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 Socialist Attitude to Ethics
Socialism and Ethics
SOCIALISM AS A MORAL IMPERATIVE
For pure Marxism Socialism is not a political programme. It does not demand that society shall be transformed into the socialist order, nor does it condemn the liberal order of society. It presents itself as a scientific theory which claims to have discovered in the dynamic laws of historical development a movement towards the socialization of the means of production. To say that pure Marxism pronounces itself in favour of Socialism or that it desires Socialism or wishes to bring it about would be just as absurd as to say that Astronomy wishes or thought it desirable to bring about a solar eclipse which it had predicted. We know that Marx’s life and even many of his writings and sayings sharply contradict his theoretic outlook and that the Socialism of resentment is always showing its cloven hoof. In practical politics at least, his supporters have long since forgotten what they owe strictly to his doctrine. Their words and deeds go far beyond what the “midwife theory” permits.
*1 This, however, is of secondary importance for our study, which here deals only with the doctrine pure and undefiled.
Besides the pure Marxist view that Socialism must come of inexorable Necessity, there are two other motives which guide the advocates of Communism. They are socialists either because they expect socialist society to increase productivity, or because they believe that a socialist society would be more just. Marxism is unable to reconcile itself to ethical Socialism. But its attitude to economic-rationalist Socialism is quite different: it is possible to interpret the materialistic conception of history as meaning that the trend of economic development naturally leads to the most productive type of economy, that is to say Socialism. Of course, this view is very different from that held by the majority of Marxists. They are for Socialism, firstly because it is bound to come in any case, secondly because it is morally preferable, and finally because it involves more rational economic organization.
The two motives of non-Marxian Socialism are mutually exclusive. If a man advocates Socialism because he expects it to increase the productivity of social labour he need not try to bolster up his demands with a higher moral valuation of the socialist order. If he elects to do so, he is open to the question whether he would be prepared to advocate Socialism if he discovered that it was after all not the morally perfect order. On the other hand it is clear that one who advocates the socialistic order for moral reasons would have to go on doing so even if he were convinced that the order based on private ownership in the means of production yielded greater productivity of labour.
2 Eudaemonistic Ethics and Socialism
To eudaemonism, which looks at social phenomena rationalistically, the very way in which ethical Socialism states its problems seems unsatisfactory. Unless Ethics and “Economy” are regarded as two systems of objectivization which have nothing to do with each other, then ethical and economic valuation and judgment cannot appear as mutually independent factors. All ethical ends are merely a part of human aims. This implies that on the one hand the ethical aim is a means, in so far as it assists in the human struggle for happiness, but that on the other hand it is comprised in the process of valuation which unites all intermediate aims into a unitary scale of values and grades them according to their importance. The conception of absolute ethical values, which might be opposed to economic values, cannot therefore be maintained.
Of course one cannot discuss this point with the ethical apriorist or the intuitionist. Those who uphold the Moral as ultimate fact, and who rule out scientific examination of its elements by referring to a transcendental origin, will never be able to agree with those who are dragging down the concept of Right into the dust of scientific analysis. Ethical ideas of duty and conscience demand nothing less than the blindest submission.
*2A priori ethics, claiming unconditional validity for its norms, approaches all earthly relations from the outside and aims at transmuting them into its own form with no concern whatever for the consequences.
Fiat iustitia, pereat mundus (let justice be done even though the world be destroyed) is its motto, and it is when it becomes honestly indignant about the eternally misunderstood plea, “the end justifies the means,” that it is most sincere.
Isolated man settles all his ends according to his own law. He sees and knows nothing but himself and arranges his actions accordingly. In society, however, he must temper his actions to the fact that he lives in society and that his actions must affirm the existence and progress of society. From the basic law of social life it follows that he does not do this to achieve aims lying outside his own personal system of ends. In making the social ends his own he does not thereby subordinate his personality and his wishes to those of a higher personality or renounce the fulfilment of any of his own desires in favour of those of a mystical universe. For, from the standpoint of his own valuation, social ends are not ultimate but intermediate in his own scale of values. He must accept society because social life helps him to fulfil his own wishes more completely. If he denied it he would be able to create only transitory advantages for himself; by destroying the social body he would in the long run injure himself.
