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 “Interest” as an Obstacle to Destructionism
According to Marx the political faith of the individual depends upon the class to which he belongs; the political faith of his class depends upon its interests as a class. The bourgeoisie is bound to support Capitalism. On the other hand the proletariat can only achieve its purpose, can only free itself from capitalist exploitation, by preparing the way for Socialism. Thus the respective positions of the bourgeoisie and the proletariat in the political arena are defined in advance. Perhaps no doctrine of Marx has made a deeper or more lasting impression on political theory than this. It has found acceptance far beyond the immediate range of Marxism. Liberalism has come to be regarded as the doctrine in which the class interests of the bourgeoisie and of big business find expression. Whoever professes liberal opinions is considered to be a more or less well-meaning representative of the special interests which stand in opposition to the general good. Economists who reject the Marxian doctrine are characterized as the “spiritual bodyguard of the profits of capital—and sometimes also of ground-rents”
*31—a remarkably convenient theory which saves the Marxian the trouble of arguing with them.
Nothing indicates more clearly the widespread recognition which has been accorded to this doctrine of Marx than its acceptance even by the opponents of Socialism. When people suggest that the defeat of socialist effort is a task chiefly or even exclusively for the propertied classes, when they attempt to form a “united front” of all the bourgeois parties in order to oppose Socialism, they then admit that the maintenance of private property in the means of production is the special interest of a certain class, and that it is antagonistic to the public welfare. These strangely short-sighted adversaries of Socialism do not realize that any attempt on the part of a class, which is comparatively small when contrasted with the masses, to defend its particular interests must be futile; they do not recognize that private property is doomed when it is regarded as the privilege of its owners. Still less are they able to perceive that their assumption is radically contradicted by the experience of the formation of actual political parties.
Liberalism is not a doctrine which serves the class interests of those in possession of property. Whoever conceives it as such has already admitted one of the leading contentions of Socialism; he is no liberal. Liberalism upholds private property not in the interests of the owners, but in the general interest; it believes that the maintenance of the capitalist system is to the advantage not only of the capitalists but of every member of society. It admits that in the socialist community there will, in all probability, be little or no inequality of income. But it urges that owing to the smaller yield of socialist production, the total amount to be shared will be considerably smaller, so that each individual will receive less than the poorest receives today. Whether this thesis is accepted or rejected is another question. This is precisely the point upon which Socialism and Liberalism are in conflict. Whoever rejects it out of hand, rejects Liberalism. Yet it would be unreasonable to do this without careful consideration of the problem and of the arguments of either sides.
In fact nothing is further from the particular interests of the entrepreneurs, whether as individuals or as a class, than to defend the principle of private property or to resist the principle of Socialism. That the introduction of Socialism must necessarily injure the entrepreneurs and capitalists, or at least their children, cannot be disputed. by those who believe that Socialism implies want and distress for all. To this extent, therefore, the propertied classes are admittedly concerned in resisting Socialism. But their interest is no greater than that of any other member of society and is quite independent of their privileged position. If it were possible to imagine that Socialism would be introduced lock stock and barrel overnight, then it might be said that the entrepreneurs and capitalists had special reasons for wishing to maintain the capitalist system. They would have more to lose. Even if the distress which resulted from the reorganization were the same for all, those would suffer more whose fall had been the greater. But it is not possible to imagine that Socialism will be introduced so rapidly; and if it were, it may be assumed that the entrepreneurs, by reason of their expert knowledge and ability to take responsibility, would occupy, at any rate for a time, privileged positions within the socialist organization.
The entrepreneur is unable to provide for his grandchildren and great-grandchildren, for it is characteristic of private property in the means of production under the capitalist system that it creates no permanent source of income. Every fortune must be renewed by effort. When the feudal lord supported the feudal system he was defending not only his own property but that of his descendants. But the entrepreneur in the capitalist system knows that his children and grandchildren will only survive in the face of new competition if they can hold their ground as directors of productive enterprise. If he is concerned for the fate of his successors and wants to consolidate his property for them in a way contrary to the interests of the community, he will have to become an enemy of the capitalist social order and demand every kind of restriction on competition. Even the way to Socialism may strike him as the best means for this, provided the transition does not take place too suddenly, for he may expect compensation against expropriation so that, for a longer or shorter time, the expropriated will enjoy a secure income in place of the uncertainty and insecurity that is the lot of owners of an enterprise. Consideration for his own property and for the property of his successors may, therefore, urge the entrepreneurs rather to support than to oppose Socialism. He must welcome all efforts which aim at suppressing newly created and newly developed fortunes, especially all measures intended to limit anything in the nature of economic freedom, because they make secure the income which otherwise must be earned by daily struggle as long as competition is not restricted—because they exclude new competitors.
