The Nazis Have Succeeded in Entirely Eliminating the Profit Motive from the Conduct of Business

No private enterprise will ever fall prey to bureaucratic methods of management if it is operated with the sole aim of making profit. It has already been pointed out that under the profit motive every industrial aggregate, no matter how big it may be, is in a position to organize its whole business and each part of it in such a way that the spirit of capitalist acquisitiveness permeates it from top to bottom.

But ours is an age of a general attack on the profit motive. Public opinion condemns it as highly immoral and extremely detrimental to the commonweal. Political parties and governments are anxious to remove it and to put in its place what they call the “service” point of view and what is in fact bureaucratic management.

We do not need to deal in detail with what the Nazis have achieved in this regard. The Nazis have succeeded in entirely eliminating the profit motive from the conduct of business. In Nazi Germany there is no longer any question of free enterprise. There are no more entrepreneurs. The former entrepreneurs have been reduced to the status of Betriebsführer (shop manager). They are not free in their operation; they are bound to obey unconditionally the orders issued by the Central Board of Production Management, the Reichswirtschaftsministerium, and its subordinate district and branch offices. The government not only determines the prices and interest rates to be paid and to be asked, the height of wages and salaries, the amount to be produced and the methods to be applied in production; it allots a definite income to every shop manager, thus virtually transforming him into a salaried civil servant. This system has, but for the use of some terms, nothing in common with capitalism and a market economy. It is simply socialism of the German pattern, Zwangswirtschaft. It differs from the Russian pattern of socialism, the system of outright nationalization of all plants, only in technical matters. And it is, of course, like the Russian system, a mode of social organization that is purely authoritarian.

—Ludwig von Mises, Bureaucracy, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2007), 53-54.

The Socialists Want to Abolish “the Worst of All Evils”--Competition, But This Is Impossible

The socialists assert that capitalism is degrading, that it is incompatible with man’s dignity, that it weakens man’s intellectual abilities and spoils his moral integrity. Under capitalism, they say, everybody must regard his fellowmen as competitors. Man’s innate instincts of benevolence and companionship are thus converted into hatred and a ruthless striving for personal success at the expense of all other people. But socialism will restore the virtues of human nature. Amicableness, fraternity, and comradeship will be the characteristic features of future man. What is needed first is to eliminate this worst of all evils, competition.

However, competition can never be eliminated. As there will always be positions which men value more highly than other positions, people will strive for them and try to outstrip their rivals. It is immaterial whether we call this emulation rivalry or competition. At any rate, in some way or other it must be decided whether or not a man ought to get the job he is applying for. The question is only what kind of competition should exist.

The capitalist variety of competition is to outdo other people on the market through offering better and cheaper goods. The bureaucratic variety consists in intrigues at the “courts” of those in power.

--Ludwig von Mises, Bureaucracy, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2007), 85-86.