The idea of a dualism of motivation assumed by most ethical theorists, when they distinguish between egoistic and altruistic motives of action, cannot therefore be maintained. This attempt to contrast egoistic and altruistic action springs from a misconception of the social interdependence of individuals. The power to choose whether my actions and conduct shall serve myself or my fellow beings is not given to me—which perhaps may be regarded as fortunate. If it were, human society would not be possible. In the society based on division of labour and co-operation, the interests of all members are in harmony, and it follows from this basic fact of social life that ultimately action in the interests of myself and action in the interest of others do not conflict, since the interests of individuals come together in the end. Thus the famous scientific dispute as to the possibility of deriving the altruistic from the egoistic motives of action may be regarded as definitely disposed of.
There is no contrast between moral duty and selfish interests. What the individual gives to society to preserve it as society, he gives, not for the sake of aims alien to himself, but in his own interest.
*3 The individual, who is a product of society not only as a thinking, willing, sentient man, but also simply as a living creature, cannot deny society without denying himself.
This position of social ends in the system of individual ends is perceived by the individual’s reason, which enables him to recognize aright his own interests. But society cannot always trust the individual to see which are his true interests. If it left everyone to judge of his own it would expose itself to the caprice of every foolish, sick, and weak-willed person, leaving him free to put its very existence into question, thus imperilling the continuity of development. This is what led to the creation of powers of social coercion which,
vis-à-vis the individual, appear as external constraints because they demand imperative obedience. And here we see the social significance of the State and the Law. They are not something outside the individual, demanding from him actions which run counter to his own interests, forcing him to serve alien purposes. They merely prevent the misguided, asocial individual, blind to his own interests, from injuring his fellow men by a revolt against the social order.
It is therefore absurd to maintain that Liberalism, Utilitarianism and Eudaemonism are “inimical to the State.” They reject the idea of Etatism, which under the name State adores as God a mysterious being not comprehensible to human understanding; they dissent from Hegel, to whom the State is “divine will”; they reject the Hegelian Marx and his school who have replaced the cult of “State” with the cult of “Society”; they combat all those who want the State or “Society” to perform tasks other than those corresponding to that social order which they themselves believe the most proper to the end in view. Because they favour private ownership in the means of production they demand that the State coercive apparatus shall be directed to maintain this, and they reject all proposals intended to restrict or abolish private property. But never for a moment do they think of “abolishing the State.” The liberal conception of society by no means omits the apparatus of the State; it assigns to this the task of safeguarding life and property. Anybody who calls opposition to State railways, State theatres, or State dairies “enmity to the State” must be deeply enmeshed indeed in the realistic (in the scholastic sense) conception of the State.
Occasionally society can prevail against the individual even without coercion. Not every social norm requires that the most extreme coercive measures shall at once be put into force. In many things, morals and custom can wring from the individual a recognition of social aims without assistance from the sword of justice. Morals and customs go further than State law in so far as they protect more extensive social aims. In this respect, there may be a difference in extent between them, but no incompatibility of principle. Essential contrasts between the legal order and moral laws occur only where the two derive from different conceptions of the social order, that is, where they appertain to different social systems. The contrast is then dynamic, not static.
The ethical valuation “good” or “evil” can be applied only in respect of ends towards which action strives. As Epicurus said: ”
” (“Vice without injurious consequences would not be vice.”)
*4 Since action is never its own end, but rather the means to an end, we call an action good or evil only in respect of the consequences of the action. It is judged according to its place in the system of cause and effect. It is valued as a means. And for the value of the means the valuation of the end is decisive. Ethical, like all other, valuation proceeds from valuation of ends, of the ultimate good. The value of an action is the value of the end it serves. Intention, too, has value in so far as it leads to action.
