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National Socialism Was Socialist

Posted by M. C. on September 30, 2024

The German pattern differs from the Russian one in that it (seemingly and nominally) maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets. There are, however, no longer entrepreneurs but only shop managers (Betriebsführer)…. The government, not the consumers, directs production. This is socialism in the outward guise of capitalism.

National Socialism Was Socialist

By Llewellyn H. Rockwell, Jr.

These days, supporters of President Trump and others on the right are often smeared as “fascists,” and what is meant by this is that they support the Nazis. For example, the historian Ruth Ben-Ghiat says: “To get people to lose their aversion to violence, savvy authoritarians also dehumanize their enemies. That’s what Trump is doing. Hitler used this ploy from the very start, calling Jews the ‘black parasites of the nation’ in a 1920 speech. By the time Hitler got into power in 1933 and translated dehumanizing rhetoric into repressive policies, Germans had heard these messages for over a decade.

As a historian of autocracy with a specialization in Italian Fascism, the use of the ‘vermin’ image got my attention. Mussolini used similar language in his 1927 Ascension Day speech which laid out Fascism’s intention to subject leftists and others to ‘prophylaxis’ measures ‘to defend the Italian state and society from their nefarious influences.’ But nothing could be further from the truth. The Nazis, as their name, National Socialists, suggests, were supporters of a centrally planned economy. Although Trump supports tariffs and deficit spending, he isn’t an opponent of the free market and favors measures such as tax cuts that help free enterprise.

As the great economist Ludwig von Mises points out, there are two kinds of socialism. One features overt ownership of industry by the government: the centrally planned economy of the former Soviet Union is an example. In the other, private ownership of business is preserved, but the government tells the ostensible owners what to produce and what prices to charge. Mises says in Omnipotent Government: “The German and the Russian systems of socialism have in common the fact that the government has full control of the means of production. It decides what shall be produced and how. It allots to each individual a share of consumer’s goods for his consumption…. The German pattern differs from the Russian one in that it (seemingly and nominally) maintains private ownership of the means of production and keeps the appearance of ordinary prices, wages, and markets. There are, however, no longer entrepreneurs but only shop managers (Betriebsführer)…. The government, not the consumers, directs production. This is socialism in the outward guise of capitalism. Some labels of capitalistic market economy are retained but they mean something entirely different from what they mean in a genuine market economy.”

Later research has supported Mises’s account of the Nazi economy. One of the most comprehensive accounts of the Nazi economy is in the book by Adam Tooze, The Wages of Destruction, and Tooze confirms that the German industrialists had to follow the Nazis’ direction. Tooze especially draws attention to the importance of Herman Goering’s Four-Year Plan: “Businesses who were reluctant to follow the plans of the New Order had to be forced into line. One law allowed the government to impose compulsory cartels. By 1936, the Four-Year Plan, headed by Hermann Goering, changed the nature of the German economy.

On 18 October [1936] Goering was given Hitler’s formal authorization as general plenipotentiary for the Four-Year Plan. On the following days he presented decrees empowering him to take responsibility for virtually every aspect of economic policy, including control of the business media.”

Moreover, Hitler admired the Soviet economy, and the Nazis hoped to transform their kind of socialism into full-fledged central planning after the war. The Nazis did not reveal their intentions publicly, because during the war they needed the cooperation of business, but Hitler and other leading Nazis made their intentions clear in private. As Rainer Zitelmann, the foremost authority on the Nazis’ economic ideology, notes: “The National Socialists intended to expand the planned economy for the period after the war, as we know from many of Hitler’s remarks. As already mentioned, Hitler increasingly admired the Soviet economic system. And this did not fail to affect his views on the question of private property. ‘If Stalin had continued to work for another ten to fifteen years’, Hitler said in a monologue in the Führer headquarters in August 1942,

‘Soviet Russia would have become the most powerful nation on earth, 150, 200, 300 years may go by, that is such a unique phenomenon! That the general standard of living rose, there can be no doubt. The people did not suffer from hunger. Taking everything together we have to say: They built factories here where two years ago there was nothing but forgotten villages, factories which are as big as the Hermann Göring Works.’

