better, therefore, to leave statistics on both sides, both for and against. For it must not be forgotten that there is a theory underlying every statistical demonstration. Figures alone prove or disprove nothing. Only the conclusions drawn from the collected material can do this. And these are theoretical.
2 The Theory of Anti-Monopolistic Policy
The theory of monopoly goes deeper than the Marxian theory of concentration. According to it, free competition, the life blood of a society based on private ownership in the means of production, is weakened by the steady growth of monopoly. The disadvantages bred within the economy by the unlimited rule of private monopolies are, however, so great that society has no choice but to transform private monopoly by socialization into state ownership. However great an evil Socialism might be, it would be less harmful than private monopoly. Should it prove impossible to counteract the tendency towards monopoly in ever widening fields of production, then private ownership in the means of production is already doomed.
It is clear that this doctrine calls for a searching investigation: first, as to whether evolution is really in the direction of monopoly control, and secondly as to what are the economic effects of such monopoly. Here one has to proceed with special care. The time at which this doctrine was first expounded was generally not favourable to the theoretical study of such problems. The emotional judgment of appearances rather than the cool examination of the essence of things was the order of the day. Even the arguments of such an outstanding economist as J. B. Clark are imbued with the popular hatred of the trusts. Utterances typical of contemporary politicians are to be found in the report of the German Socialization Commission of February 15th, 1919, where it was affirmed as “indisputable” that the monopolistic position of the German coal industry “constitutes an independent power which is incompatible with the nature of the modern state, and not merely the socialist one.” It was, in the opinion of the Commission, “unnecessary to discuss anew the question whether and to what degree this power is misused to the detriment of the remaining members of society, those to whom it is raw material, the consumers, and the workers; its existence suffices to make evident the necessity for completely abolishing it.”
Vorläufige Thesen zur Reform der Philosophie, 1842, Collected Works, Vol. II (Stuttgart, 1904), p. 239.
Die Naturwissenschaft und die Revolution, 1850, Vol. X (Stuttgart, 1911), p. 22.
Köhlerglaube und Wissenschaft, 2nd ed. (Giessen, 1855), p. 32.
Marxistische Probleme (Stuttgart, 1913), pp. 60 if., 216 ff., in which he conflicts sharply with other Marxists. See, for example, Plekhanov,
Grundprobleme des Marxismus (Stuttgart, 1910).
Das Kapital, Vol. I, p. 354, note. But between Descartes and Haller stands La Mettrie, with his “homme machine,” whose philosophy Marx has unfortunately omitted to interpret genetically. Publisher’s Note: This is page 426n in the Kerr edition.
Zur Kritik der politischen Ökonomie, p. xi. Publisher’s Note: p. 11 in the Eastman anthology, p. 12 in the Kerr edition.
Das Komnunistische Manifest, p. 27. Publisher’s Note: This quote appears on p. 326 of the Eastman anthology.
Das Elend der Philosophie, ibid., p. 91. See also p. 269 of the present work. Publisher’s Note: p. l05 in the English translation.
Das Kapital, Vol. I, p. 336. Publisher’s Note: p. 406n in the English translation.
Zur Kritik der politischen Ökonomie, p. 62. Barth,
Die Philosophie der Geschichte als Soziologie, Vol. I, pp. 658 ff., says rightly that the comparison between the innate privileges of the nobility and the presumably innate ideas can be considered as at most a joke. But the first part of Marx’s characterization of Locke is no less untenable than the second. Publisher’s Note: p. 93 of the Kerr edition. Please note that this particular quotation is not in the excerpt reprinted in the Eastman anthology.
Die Lessing-Legende, 3rd ed. (Stuttgart, 1909), p. 422.
Zwei Bücher zur sozialen Geschichte Englands (Leipzig, 1881), pp. 176, 183.
Grundriss der Sozialökonomik, Pt. I (Tübingen, 1914), pp. 81 ff.
Böhm-Bawerk’s Marx-Kritik (Vienna, 1904), pp. 1, 61. For the Catholic Marxist Hohoff,
Warenwert und Kapitalprofit (Paderborn, 1902), p. 57. Böhm-Bawerk is “an indeed well gifted, ordinary economist who could not lift himself out of the capitalistic prejudices among which he grew up.” See my
Grundprobleme der Nationalökonomie (Jena, 1933), pp. 170 ff. Publisher’s Note: The Hilferding essay is available in English in
Karl Marx and the Close of his System by Eugen Böhm-Bawerk & Böhm-Bawerk’s Criticism of Marx by Rudolf Hilferding, ed. Paul M. Sweezy (New York: Augustus M. Kelly, 1949), pp. 121-196. The pages cited here are pp. 121 and 196. Please also note that Mises’ book,
Grundprobleme der Nationalökonomie is in English as
Epistemological Problems of Economics (Princeton, N.J.: D. Van Nostrand, 1960). The particular citation here is to the essay entitled “The Psychological Basis of the Opposition to Economic Theory,” essay VI in this collection, pp. 183-203. This was first published in 1931.
Fabian Essays (1889), pp. 16 ff. In the same way, in sociology and political science, natural law and contract theory have served both to advocate and fight Absolutism.
Die deutsche Geschichtsschreibung von den Befreiungskriegen bis zu unseren Tagen [Leipzig, 1916], pp. 224 ff.,) Were beforehand with this knowledge.