Entrepreneurs have an interest in combining to proceed uniformly in wage negotiations with the workers organized in trade unions.
*33 And they have an interest in combining to carry through tariff and other restrictions which conflict with the essence and principle of Liberalism or to resist government interference which may injure them. But they have absolutely no special interest in fighting Socialism and socialization as such. They have no special interest in fighting destructionism. The whole purpose of the entrepreneur is to adjust himself to the economic contingencies of any moment. His aim is not to fight Socialism, but to adjust himself to conditions created by a policy directed towards socialization. It is not to be expected that entrepreneurs or any other particular group in the community should, out of self-interest, necessarily make the general principles of well-being the maxim of their own procedure. The necessities of life compel them to make the best of any given circumstances. It is not the business of the entrepreneurs to lead the political fight against Socialism; all that concerns them is to adjust themselves and their enterprises to the situations created by the measures directed towards socialization, so that they will make the greatest profit possible under the conditions prevailing.
It follows, therefore, that neither associations of entrepreneurs, nor those organizations in which the entrepreneurs’ support counts, are inclined to fight on principle against Socialism. The entrepreneur, the man who seizes the opportunity of the moment, has little interest in the issue of a
secular struggle of indefinite duration. His interest is to adjust himself to the circumstances in which he finds himself at the moment. An entrepreneurs’ organization aims solely at repulsing some individual encroachment of the trade unions; or it may oppose acts of legislation, such as special forms of taxation. It carries out the tasks assigned to it by parliaments and governments in cases where it is desired that the organized body of entrepreneurs should co-operate with the organized working class in order to give the destructionist element its say in the national economy. To fight on principle for the maintenance of an economy based on private property in the means of production is no part of the programme of organized entrepreneurs. Its attitude towards Liberalism is one of indifference or even, as in the case of tariff policy, of antagonism.
Organized interests, as the socialist doctrine depicts them, correspond not to the entrepreneurs’ associations but to the farmers’ unions, which advocate tariff duties on agricultural products, or those associations of small producers, which—above all in Austria—press for the exclusion of competition. These clearly are not efforts on behalf of Liberalism.
Thus there are no individuals and no classes whose particular interests would lead them to support Capitalism as such. The policy of Liberalism is the policy of the common good, the policy of subjecting particular interests to the public welfare—a process that demands from the individual not so much a renunciation of his own interests as a perception of the harmony of all individual interests. There are, therefore, no individuals and no groups whose interests would ultimately be better guarded by Socialism than by a society based on private ownership in the means of production. But although ultimately no one’s interests would actually be better served by Socialism, there are plenty of people whose particular interests of the moment are better guarded by a policy directed towards socialization than by the maintenance of Liberalism. Liberalism has opposed everything in the nature of a sinecure and has sought to reduce to a minimum the number of public officials. The interventionist policy provides thousands and thousands of people with safe, placid, and not too strenuous jobs at the expense of the rest of society. All nationalization or setting up of a municipal or public enterprise links private interests with the movement against private property. Today Socialism and destructionism find their strongest supporters in the millions for whom a return to a freer economy would be at first and in the short run detrimental to their particular interests.
2 Violence and Authority
The attitude of mind which sees in private property a privilege of the owners is an echo from former periods in the history of property. All property ownership began with appropriation of ownerless things. The history of property passed through a period in which forcible dispossession of the owners was the rule. It is safe to say that the ownership of any piece of ground property can be traced back to seizure by violence. This has of course no application to the social order of Capitalism, as property here is constantly being acquired in the process of market competition. But as the liberal principles have nowhere—in Europe at least—been put into practice in their entirety, and as everywhere, especially in landed property, very much of the old taint of violence survives, the tradition of the feudal owners is still upheld:
“Ich lieg und besitze” (I occupy and possess). Criticism of property rights is met with violent abuse. This is the policy the German Junkers adopted against Social Democracy—with what success is well known.
Partisans of this order can say nothing in justification of private ownership in the means of production but that it is upheld by force. The fight of the strong is the only fight they can enforce. They boast of their physical force, rely on their armed equipment, and consider themselves entitled to despise any other argument. Only when the ground begins to tremble under their feet, do they produce another argument by taking their stand upon acquired rights. Violation of their property becomes an illegality which must be avoided. We need waste no words in exposing the weakness of this point of view in the struggle against a movement that wants to found new rights. It is quite powerless to change public opinion if that opinion has condemned property. Its beneficiaries recognize this with horror and turn in their distress to the Church, with the odd request that the Church shall keep the
misera plebs (wretched masses) modest and humble, fight covetousness and turn the eyes of the propertyless from earthly goods to heavenly things.