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We Oppose the State, its Socialism, and its Wars

Posted by M. C. on May 30, 2024

Naturally, I reject these articles because our editorial policy and our mission is to publish articles that actually support peace, freedom, and Austrian Economics. It’s not our job to publish articles opposed to these things. After all, for writers and readers who don’t like what the Mises Institute stands for, they can read and publish articles at National Review, The Washington Post, The New York Times, Commentary, and countless other neoconservative or social-democrat publications that are more than happy to tell readers that radical laissez-faire and non-interventionist foreign policy are terrible.

https://mises.org/power-market/we-oppose-state-its-socialism-and-its-wars

Ryan McMaken

In case you haven’t read it lately—or perhaps you’ve never read it—the mission statement of the Mises Institute states that the Institute “exists to promote teaching and research in the Austrian school of economics, individual freedom, honest history, and international peace, in the tradition of Ludwig von Mises and Murray N. Rothbard.”

For those who find this mission statement too non-specific, I recommend consulting the decades’ worth of commentary and research published by the Institute over the forty-plus years of the Institute’s existence. For anyone who has bothered to read any significant portion of this body of work, the Mises Institute’s mission and editorial positions over the past four decades are no mystery. 

In my ten years as an editor at the Mises Institute, however, I’ve been often surprised by how many self-described “supporters” of the Institute don’t actually agree with its mission. For example, it’s remarkable how many article submissions I have received over the years in which the author attacks our core editorial positions. 

These articles often have titles like “Why the Austrian School is wrong about X.” ”X” is some fundamental tenet of the Austrian School that is supposedly “disproven” in 900 words by the would-be columnist who generally demonstrates almost no understanding of the Austrian School at all. 

I also receive article submissions which take the form of “the libertarian/free-market case for Y” in which Y is a position—usually a morally repugnant one—that is utterly opposed to what Mises Institute scholars have been publishing here for decades. This sort of submission usually—but not always—centers on foreign policy and advocates for the latest war or “humanitarian” intervention. 

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The Brain Drain

Posted by M. C. on February 20, 2024

by Jeff Thomas

Indeed, this has already begun for Americans – an “exit tax” that is to be paid on any wealth you presently have, even though you’ve already paid a stiff income tax on it.

The Brain Drain

In 1933, Albert Einstein renounced his German citizenship soon after Adolf Hitler became Chancellor. Although that left him without a legal home, he was welcomed in England and later, the US, and eventually became a US citizen in 1935.

This was quite a risky move at the time, as he had no certainty of a better life outside of Germany, or even a prospective job. But he saw the writing on the wall. As a man of reason, he focused not on the present condition in Germany, but where events would ultimately lead. His focus was on the Germany of the future and he made a difficult call that those with less vision might not have made.

In 1940, Ludwig von Mises was perhaps the most gifted economist in Austria, as well as being a visionary of libertarian thinking. But he left Austria in that year. The Nazi expansion was already under way and he understood that, if anything, he was leaving late in the game, but before it became impossible to leave. On that day, Austria lost one of its best minds.

When Fidel Castro came suddenly to power on 1st January 1959, many business leaders understood immediately what effect that would have on them in the future and made a hasty exit from Cuba. Then, in the following years, as the socialist confiscations of businesses and property began to take place, larger numbers of businessmen made their exit. In the end, hundreds of thousands left.

Many similar examples can be studied, evidencing that, when a systemic collapse is imminent and, even more so, after it has begun, it’s invariably the best and brightest that choose to head for the exit doors first.

In most cases, it begins with a few forward-thinking people making their exit, followed by a small wave of others who see what’s coming. That wave is followed by a larger wave, made up of those who need a bit more evidence of decline before they see the writing on the wall. After that, the waves become ever-larger, as the most inventive and productive people realise that they may become collateral damage of the decline.

