The Communist Doctrine Ignores the Essential Difference between a Status/Caste Society and a Capitalist Society

Marx obfuscated the problem by confusing the notions of caste and class. Where status and caste differences prevail, all members of every caste but the most privileged have one interest in common, viz., [namely] to wipe out the legal disabilities of their own caste. All slaves, for instance, are united in having a stake in the abolition of slavery. But no such conflicts are present in a society in which all citizens are equal before the law. No logical objection can be advanced against distinguishing various classes among the members of such a society. Any classification is logically permissible, however arbitrarily the mark of distinction may be chosen. But it is nonsensical to classify the members of a capitalistic society according to their position in the framework of the social division of labor and then to identify these classes with the castes of a status society. . . .

This socialist or communist doctrine fails entirely to take into account the essential difference between the conditions of a status or caste society and those of a capitalistic society. Feudal property came into existence either by conquest or by donation on the part of a conqueror. It came to an end either by revocation of the donation or by conquest on the part of a more powerful conqueror. It was property by “the grace of God,” because it was ultimately derived from military victory which the humility or conceit of the princes ascribed to special intervention of the Lord. The owners of feudal property did not depend on the market, they did not serve the consumers; within the range of their property rights they were real lords. But it is quite different with the capitalists and entrepreneurs of a market economy. They acquire and enlarge their property through the services they have rendered to the consumers, and they can retain it only by serving daily again in the best possible way. This difference is not eradicated by metaphorically calling a successful manufacturer of spaghetti “the spaghetti king.”

—Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (Auburn, AL: Ludwig von Mises Institute, 2007), 113, 115-116.

There Is Always Disequilibrium in the Real Economy and the State of “Equilibrium” Never Becomes Actual

A new sophisticated version of the image of the perfect society has arisen lately out of a crass misinterpretation of the procedure of economics. In order to deal with the effects of changes in the market situation, the endeavors to adjust production to these changes, and the phenomena of profit and loss, the economist constructs the image of a hypothetical, although unattainable, state of affairs in which production is always fully adjusted to the realizable wishes of the consumers and no further changes whatever occur. In this imaginary world tomorrow does not differ from today, no maladjustments can arise, and no need for any entrepreneurial action emerges. The conduct of business does not require any initiative; it is a self-acting process unconsciously performed by automatons impelled by mysterious quasi-instincts. There is for economists (and, for that matter, also for laymen discussing economic issues) no other way to conceive what is going on in the real, continually changing world than to contrast it in this way with a fictitious world of stability and absence of change. But the economists are fully aware that the elaboration of this image of an evenly rotating economy is merely a mental tool that has no counterpart in the real world in which man lives and is called to act. They did not even suspect that anybody could fail to grasp the merely hypothetical and ancillary character of their concept.

Yet some people misunderstood the meaning and significance of this mental tool. In a metaphor borrowed from the theory of mechanics, the mathematical economists call the evenly rotating economy the static state, the conditions prevailing in it “equilibrium,” and any deviation from “equilibrium” disequilibrium. This language suggests that there is something vicious in the very fact that there is always disequilibrium in the real economy and that the state of “equilibrium” never becomes actual. The merely imagined hypothetical state of undisturbed “equilibrium” appears as the most desirable state of reality. In this sense some authors call competition as it prevails in the changing economy imperfect competition. The truth is that competition can exist only in a changing economy. Its function is precisely to wipe out disequilibrium and to generate a tendency toward the attainment of “equilibrium.” There cannot be any competition in a state of “static equilibrium” because in such a state there is no point at which a competitor could interfere in order to perform something that satisfies the consumers better than what is already performed anyway. The very definition of “equilibrium” implies that there is no maladjustment anywhere in the economic system, and consequently no need for any action to wipe out maladjustments, no entrepreneurial activity, no entrepreneurial profits and losses. It is precisely the absence of the profits that prompts mathematical economists to consider the state of undisturbed static equilibrium as the ideal state, for they are inspired by the prepossession that entrepreneurs are useless parasites and profits are unfair lucre.

—Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 241-242.

The Much Admired “Progressive” Writers Gave Up the Essential Idea of the Enlightenment: Freedom of Thought, Speech, and Communication

Lacking the power to think logically, and ignorant of history as well as of theory, the much admired “progressive” writers gave up the essential idea of the Enlightenment: freedom of thought, speech, and communication. Not all of them were so outspoken as Comte and Lenin; but they all, in declaring that freedom means only the right to say the correct things, not also the right to say the wrong things, virtually converted the ideas of freedom of thought and conscience into their opposite. It was not the Syllabus of Pope Pius IX that paved the way for the return of intolerance and the persecution of dissenters. It was the writings of the socialists. After a short-lived triumph of the idea of freedom, bondage made a comeback disguised as a consummation and completion of the philosophy of freedom, as the finishing of the unfinished revolution, as the final emancipation of the individual.