*35 Christianity is to be kept alive so that the people shall not become covetous. But the demand thus made to the Church is monstrous. It is asked to serve the interests, generally assumed to be harmful to the community, of a number of privileged persons. It is obvious that the true servants of the Church have revolted against this presumptuous demand, while enemies of the Church have found it an effective weapon in their war of liberation against religion. What is surprising is that ecclesiastical enemies of Socialism, in their efforts to represent Socialism as a child of Liberalism, of the free school, and of atheism, have taken up just the same attitude towards the work which the Church performs in maintaining existing property relations. Thus the Jesuit Cathrein says: “If one assumes that with this life all is finished, that to man is given no greater destiny than to any other mammal that wallows in the mire, who then will ask of the poor and oppressed, whose life is a constant struggle for existence, that they should bear their hard fate with patience and resignation, and look on while others clothe themselves in silk and purple and have regular and ample meals? Does not the worker too carry in his heart the indestructible
impulse towards perfect happiness? If he is robbed of every hope of a better world beyond, by what right is he prevented from seeking his happiness as far as possible on earth and so demanding imperatively, his share of the earth’s riches? Is he not just as much man as his employer? Why should some just manage to exist in want and poverty while others live on the fat of the land, when from their point of view there is no reason why the good things of this world should belong to some rather than to others? If the atheistic-naturalistic standpoint is justified, so also is the Socialist demand: that worldly goods and happiness should be distributed to all as equally as possible, that it is wrong for some to live a life of idle enjoyment in palaces while others live in miserable cellars and attics, barely able in spite of the most strenuous efforts to earn their daily bread.”
*36 Assuming matters to be just as Cathrein imagines them—that private property is a privilege of the owners, that the others are poorer in proportion as these are rich, that some starve because others carouse, that some live in miserable little rooms because others live in lordly places—does he really believe that it could possibly be a work of the Church to maintain such conditions? Whatever one may read into the Church’s social teaching, one cannot suppose that its founder or his supporters would have approved of its being used to bolster up unjust social institutions that are obviously disadvantageous to the greater part of humanity. Christianity would long since have vanished from the earth, were it that for which, in common with many of its bitterest enemies, Bismarck and Cathrein mistook it: a bodyguard for a social institution injurious to the masses.
The socialist idea can be suppressed neither by force nor by authority, for both are on the side of Socialism and not of its opponents. If guns and machine-guns are brought into action today they will be in the ranks of Socialism and Syndicalism, and not opposed to them. For the great mass of our contemporaries are imbued with the spirit of Socialism or of Syndicalism. Whatever system is set in authority at the present time, it can certainly not be Capitalism, for the masses do not believe in it.
3 The Battle of Ideas
It is a mistake to think that the lack of success of experiments in Socialism that have been made can help to overcome Socialism. Facts
per se can neither prove nor refute anything. Everything is decided by the interpretation and explanation of the facts, by the ideas and the theories.
The man who clings to Socialism will continue to ascribe all the world’s evil to private property and to expect salvation from Socialism. Socialists ascribe the failures of Russian Bolshevism to every circumstance except the inadequacy of the system. From the socialist point of view, Capitalism alone is responsible for all the misery the world has had to endure in recent years. Socialists see only what they want to see and are blind to anything that might contradict their theory.
Only ideas can overcome ideas and it is only the
ideas of Capitalism and of Liberalism that can overcome Socialism. Only by a battle of ideas can a decision be reached.
Liberalism and Capitalism address themselves to the cool, well-balanced mind. They proceed by strict logic, eliminating any appeal to the emotions. Socialism, on the contrary, works on the emotions, tries to violate logical considerations by rousing a sense of personal interest and to stifle the voice of reason by awakening primitive instincts.
Even with those of intellectually higher standing, with the few capable of independent reflection, this seems to give Socialism an advantage. With the others, the great masses who are unable to think, the Socialist position is considered unshakable. A speaker who inflames the passions of the masses is supposed to have a better chance of success than one who appeals to their reason. Thus the prospects of Liberalism in the fight with Socialism are accounted very poor.
This pessimistic point of view is completely mistaken in its estimate of the influence which rational and quiet reflection can exercise on the masses. It also exaggerates enormously the importance of the part played by the masses, and consequently mass-psychological elements, in creating and forming the predominant ideas of an epoch.
It is true that the masses do not think. But just for this reason they follow those who do think. The intellectual guidance of humanity belongs to the very few who think for themselves. At first they influence the circle of those capable of grasping and understanding what others have thought; through these intermediaries their ideas reach the masses and there condense themselves into the public opinion of the time. Socialism has not become the ruling idea of our period because the masses first thought out the idea of the socialization of the means of production and then transmitted it to the intellectually higher classes. Even the materialistic conception of history, haunted as it is by “the psyche of the people” as conceived by Romanticism and the historical school of jurisprudence does not risk such an assertion. Of itself the mass psyche has never produced anything but mass crime, devastation, and destruction.