But why should this be? Is it coincidence that the greatest contributors to a society leave prior to a major decline, or does it simply seem that way after the fact – after they’ve been proven to be correct?

Well, if we observe any society, we learn that the bottom 10% tend to contribute very little. Indeed, they tend to be a drag on the economy and to remain so throughout their lives.

Then there’s the main bulk of society – say, 60% – who merely accept whatever the leaders dictate. They may complain that they want more, but for the most part, as long as they don’t experience extreme hardships, they accept their lot in life and tend not to be especially analytical. Therefore, when a systemic decline is in the works, they tend not to notice, as they’re not in the habit of analysing change.

Then there are the people at the management level – say, 20% – who are more expansive in their thinking. They tend to be the class of people who, whatever their field of expertise, make day-to-day analysis and day-to-day decisions.

At the top, there are those who consistently think outside the box – the Einsteins, the Mises, etc., who are gifted and are capable of perceiving the larger picture. They’re also the visionaries, who are capable of imagining and planning a greater future.

Not surprisingly, it’s this group that recognise the coming danger first, since they habitually analyse events. The decline is simply the next series of events.

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TGIF: Bigotry versus Social Cooperation

Posted by M. C. on November 17, 2023

Let’s not have our mutual interest get lost in the heat of controversy.

https://libertarianinstitute.org/articles/tgif-bigotry-versus-cooperation/

by Sheldon Richman

mises2

We who value individualism, freedom, and social cooperation as essential to flourishing should be distressed by the hostile bigotry that has lately reared its ugly head, to some uncertain extent, on the streets and campuses of America and abroad. This is not new. In America we’ve seen it intermittently in both directions on racial issues just in this century. It seems related to an intolerant, zero-nuance, take-no-prisoners, and glib attitude among many contenders over racial, religious, and ethnic controversies.

Now it is showing itself in ugly group chants and more personal communication calling for violence against Jews and Arabs, and perhaps even direct harassment and assault. A couple of people have died. Anti-Semitism and anti-Arabism should be off-limits. Regardless of the target, the unrestrained hostility is frightening on many counts, not least of which is its ominous implications for spontaneous social /market cooperation.

I couldn’t possibly know whether these clashes are common or just fringe opportunism — let’s hope the latter. In the heat of a controversy it is possible to misread innocent events and words. The principle of charitable interpretation ought to apply unless solid evidence to the contrary revokes it. We should also be aware that government officials and the news media, for obvious reasons, might be inclined to exaggerate.

The point is that much could be at stake if impressions are not exaggerated — including the trust and cooperation that characterize market-oriented societies. Social strife can have severe consequences. Even public demonstrations can create rippling animosity.

mises2

We who value individualism, freedom, and social cooperation as essential to flourishing should be distressed by the hostile bigotry that has lately reared its ugly head, to some uncertain extent, on the streets and campuses of America and abroad. This is not new. In America we’ve seen it intermittently in both directions on racial issues just in this century. It seems related to an intolerant, zero-nuance, take-no-prisoners, and glib attitude among many contenders over racial, religious, and ethnic controversies.

Now it is showing itself in ugly group chants and more personal communication calling for violence against Jews and Arabs, and perhaps even direct harassment and assault. A couple of people have died. Anti-Semitism and anti-Arabism should be off-limits. Regardless of the target, the unrestrained hostility is frightening on many counts, not least of which is its ominous implications for spontaneous social /market cooperation.

I couldn’t possibly know whether these clashes are common or just fringe opportunism — let’s hope the latter. In the heat of a controversy it is possible to misread innocent events and words. The principle of charitable interpretation ought to apply unless solid evidence to the contrary revokes it. We should also be aware that government officials and the news media, for obvious reasons, might be inclined to exaggerate.