The concept of absolute and eternal values is an indispensable element in this totalitarian ideology. A new notion of truth was established. Truth is what those in power declare to be true. The dissenting minority is undemocratic because it refuses to accept as true the opinion of the majority. All means to “liquidate” such rebellious scoundrels are “democratic” and therefore morally good.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 45.

Today Even the Adepts of “Scientific” Socialism Rely Exclusively upon These Emotional Factors; the Basis of Contemporary Socialism and Interventionism Is Judgments of Value

Marx was at a loss to refute the well-founded objections that were raised even in his time about the minor difficulties of the socialist schemes. It was his helplessness in this regard that prompted him to develop the three fundamental doctrines of his dogmatism. When economics later demonstrated why a socialist order, necessarily lacking any method of economic calculation, could never function as an economic system, all arguments advanced in favor of the great reform collapsed. From that time on socialists no longer based their hopes upon the power of their arguments but upon the resentment, envy, and hatred of the masses. Today even the adepts of “scientific” socialism rely exclusively upon these emotional factors. The basis of contemporary socialism and interventionism is judgments of value. Socialism is praised as the only fair variety of society’s economic organization. All socialists, Marxians as well as non-Marxians, advocate socialism as the only system consonant with a scale of arbitrarily established absolute values. These values, they claim, are the only values that are valid for all decent people, foremost among them the workers, the majority in a modern industrial society. They are considered absolute because they are supported by the majority—and the majority is always right.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 43.

In Their Ignorance of All Business Problems, the Marxians Failed to see That the Present-Day Bourgeois Are in their Capacity as Bourgeois Not Selfishly Interested in the Preservation of Laissez Faire

In their ignorance of all business problems, the Marxians failed to see that the present-day bourgeois, those who are already wealthy capitalists and entrepreneurs, are in their capacity as bourgeois not selfishly interested in the preservation of laissez faire. Under laissez faire their eminent position is daily threatened anew by the ambitions of impecunious newcomers. Laws that put obstacles in the way of talented upstarts are detrimental to the interests of the consumers but they protect those who have already established their position in business against the competition of intruders. In making it more difficult for a businessman to reap profit and in taxing away the greater part of the profits made, they prevent the accumulation of capital by newcomers and thus remove the inducement that impels old firms toward the utmost exertion in serving the customers. Measures sheltering the less efficient against the competition of the more efficient and laws that aim at reducing or confiscating profits are from the Marxian point of view conservative, nay, reactionary. They tend to prevent technological improvement and economic progress and to preserve inefficiency and backwardness. If the New Deal had started in 1900 and not in 1933, the American consumer would have been deprived of many things today provided by industries which grew in the first decades of the century from insignificant beginnings to national importance and mass production.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 97-98.

All Brands of Historicism Emphatically Reject Economics

All brands of historicism—the German and the British historical schools of the social sciences, American institutionalism, the adepts of Sismondi, Le Play, and Veblen, and many kindred "unorthodox" sects—emphatically reject economics.

The historicists do not eliminate economic reasoning from their treatises. While rejecting an economic doctrine they do not like, they resort in dealing with events to fallacious doctrines long since refuted by the economists.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution (1957; repr., Auburn, AL: Ludwig von Mises Institute, 2007), 208.

The Collectivist Dogma

It ascribes to the universals objective real existence, even an existence superior to that of individuals, sometimes, even, flatly denying the autonomous existence of individuals, the only real existence.

Collectivism transforms the epistemological doctrine into an ethical claim. It tells people what they ought to do. It distinguishes between the true collective entity to which people owe loyalty and spurious pseudo entities about which they ought not to bother at all. There is no uniform collectivist ideology, but many collectivist doctrines. Each of them extols a different collectivist entity and requests all decent people to submit to it. Each sect worships its own idol and is intolerant of all rival idols. Each ordains total subjection of the individual; each is totalitarian.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 166-167.

 

The Great God Society Versus the Impudent Individual

In contrasting society and the individual and in denying to the latter any “true” reality, the collectivist doctrines look upon the individual merely as a refractory rebel. This sinful wretch has the impudence to give preference to his petty selfish interests as against the sublime interests of the great god society. Of course, the collectivist ascribes this eminence only to the rightful social idol, not to one of the pretenders. When the collectivist extols the state, what he means is not every state but only that regime of which he approves, no matter whether this legitimate state exists already or has to be created.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 169.

The Doctrine of Polylogism

When carried to its ultimate logical consequences this attitude implies the doctrine of polylogism. Polylogism denies the uniformity of the logical structure of the human mind. Every social class, every nation, race, or period of history is equipped with a logic that differs from the logic of other classes, nations, races, or ages. Hence bourgeois economics differs from proletarian economics, German physics from the physics of other nations, Aryan mathematics from Semitic mathematics. There is no need to examine here the essentials of the various brands of polylogism.

--Ludwig von Mises, Theory and History: An Interpretation of Social and Economic Evolution, ed. Bettina Bien Greaves (Indianapolis: Liberty Fund, 2005), 21-22.