*37 Admittedly the idea of Socialism is also in its effects nothing more than destruction, but it is nevertheless an idea. It had to be thought out, and this could only be the work of individual thinkers. Like every other great thought, it has penetrated to the masses only through the intellectual middle class. Neither the people nor the masses were the first socialists. Even today they are agrarian socialist and syndicalist rather than socialist. The first socialists were the intellectuals; they and not the masses are the backbone of Socialism.
*38 The power of Socialism too, is like any other power ultimately spiritual; and it finds its support in ideas proceeding from the intellectual leaders, who give them to the people. If the intelligentsia abandoned Socialism its power would end. In the long run the masses cannot withstand the ideas of the leaders. True, individual demagogues may be ready, for the sake of a career and against their better knowledge, to instil into the people ideas which flatter their baser instincts and which are therefore sure to be well received. But in the end, prophets who in their heart know themselves to be false cannot prevail against those filled with the power of sincere conviction. Nothing can corrupt ideas. Neither by money nor by other rewards can one hire men for the fight against ideas.
Human society is an issue of the mind. Social co-operation must first be conceived, then willed, then realized in action. It is ideas that make history, not the “material productive forces,” those nebulous and mystical schemata of the materialist conception of history. If we could overcome the
idea of Socialism, if humanity could be brought to recognize the social necessity of private ownership in the means of production, then Socialism would have to leave the stage. That is the only thing that counts.
The victory of the socialist idea over the Liberal idea has only come about through the displacement of the social attitude, which has regard to the social function of the single institution and the total effect of the whole social apparatus, by an anti-social attitude, which considers the individual parts of the social mechanism as detached units. Socialism sees the individuals–the hungry, the unemployed, and the rich—and finds fault on that account; Liberalism never forgets the whole and the interdependence of every phenomenon. It knows well enough that private ownership in the means of production is not able to transform the world into a paradise; it has never tried to establish anything beyond the simple fact that the socialist order of society is unrealizable, and therefore less able than Capitalism to promote the well-being of all.
No one has understood Liberalism less than those who have joined its ranks during the recent decades. They have felt themselves obliged to fight excrescences” of Capitalism, thereby taking over without a qualm the characteristic anti-social attitude of the socialists. A social order has no excrescences which can be cut off at will. If a phenomenon results inevitably from a social system based on private ownership in the means of production, no ethical or aesthetic caprice can condemn it. Speculation, for example, which is inherent in all economic action, in a socialistic society as well as any other, cannot be condemned for the form it takes under Capitalism merely because the censor of morals mistakes its social function. Nor have these disciples of Liberalism been any more fortunate in their criticisms of Socialism. They have constantly declared that Socialism is a beautiful and noble ideal towards which one ought to strive were it realizable, but that, alas, it could not be so, because it presupposed human beings more perfect morally than those with whom we have to deal. It is difficult to see how people can decide that Socialism is in any way better than Capitalism unless they can maintain that it functions better as a social system. With the same justification it might be said that a machine constructed on the basis of perpetual motion would be better than one worked according to the given laws of mechanics—if only it could be made to function reliably. If the concept of Socialism contains an error which prevents that system from doing what it is supposed to do, then Socialism cannot be compared with the Capitalist system, for this has proved itself workable. Neither can it be called nobler, more beautiful or more just.
It is true, Socialism cannot be realized, but it is not because it calls for sublime and altruistic beings. One of the things this book set out to prove was that the socialist commonwealth lacks above all one quality which is indispensable for every economic system which does not live from hand to mouth but works with indirect and roundabout methods of production: that is the ability to calculate, and therefore to proceed rationally. Once this has been generally recognized, all socialist ideas must vanish from the minds of reasonable human beings.
How untenable is the opinion that Socialism must come because social evolution necessarily leads to it, has been shown in earlier sections of this book. The world inclines to Socialism because the great majority of people want it. They want it because they believe that Socialism will guarantee a higher standard of welfare. The loss of this conviction would signify the end of Socialism.
Grundlagen der Karl Marxschen Kritik der bestehenden Volkswirtschaft (Tübingen, 1887), p. 511
Cours d’Economie Politique, Vol. II, p. 97n.
The Theory of Collective Bargaining, pp. 25 ff.
Fürst Bismarcks Reden, edited by Stein, Vol. I, p. 24.
Der Sozialismus, 12th and 13th eds. (Freiburg, 1920), pp. 347 ff.
Community, London, 1924, pp. 79 ff.
Totem und Tabu (Vienna, 1913), pp. 62 ff. Publisher’s Note: In English, “Totem and Taboo,” in The Standard Edition of
The Complete Psychological Works of Sigmund Freud (London: Hogarth; New York: Macmillan, 1953).