The point is that much could be at stake if impressions are not exaggerated — including the trust and cooperation that characterize market-oriented societies. Social strife can have severe consequences. Even public demonstrations can create rippling animosity.

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Progressives Have Corrupted Not Only Money, but Its History as Well | Mises Wire

Posted by M. C. on July 27, 2023

So not only was silver already an internationally recognized money, but the earliest recorded states were already corrupting domestic money markets. Just as more modern governments would do thousands of years later with gold and silver, these Sumerian authorities mandated a fixed exchange rate between the two commodities, leading people to use the artificially overvalued one—in this case, barley—while the government hoarded the other.

https://mises.org/wire/progressives-have-corrupted-not-only-money-its-history-well

Connor O’Keeffe

As modern monetary theory (MMT) gains prominence in the political sphere, it has revitalized interest in some older theories about the origin of money—namely, the state and credit theories of money.

The credit theory of money says that money is simply a unit for measuring debt. And the state theory of money, or chartalism, as it is often known, says that this measurement was created by the state. These days, the two theories are often combined and championed by proponents of MMT who argue that most of the economic constraints put on government are imaginary because the government can simply create money.

The MMT debate is about the nature of money itself, and these theories about the origin of money are central to understanding this alternative way of thinking that’s gaining popularity on the progressive left. However, when one looks, it’s clear that both the theory and history presented as evidence for the state and credit theories of money don’t hold up, especially when compared to the Austrian alternative.

Readers of this website are likely familiar with the Austrian theory of the origin of money, developed by Carl Menger and synthesized by Ludwig von Mises. But to review it quickly, money developed as a way to make trade easier. At some point in the past, humans began using their property to produce goods beyond what the natural environment had provided.

Certain goods became valued, not just for direct consumption but also because of their salability. In other words, people started wanting certain goods because they knew others would trade for them. A good used in this way is called a medium of exchange. Thanks to the network effect, one or a small number of media of exchange would become nearly universally accepted among a society. That’s when it becomes a money.

Historically, precious metals became monies. Currencies were simply a unit of weight in a precious metal. Once a money had been established, people could specialize their labor, and the number of prices—that is, records of past exchange ratios—to keep track of was greatly reduced. That makes entrepreneurship, production, and therefore civilization as we know it possible.

The important insight here is that money gets its value as a money from what it’s able to buy and that it, therefore, must have originated out of a good or commodity produced for some other purpose that was then found to be particularly saleable.

The state and credit theorists reject this entirely as bad theory disproven by the historical record. They instead frame money as a unit of debt.

Debt, credit theorists say, is something that has been around far longer than money. It’s the obligations people have to one another. If a person gives a neighbor some livestock, that neighbor is then obligated to repay the benefactor in kind at some point in the future. They are in debt. Similarly, if one assaults someone else or destroys their property, they are obligated to pay restitution to the victim—or the victim’s family—and are therefore in debt.

Credit theorists argue that money is simply a unit that governments invented to quantify debt. Some say it arose as early states attempted to quantify restitution payments for violent crimes. This unit of debt is then imposed on everyone by the government through taxes. Only then are these state-created IOUs used as a medium of exchange.

In contrast to the Austrians, these theorists see money not as a social institution developed through cooperation but as a state institution imposed on people through violence. It’s not only a disturbing and rather sad view of people and society, it’s also bad theory.

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Libertarian Law by Democratic Means: The Power of Ideologies and Public Opinion | Mises Wire

Posted by M. C. on May 6, 2023

Mises—using the subjectivist-utilitarian method of analyzing society: subjective value, entrepreneurial innovation, consumer sovereignty, and action guided by ideas about ends and means—argues that in reality all de jure government is ultimately de facto government by public opinion, which is guided by ideologies.