Unity of action can exist only when all ultimate values can be brought into a unitary scale of values. If this were not possible, man would always be finding himself in a position where he could not act, that is, work as a creature conscious of his striving towards a goal; he would have to abandon the issue to forces beyond his control. Conscious scaling of values precedes every human action. The man who chooses to attain A while renouncing B, C, D, etc., has decided that in the given circumstances the attainment of A is more valuable to him than the attainment of the others.
Philosophers had been arguing about this ultimate Good for a long time before it was settled by modern investigation. At the present day Eudaemonism is no longer open to attack. In the long run all the arguments which philosophers from Kant to Hegel brought against it were unable to dissociate the concept Morality from that of Happiness. Never in history has more intellect and ingenuity been expended in defending an untenable position. We are lost in admiration of the magnificent performance of these philosophers. We might almost say that what they have done to prove the impossible elicits more admiration than the achievements of the great thinkers and sociologists who have made Eudaemonism and Utilitarianism a permanent possession of the human mind. Certainly their efforts were not in vain. Their gigantic struggle for anti-eudaemonistic ethics were necessary to expose the problem in all its wide ramifications and so enable a conclusive solution to be reached.
Since the tenets of intuitionist ethics, which are irreconcilable with scientific method, have been deprived of their very foundations, anyone who recognizes the eudaemonistic character of all ethical valuation is exempt from further discussion of ethical Socialism. For such a one the Moral does not stand outside the scale of values which comprises all values of life. For him no moral ethic is valid
per se. He must first be allowed to inquire why it is so rated. He can never reject that which has been recognized as beneficial and reasonable simply because a norm, based on some mysterious intuition, declares it to be immoral—a norm the sense and purpose of which he is not entitled even to investigate.
*5 His principle is not
fiat iustitia, pereat mundus, (let justice be done, though the world perish), but
fiat iustitia, ne pereat mundus (let justice be done, lest the world perish).
If nevertheless it appears not entirely superfluous to discuss separately the arguments of ethical Socialism, this is not merely because it counts many adherents, but, what is more important, because it provides an opportunity of showing how eudaemonistic ideas lie concealed in every train of aprioristic-intuitive ethical thought, and how this system can be traced back, in every one of its utterances, to untenable notions of economic conduct and of social co-operation. Every ethical system built up on the idea of duty, even though it exhibits itself as strictly as Kant’s, is finally obliged to yield so much to Eudaemonism that its principles can no longer be maintained.
*6 In the same way every single requirement of aprioristic-intuitive ethics displays ultimately an eudaemonistic character.
3 A Contribution to the Understanding of Eudaemonism
Formalist ethics takes its differences with Eudaemonism altogether too lightly when it interprets the happiness of which the latter speaks as satisfaction of sensual desires. More or less consciously, formalistic ethics foists upon Eudaemonism the assertion that all human striving is directed solely towards filling the belly and the basest forms of sensual enjoyment. It is of course not to be denied that the thoughts and endeavors of many, very many people are concentrated on these things. This, however, is no fault of social science, which merely points it out as a fact. Eudaemonism does not advise men to strive after happiness; it merely shows that human striving necessarily tends in this direction. And after all, happiness is not to be found only in sexual enjoyment and a good digestion.
The energistic conception of the Moral sees the highest good in fulfilling oneself, in the full exercise of one’s own powers, and this is perhaps only another way of saying what eudaemonists have in mind when they speak of happiness. The happiness of the strong and the healthy certainly does not lie in idle dreaming. But when this conception is contrasted with Eudaemonism it becomes untenable. What are we to make of Guyau when he says: “Life is not calculation, but action. In every living being there is a store of strength, a surplus of energy, which strives to spend itself,
not for the sake of the accompanying pleasurable sensations but because it must spend itself …
Duty derives from
strength, which necessarily urges towards action.”