Sozialismus und soziale Bewegung, 7th ed. (Jena, 1919), p. 110, says, “So far as I know them personally—amiable, fine, educated people. Cultured people with clean linen, good manners and elegant wives, whom one meets as gladly as one’s own kind of people, and who certainly do not look as if they represented a movement which turns above all against the increasingly bourgeois nature of Socialism and wants to help the wealed fist, the genuine and true only-manual-workers to their rights.” And De Man,
Zur Psychologie des Sozialismus, pp. 16 if., says, “If one accepted the misleading Marxist expression which connects every social ideology with a definite class attachment, one would have to say that Socialism as a doctrine, even Marxism, is of bourgeois origin.”
thought, says a figure of speech. What it means is that the wish is the father of
Ludwig Feuerbach und der Ausgang der klassischen deutschen Philosophie, 5th ed. (Stuttgart, 1910), p. 58.
Der Nietzsche-Kultus (Leipzig, 1897), p. 6.
Das Kapital, Vol. I, pp. 726 ff. Publisher’s Note: p. 837 in the English translation.
Das Kapital, Vol. I, pp. 728 ff. Publisher’s Note: pp. 837 ff. in the English translation.
Das Erfurter Programm, pp. 83 ff.
Sozialismus und kapitalistische Gesellschaftsordnung (Stuttgart, 1892), pp. 149 ff.
Essentials of Economic Theory, pp. 374 ff., 397.
Sozialisierungskommission über die Frage der Sozialisierung des Kohlenbergbaus vom 31 Juli 1920 (Appendix:
Vorläufiger Bericht vom 15 Februar 1919), op. cit., p. 32.
Grundriss der Sozialökonomik, Pt. VI (Tübingen, 1914), pp. 203 ff. Weiss, “Abnehmender Ertrag,”
Handwörterbuch der Staatswissenschaften, 4th ed., Vol. I, pp. 11 ff.
Grundriss der Sozialiökonomik, Pt. VI (Tübingen, 1914), pp. 54 ff. The remaining factors of localization can be passed over, as the present, or the historically transmitted, distribution of primary production ultimately determines them.
Lehrbuch der deutschen Rechtsgeschichte, pp. 159 ff.; Dopsch,
Wirtschaftliche und soziale Grundlagen der europäischen Kulturentwicklung, Part 2 (Vienna, 1920), pp. 289, 309 ff.
Die Verelendungstheorie (Leipzig, 1928), pp. 19 ff.
Die drei Bevölkerungsstufen (Munich, 1889), pp. 181 ff.
“Les capitaux suivent aujourd’hui sans contrepoids la loi de leur propre gravitation; c’est que, s’attirant en raison de leurs masses, les richesses sociales se concentrent de plus en plus entre ks mains des grands possesseurs.” (“Capital today follows, without any opposing force, the law of its own magnetism. Capital attracts capital to itself, by mason of its very size. Social wealth is concentrated more and more in the hands of the largest owners.”) Quoted by Tugan-Baranowsky,
Der moderne Sozialismus in seiner geschichtlichen Entwicklung, p. 62. That is word play, nothing more.
Das Kapital, Vol. I, p. 611. Publisher’s Note: In the English
Capital, Vol. I, pp. 736-737.
Bernstein und das Sozialdemokratische Programm (Stuttgart, 1899), p. 116.
Zur Erkenntnis unserer staatwirtschaftlichen Zustände, 2nd ed. (Berlin, 1885), p. 273 n.
Karl Marx und die Gewerkschaften (Berlin, 1918) pp. 82 ff.
Der Zukunftsstaat, 2nd ed. (Stuttgart, 1919), p. 12.
Bernstein und das Sozialdemokratische Programm, p. ll6.
Der proletarische Sozialismus (Jena, 1924), Vol. I, p. 106.
A Treatise of Human Nature, Philosophical Works, ed. Green and Grose (London, 1874), Vol. II, pp. 162 ff.; Mandeville,
Bienenfabel, ed. Bobertag (Munich, 1914), p. 123. Publisher’s Note: In English, Mandeville,
The Fable of the Bees, ed. F. B. Kaye (Oxford University Press, 1924), pp. 135-136; Schatz,
L’Individualisme économique et social (Paris, 1907), p. 73 n2, calls this an
“idée fondamentale pour bien comprendre la cause profonde des antagonismes sociaux.” (“Fundamental idea for a good understanding of the profound cause of social animosities.”)
Monopolies and Trusts (New York, 1900), pp. 11 ff.; Vogelstein, “Die finanzielle Organisation der kapitalistischen Industrie und die Monopolbildungen” (
op. cit., p. 231) too, and following him the German Socialization Commission (
op. cit., pp. 31 ff.), start from a concept of monopoly which comes very close to the views criticized by Ely and generally abandoned by the price theory of modern science.
Grundsätze der Volkswirtschaftslehre (Vienna, 1871), p. 195; further Forchheimer, “Theoretisches zum unvollständigen Monopole” (
Schmoller’s Jahrbuch XXXII), pp. 3 ff. Publisher’s Note: In English, Menger,
Principles of Economics, trans. and ed. James Dingwall and Bert F. Hoselitz (Glencoe, Illinois: The Free Press, 1950), pp. 211 ff.
ibid., this is “perhaps even the rule.”