From a Misesian perspective, the establishment of a representative democracy is a quest for a de jure government of public opinion. This could deal both with the social fact of the power of ideologies and public opinion and with the regulative ideal of a peacefully adapting to changes in the ideological preferences of the population.

https://mises.org/wire/libertarian-law-democratic-means-power-ideologies-and-public-opinion

Fabricio Terán

Previously I explained Ludwig von Mises’s descriptive philosophy of the consent of individuals as the only thing that gives value to norms and authority. Individuals interpret norms and authority as useful—whether or not they are useful in reality for individuals’ purposes of coexistence. I continue with the explanation of how group consent originates and how it sustains norms and authorities with the help of ideologies and public opinion.

Ideologies and Ideological Entrepreneurs

In the first place, the consent of the governed refers to individual consent to ideas, more specifically to systems of ideas that Mises calls “ideologies.” From Misesian theory, the act of consenting to norms and authorities is influenced by an ideology that guides action. Ideologies are standardized sets of purposes and means that facilitate the creation of groups by simplifying individual choices. In Mises’s words:

What creates a group activity is a definite end sought by individuals and the belief of these individuals that cooperating in this group is a suitable means to attain the end sought. A group is a product of human wishes and the ideas about the means to realize these wishes. Its roots are in the value judgments of individuals and in the opinions held by individuals about the effects to be expected from definite means. To deal with social groups adequately and completely, one must start from the actions of the individuals. No group activity can be understood without analyzing the ideology that forms the group and makes it live and work.

Mises’s subjectivist-utilitarian individualism helps us to understand social phenomena on the basis of minimum certainties and by avoiding metaphysical speculations: only individuals exist in a real way, while groups exist only as the action of individuals who share the same ideologies.

In Misesian philosophical individualism, since individuals act, there are no “natural” forms of organization of society; all forms of organization are ideological, and ideologies are human inventions and choices. Therefore, ideologies are explained as immaterial products or social technologies created by concrete individuals and not by an anonymous mass or some metaphysical phantom. Groups are consumers of these products, and social phenomena are the result of these products. Mises explains ideologies as entrepreneurial creations:

There are pioneers who conceive new ideas and design new modes of thinking and acting; there are leaders who guide people along the way these people want to walk, and there are the anonymous masses who follow the leaders. There can be no question of writing history without the names of the pioneers and the leaders. . . . To ascribe the ideas producing historical change to the mass psyche is a manifestation of arbitrary metaphysical prepossession. . . . Mass movements are not inaugurated by anonymous nobodys but by individuals. We do not know the names of the men who in the early days of civilization accomplished the greatest exploits. But we are certain that also the technological and institutional innovations of those early ages were not the result of a sudden flash of inspiration that struck the masses but the work of some individuals who by far surpassed their fellow men.

There is no mass psyche and no mass mind but only ideas held and actions performed by the many in endorsing the opinions of the pioneers and leaders and imitating their conduct. Mobs and crowds too act only under the direction of ringleaders. The common men who constitute the masses are characterized by lack of initiative. They are not passive, they also act, but they act only at the instigation of abetters.

In short, ideologies are sets of standardized ends and means created by intellectuals—the ideological entrepreneur. When adopted by others, ideologies generate group actions, including the action of group consent to certain norms and authorities.

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What Mises Understood about Prices and Trade That Socialist Economists Did Not – Foundation for Economic Education

Posted by M. C. on February 14, 2023

However, when the utter failure of socialist economics was definitively exposed for all to see in the demise of the Soviet Union, Robert Heilbroner, who had spent most of his career as an unabashed socialist, raised the white flag and admitted that Mises was correct about socialism in a September 1990 New Yorker article entitled “After Communism.” 

https://fee.org/articles/what-mises-understood-about-prices-and-trade-that-socialist-economists-did-not/

Walter Block
Walter Block
Robert Batemarco
Robert Batemarco

Socialism is a very popular system. Vermont Senator Bernie Sanders attracts thousands of fellow economic innocents on college campuses, and even professional economists of the ilk of Paul Samuelson were taken in by the siren song of this ineffective and evil system. (He predicted in his economics textbook that the USSR would overtake the American economy).