*7 Action means working with a conscious end, that is, on a basis of reflection and calculation. Guyau is guilty of a lapse into intuitionism, which he otherwise rejects, when he represents a mysterious urge as the guide of moral action. In the
idées-forces of Fouillée the intuitionist element is still more clearly revealed.
was thought is supposed to urge towards realization. But presumably this is only when the end, which the action serves, seems desirable. To the question why an end appears good or evil, however, Fouillée offers no reply.
Nothing is gained when the teacher of morals constructs an absolute ethic without reference to the nature of man and his life. The declamations of philosophers cannot alter the fact that life strives to live itself out, that the living being seeks pleasure and avoids pain. All one’s scruples against acknowledging this as the basic law of human actions fall away as soon as the fundamental principle of social co-operation is recognized. That everyone lives and wishes to live primarily for himself does not disturb social life but promotes it, for the higher fulfilment of the individual’s life is possible only in and through society. This is the true meaning of the doctrine that egoism is the basic law of society.
The highest demand that Society makes of the individual is the sacrifice of his life. Though all other restrictions of his action which the individual has to accept from society may be considered ultimately in his own interests, this, says the anti-eudaemonistic ethic, can be explained by no method which smooths over the opposition between individual and general interests. The hero’s death may be useful to the community, but that is no great consolation to him. Only an ethic based on duty could help one over this difficulty. On closer considerations we see that this objection may be easily disproved. When society’s existence is threatened, each individual must risk his best to avoid destruction. Even the prospect of perishing in the attempt can no longer deter him. For there is then no choice between either living on as one formerly lived or sacrificing oneself for one’s country, for society, or for one’s convictions. Rather, must the certainty of death, servitude, or insufferable poverty be set against the chance of returning victorious from the struggle. War carried on
pro aris et focis (for our altars and our hearths) demands no sacrifice from the individual. One does not engage in it merely to reap benefits for others, but to preserve one’s own existence. This of course, is only true of wars in which individuals fight for their very existence. It is not true of wars which are merely a means of enrichment, such as the quarrels of feudal lords or the cabinet wars of princes. Thus Imperialism, ever covetous of conquests, cannot do without an ethic which demands from the individual “sacrifices” for the “good of the State.”
The long fight carried on by moralists against the convenient eudaemonistic explanation of the Moral finds its counterpart in the efforts of economists to solve the problem of economic value otherwise than through the utility of consumption goods. Economists had nothing nearer to hand than the idea of value as reflecting in some way the significance of a commodity to human welfare, nevertheless the attempt to explain the phenomena of value with the help of this concept has been given up again and again and other theories of value have been persistently sought. This is because of the difficulties presented by the problem of the quantity of value. There was, for instance, the apparent contradiction that precious stones, satisfying an obviously minor want, have a higher value than bread, which satisfies one of the most important needs, and that air and water, without which man simply cannot live, are generally without value. The basis for erecting a theory of value on the utility of goods was laid only when the idea of a scale of importance of
classes of wants was separated from that of the concrete wants themselves, and the fact recognized that the scale according to which the importance of the wants depending on the power to dispose of goods is judged, is that of the concrete wants themselves.
The difficulty which the utilitarian-eudaemonistic explanation of the Moral had to overcome was not less than that with which economic theory had to fight in the effort to trace economic values back to utility. No one could discover how to bring eudaemonistic doctrine into harmony with the obvious fact that moral action consists just in the individual’s avoiding actions which seem directly useful to him and doing that which seems directly harmful to him. Liberal social philosophy was the first to find the solution. It showed that by maintaining and developing the social bond each individual serves his highest interest, so that the sacrifices made in the fulfilment of social life are only temporary ones. He exchanges a smaller direct advantage for a considerably greater indirect advantage. Thus duty and interest coincide.
*10 This is the meaning of the harmony of interests of which the liberal theory of society speaks.
Praktische Wirtschaftspolitik (Berlin, 1919), p. 53.