There stood Ludwig von Mises, like the Rock of Gibraltar, standing in the path of socialists of all types and varieties. He laid down the line: under socialism without free market prices, planning would necessarily be irrational. How and why, then, the existence of this pernicious system in Russia from 1917 to 1991 with the dissolution of the Soviet Union. How is it that socialism still exists in places like Cuba, North Korea, and Venezuela? That is because market prices, generated elsewhere, were available to the economic dictators. During the period of USSR socialism, there was the Chicago board of trade and Consumers’ Reports. They made market prices available to the Soviet planners; they were a not-totally-unreasonable approximation to Russian realities. Nowadays, at least quasi-market prices are available in many areas of the world (they are only quasi since every government, bar none, engages in taxes and subsidies, price ceilings and floors, etc., which would not exist in the pure free market, and thus still misallocate resources on their basis).

Without prices that reflect consumer desires and relative scarcities, it is impossible to determine whether platinum or steel should be used, for example, for rails for locomotives. The former is more efficient, but is needed elsewhere in the economy. But to what degree? Or, should a tunnel be dug through a mountain; or should the new road go all around it? The former is much more expensive, now, but will save gigantic transportation costs for years to come. Without accurate prices and interest rates, it is impossible to make a rational calculation of the relevant benefits and costs. Should rowboats be constructed of wood, metal or plastic? A rational decision, again depends upon free market prices, which are to the economy what maps are to geography.

It is no accident that there was virtually one-way traffic between East and West Germany, and between North and South Korea. The latter in each pair instituted systems that were at least within sight of the free enterprise, private property, limited government system advocated by Mises. The former were—and now are in the case of last mentioned—economic basket cases.

But Mises’ contribution to the socialist calculation debate—in his 1922 book Socialism: An Economic and Sociological Analysis—was but the tip of the iceberg in terms of his overall accomplishments. He also made important contributions to the theory of money in his 1912 book The Theory of Money and Credit. There, he demonstrated that whichever monetary commodity arises from the free interplay of market forces is the only path to soundness. He must be credited with a critique of interventionism (small interventions escalate); he did so in his 1977 book A Critique of Interventionism. In many of his publications he made the case for private property rights and economic freedom (the two are necessarily intertwined). His sterling contribution to the Austrian business cycle theory (an artificial lowering of the interest rates creates an unsustainable boom, which necessarily ends in a depression) can be found in his 1912 book, The Theory of Money and Credit.

Perhaps his most profound contribution concerns praxeology (in his 1962 book, The Ultimate Foundation of Economic Science and especially in his magisterial 1949 book, Human Action). This is the view that there is such a thing as economic law, which can only be illustrated, not tested. 

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TGIF: Where Socialists Go Wrong | The Libertarian Institute

Posted by M. C. on January 17, 2023

Here Hayek extended Ludwig von Mises’s fatal critique of socialism; namely, that

  1. without tradeable private property in the means of production, markets for resources and producers’ goods don’t exist;
  2. without such markets, true prices can’t exist; and
  3. without prices, rational economic calculation is impossible;
  4. therefore, socialism is impossible; it’s “planned chaos.”

https://libertarianinstitute.org/articles/tgif-where-socialists-go-wrong/

by Sheldon Richman 

r

R

Since socialism is “in” today — even though many people who say they favor it have no idea what it is — F. A. Hayek’s last book, The Fatal Conceit: The Errors of Socialism (1988), is worth checking out. Hayek, the late great Nobel-laureate economist of the Austrian school, begins this way:

This book argues that our civilisation depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. To understand our civilisation, one must appreciate that the extended order resulted not from human design or intention but spontaneously: it arose from unintentionally conforming to certain traditional and largely moral practices, many of which men tend to dislike, whose significance they usually fail to understand, whose validity they cannot prove, and which have nonetheless fairly rapidly spread by means of an evolutionary selection — the comparative increase of population and wealth — of those groups that happened to follow them. The unwitting, reluctant, even painful adoption of these practices kept these groups together, increased their access to valuable information of all sorts, and enabled them to be ‘fruitful, and multiply…’ This process is perhaps the least appreciated facet of human evolution.