Geschichte der Ethik als philosophischer Wissenschaft, Vol. II, 2nd ed. (Stuttgart, 1921), p. 450.
La cité moderne, pp. 413 ff.
Die englische Ethik der Gegenwart, trans. Peusner (Leipzig, 1914), p. 20.
Deontology or the Science of Morality, ed. Bowring (London, 1834), Vol. I, pp. 8 ff.
Utilitarianism (London, 1863), pp. 5 ff.; Jodl,
Geschichte der Ethik als philosophischer Wissenschaft, Vol. II, p. 36.
Sittlichkeit ohne “Pflicht,” pp. 272 ff.
Humanitaires et libertaires au point de vue sociologique et moral, pp. 157 ff.
Kapital und Kapitalzins, 3rd ed., Part II (Innsbruck, 1909), pp. 233 ff. Publisher’s Note: This is pp. 135 ff. in Volume II of the English edition.
Deontology, Vol. I, p. 87 ff.
Gesammelte Aufsätze zur Religionssoziologie (Tübingen, 1920), Vol. II, p. 206.
op. cit., Vol. I, p. 262.
Die franziskanische Bewegung (Stuttgart and Berlin, 1903), pp. 53 ff., 59.
Die Neue Zeit, Vol. 38, Vol. l, pp. 312 ff. Specially remarkable in this context are also the remarks of Charles Gide, “Le Matérialisme et l’ Économie Politique” in
Le Matérialisme actuel (Paris, 1924).
Das Mönchtum, 7th ed. (Giessen, 19o7), p. 32 ff.
Das Mönchtum, p. 33.
Gesammelte Schriften, Vol. II (Tübingen, 1913), pp. 386 ff.
Das Wesen des Christentums (Leipzig, 1907), pp. 50 ff.
Aus Wissenschaft und Leben, Vol. II (Giessen, 1911), pp. 257 ff.; Troeltsch,
Die Soziallehren der christlichen Kirchen und Gruppen, pp. 31 ff.
Das Urchristentum, Vol. I, pp. 649 ff.
Studien in der romanisch-kanonistischen Wirtschafts-und Rechtslehre his gegen Ende des siebzehnten Jahrhunderts (Berlin, 1874-83), Vol. I, p. 2.
De usuris (III, 19). See Schaub,
Der Kampf gegen den Zinswucher, ungerechten Preis und unlautern Handel im Mittelalter (Freiburg, 1905), pp. 61 ff.
Geld und Kredit, Part II (Berlin, 1876), pp. 333-5 note.
Cod. iur. can., has come to acknowledge conditionally the legality of the taking of interest, see Zehentbauer,
Das Zinsproblem nach Moral und Recht (Vienna, 1920), pp. 138 ff.
Lehrbuch der Nationalökonomie, pp. 212 ff.
op. cit., p. 212.
Das Urchristentum, Vol. I, p. 652, explains Jesus’ pessimistic judgment of earthly possessions by the apocalyptic expectation of the near world catastrophe. “Instead of trying to reinterpret and adapt His rigoristic expressions on this subject in the sense of our modern social ethics, one should make oneself familiar, once and for all, with the idea that Jesus did not appear as a rational moralist but as an enthusiastic prophet of the impending Kingdom of God and has only thus become the source of the religion of salvation. He who wants to make the eschatological enthusiasm of the prophet the direct and permanent authority for social ethics does just as wisely as he who would wish to warm his hearth and cook his soup with the flames of a volcano.” On May 25th, 1525, Luther wrote to the Danzig Council: “The Gospel is a spiritual law by which one cannot well govern.” See Neumann,
Geschichte des Wuchers in Deutschland (Halle, 2865), p. 618. Also Traub,
Ethik und Kapitalismus, 2nd ed. (Heilbronn, 2909), p. 71.
Die wirtschaftsethischen Lehren der Kirchenväter (Vienna, 3907), pp. 84 ff.
Patrologiae Graecae, Vol. LX, pp. 96 ff.