Socialists take a different view of these matters.

Well, that last sentence is quite an understatement. By socialism Hayek didn’t mean the welfare state or continuing government efforts to manipulate market outcomes according to some notion of equity. That would be interventionism or the mixed economy. No, socialism is the abolition of the market order and its necessary condition, private property: the replacement of free private enterprise with centralized bureaucracy. Let’s cut to the chase:

The main point of my argument is, then, that the conflict between, on one hand, advocates of the spontaneous extended human order created by a competitive market, and on the other hand those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources is due to a factual error by the latter about how knowledge of these resources is and can be generated and utilised. As a question of fact, this conflict must be settled by scientific study. Such study shows that, by following the spontaneously generated moral traditions underlying the competitive market order (traditions which do not satisfy the canons or norms of rationality embraced by most socialists), we generate and garner greater knowledge and wealth than could ever be obtained or utilised in a centrally-directed economy whose adherents claim to proceed strictly in accordance with ‘reason’. Thus socialist aims and programmes are factually impossible to achieve or execute; and they also happen, into the bargain as it were, to be logically impossible.

Hayek is saying that once we understand how information about resources is produced and transmitted, we realize that central planners can’t deliver the goods. Socialism can’t keep its (earlier) promises of plenty. (Nor of justice, but that’s for another time.)

Here Hayek extended Ludwig von Mises’s fatal critique of socialism; namely, that

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“Classical Liberalism” Will Never Satisfy the Left | Mises Wire

Posted by M. C. on December 7, 2022

Mises and Hayek used “classical liberal” to distinguish themselves from the Left. Today the term is used primarily to appease the Left. Self-proclaimed classical liberals today mostly seek to distance themselves from MAGA Trumpism and the hated Deplorables, to convince progressives they are not like those awful right-wingers! 

https://mises.org/wire/classical-liberalism-will-never-satisfy-left

Jeff Deist

“Today the tenets of this nineteenth-century philosophy of liberalism are almost forgotten. In the United States “liberal” means today a set of ideas and political postulates that in every regard are the opposite of all that liberalism meant to the preceding generations.”

—Ludwig von Mises, 1962 (emphasis added)

F.A. Hayek is back in the public eye, thanks to a promising and weighty new biography from Professors Bruce Caldwell and Hansjörg Klausinger. Predictably, the book has brought Hayek’s critics out of the woodwork. Consider the recent backhand in The Spectator by Lord Robert Skidelsky, titled “Friedrich Hayek: A Great Political Thinker Rather than a Great Economist.” Readers quickly understand the author actually thinks Hayek was neither. This is perhaps not a surprise coming from Skidelsky, the fulsome biographer of John Maynard Keynes who clearly imagines that his subject “won” the debate against Hayek over planning versus markets (“He more or less gave up technical economics after his battles with Keynes and the Keynesians”).

But the ongoing criticisms of Hayek’s “neoliberalism”—i.e., his supposed political program1—ring very hollow even in hopeless outlets like Jacobin. Hayek and his mentor Ludwig von Mises were old liberals of the nineteenth-century variety. Neoliberalism, by contrast, is a derogatory catchall term used by the Left today to police what it sees as undue respect for markets and private capital among the Clintonite and Blairite factions pushing global social democracy.

But fundamentally there is only liberalism and illiberalism. Hayek and Mises steadfastly called themselves “classical liberals” out of necessity—to distinguish themselves from the modern liberal program.

Twentieth-century liberalism, the bad kind, had its roots in the Progressive Era. It manifested in Wilsonian expansionism and Franklin Roosevelt’s criminal New Deal, both deeply illiberal developments opposed by the two Austrians-cum-Americans. “Liberal” had morphed into a proxy term for individuals advocating left-wing economic and social programs rather than markets and laissez-faire. So regardless of the earlier strands of classical liberalism flowing from Adam Smith, John Locke, David Hume, or even Jean-Jacques Rousseau, Mises and Hayek used the term expressly in the context of midcentury Western politics.

After the Great Depression and two world wars, the old nineteenth-century liberalism was under open attack. But Mises and Hayek still advanced a liberalism of economic freedom and peace, in stark contrast to the central planning, interventionism, and positive rights (entitlements) promoted as scientific by Marxists and Keynesians. The quote at the top of this article, from the 1962 preface to the English translation of Mises’s foundational 1927 book, Liberalismus, demonstrates the critical distinction. The shift in the meaning of “liberal” over the thirty-five years between editions was clear and convincing. And it compelled the great economist to retitle the book The Free and Prosperous Commonwealth: An Exposition of the Ideas of Classical Liberalism to make sure Anglo-American audiences knew exactly which version of liberalism the book explained.

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Lord Keynes and Say’s Law

Posted by M. C. on June 29, 2022

The unprecedented success of Keynesianism is due to the fact that it provides an apparent justification for the “deficit spending” policies of contemporary governments. It is the pseudo-philosophy of those who can think of nothing else than to dissipate the capital accumulated by previous generations.

https://mises.org/library/lord-keynes-and-says-law

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Ludwig von Mises

Lord Keynes’s main contribution did not lie in the development of new ideas but “in escaping from the old ones,” as he himself declared at the end of the Preface to his “General Theory.” The Keynesians tell us that his immortal achievement consists in the entire refutation of what has come to be known as Say’s Law of Markets. The rejection of this law, they declare, is the gist of all Keynes’s teachings; all other propositions of his doctrine follow with logical necessity from this fundamental insight and must collapse if the futility of his attack on Say’s Law can be demonstrated.1

Now it is important to realize that what is called Say’s Law was in the first instance designed as a refutation of doctrines popularly held in the ages preceding the development of economics as a branch of human knowledge. It was not an integral part of the new science of economics as taught by the Classical economists. It was rather a preliminary—the exposure and removal of garbled and untenable ideas which dimmed people’s minds and were a serious obstacle to a reasonable analysis of conditions.

Whenever business turned bad, the average merchant had two explanations at hand: the evil was caused by a scarcity of money and by general overproduction. Adam Smith, in a famous passage in “The Wealth of Nations,” exploded the first of these myths. Say devoted himself predominantly to a thorough refutation of the second.

As long as a definite thing is still an economic good and not a “free good,” its supply is not, of course, absolutely abundant. There are still unsatisfied needs which a larger supply of the good concerned could satisfy. There are still people who would be glad to get more of this good than they are really getting. With regard to economic goods there can never be absolute overproduction. (And economics deals only with economic goods, not with free goods such as air which are no object of purposive human action, are therefore not produced, and with regard to which the employment of terms like underproduction and overproduction is simply nonsensical.)

With regard to economic goods there can be only relative overproduction. While the consumers are asking for definite quantities of shirts and of shoes, business has produced, say, a larger quantity of shoes and a smaller quantity of shirts. This is not general overproduction of all commodities. To the overproduction of shoes corresponds an underproduction of shirts. Consequently the result can not be a general depression of all branches of business. The outcome is a change in the exchange ratio between shoes and shirts. If, for instance, previously one pair of shoes could buy four shirts, it now buys only three shirts. While business is bad for the shoemakers, it is good for the shirtmakers. The attempts to explain the general depression of trade by referring to an allegedly general overproduction are therefore fallacious.

Commodities, says Say, are ultimately paid for not by money, but by other commodities. Money is merely the commonly used medium of exchange; it plays only an intermediary role. What the seller wants ultimately to receive in exchange for the commodities sold is other commodities.

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