Political Theory: Recent Episodes
None
Political Theory includes works on individual rights in a political system and proper role of government, i.e., anarchism, anarcho-capitalism, libertarianism.
Recorded at the 2003 Supporters Summit: Prosperty, War, and Depression. Ralph Raico discusses how from Jefferson to Madison, and on to Bastiat, Molinari, and Spencer, the "classical" liberals routinely denounced war as the enemy of freedom, prudence, and natural rights. Instead, militarism and imperialism have long been the domain of the enemies of private property and other apologists for the state.
(32:19)
Featuring Per Bylund, Lucas Engelhardt, Karl-Friedrich Israel, Tate Fegley, Shawn Ritenour, and Timothy Terrell.
Recorded at the Mises Institute in Auburn, Alabama, on July 28, 2023.
Modern socialism is based upon state interference in normal human relationships, economic and otherwise. It is as disastrous as the older state-planning model.
Original Article: "Modern Socialism Is Forced Socialization"
More than two thousand years ago, the ancient Chinese Tao presented ideas that are reflected in F.A. Hayek's concept of spontaneous order.
Original Article: "The Tao and the Synergy of the Spontaneous Order"
At a time when ethnic politics were tearing Europe apart, Ludwig von Mises believed that such ethnic devotion did more harm than good.
Original Article: "Mises and Nationalism"
Rational choice theory claims that people in the political realm act in their own self-interest. However, in today's political climate, many people act against their own interests to avoid being attacked by others.
Original Article: "Why Do We Act against Our Self-Interest?"
Mercantilism has had a "good press" in recent decades, in contrast to 19th-century opinion. In the days of Adam Smith and the classical economists, mercantilism was properly regarded as a blend of economic fallacy and state creation of special privilege. But in our century, the general view of mercantilism has changed drastically: Keynesians hail mercantilists as prefiguring their own economic insights; Marxists, constitutionally unable to distinguish between free enterprise and special privilege, hail mercantilism as a "progressive" step in the historical development of capitalism; socialists and interventionists salute mercantilism as anticipating modern state building and central planning.
Mercantilism, which reached its height in the Europe of the 17th and 18th centuries, was a system of statism which employed economic fallacy to build up a structure of imperial state power, as well as special subsidy and monopolistic privilege to individuals or groups favored by the state. Thus, mercantilism held that exports should be encouraged by the government and imports discouraged. Economically, this seems to be a tissue of fallacy; for what is the point of exports if not to purchase imports, and what is the point of piling up monetary bullion if the bullion is not used to purchase goods?
But mercantilism cannot be viewed satisfactorily as merely an exercise in economic theory. The mercantilist writers, indeed, did not consider themselves economic theorists, but practical men of affairs who argued and pamphleteered for specific economic policies, generally for policies which would subsidize activities or companies in which those writers were interested. Thus, a policy of favoring exports and penalizing imports had two important practical effects: it subsidized merchants and manufacturers engaged in the export trade, and it threw up a wall of privilege around inefficient manufacturers who formerly had to compete with foreign rivals. At the same time, the network of regulation and its enforcement built up the state bureaucracy as well as national and imperial power.
The famous English Navigation Acts, which played a leading role in provoking the American Revolution, are an excellent example of the structure and purpose of mercantilist regulation. The network of restriction greatly penalized Dutch and other European shippers, as well as American shipping and manufacturing, for the benefit of English merchants and manufacturers, whose competition was either outlawed or severely taxed and crippled. The use of the state to cripple or prohibit one's competition is, in effect, the grant by the state of monopolistic privilege; and such was the effect for Englishmen engaged in the colonial trade.
A further consequence was the increase of tax revenue to build up the power and wealth of the English government, as well as the multiplying of the royal bureaucracy needed to administer and enforce the regulations and tax decrees. Thus, the English government, and certain English merchants and manufacturers, benefited from these mercantilist laws, while the losers included foreign merchants, American merchants and manufacturers, and, above all, the consumers of all lands, including England itself. The consumers lost, not only because of the specific distortions and restrictions on production of the various decrees, but also from the hampering of the international division of labor imposed by all the regulations.
Adam Smith's Refutation Mercantilism, then, was not simply an embodiment of theoretical fallacies; for the laws were only fallacies if we look at them from the point of view of the consumer, or of each individual in society. They are not fallacious if we realize that their aim was to confer special privilege and subsidy on favored groups; since subsidy and privilege can only be conferred by government at the expense of the remainder of its citizens, the fact that the bulk of the consumers lost in the process should occasion little surprise."The laws and proclamations … were the product of conflicting interests of varying degrees of respectability. Each group, economic, social, or religious, pressed constantly for legislation in conformity with its special interest. The fiscal needs of the crown were always an important and generally a determining influence on the course of trade legislation. Diplomatic considerations also played their part in influencing legislation, as did the desire of the crown to award special privileges, con amore, to its favorites, or to sell them, or to be bribed into giving them, to the highest bidders.… The mercantilist literature, on the other hand, consisted in the main of writings by or on behalf of 'merchants' or businessmen … tracts which were partly or wholly, frankly or disguisedly, special pleas for special economic interests. Freedom for themselves, restrictions for others, such was the essence of the usual program of legislation of the mercantilist tracts of merchant authorship." Jacob Viner, Studies in the Theory of International Trade (New York: Harper and Bros., 1937), pp. 58–59.
Contrary to general opinion, the classical economists were not content merely to refute the fallacious economics of such mercantilist theories as bullionism or protectionism; they also were perfectly aware of the drive for special privilege that propelled the "mercantile system." Thus, Adam Smith pointed to the fact that linen yarn could be imported into England duty free, whereas heavy import duties were levied on finished woven linen. The reason, as seen by Smith, was that the numerous English yarn spinners did not constitute a strong pressure group, whereas the master weavers were able to pressure the government to impose high duties on their product, while making sure that their raw material could be bought at as low a price as possible. He concluded that the
motive of all these regulations, is to extend our own manufactures, not by their own improvement, but by the depression of those of all our neighbors, and by putting an end, as much as possible, to the troublesome competition of such odious and disagreeable rivals.
Consumption is the sole end and purpose of all production; and the interest of the producer ought to be attended to, only so far as it may be necessary for promoting that of the consumer. … But in the mercantile system, the interest of the consumer is almost constantly sacrificed to that of the producer; and it seems to consider production, and not consumption, as the ultimate end and object of all industry and commerce.
In the restraints upon the importation of all foreign commodities which can come into competition with those of our own growth, or manufacture, the interest of the home-consumer is evidently sacrificed to that of the producer. It is altogether for the benefit of the latter, that the former is obliged to pay that enhancement of price which this monopoly almost always occasions.
It is altogether for the benefit of the producer that bounties are granted upon the exportation of some of his productions. The home-consumer is obliged to pay, first, the tax which is necessary for paying the bounty, and secondly, the still greater tax which necessarily arises from enhancement of the price of the commodity in the home market.Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations (New York: Modern Library, 1937), p. 625.
Before Keynes Mercantilism was not only a policy of intricate government regulations; it was also a pre-Keynesian policy of inflation, of lowering interest rates artificially, and of increasing "effective demand" by heavy government spending and sponsorship of measures to increase the quantity of money. Like the Keynesians, the mercantilists thundered against "hoarding," and urged the rapid circulation of money throughout the economy; furthermore, they habitually pointed to an alleged "scarcity of money" as the cause of depressed trade or unemployment.See the laudatory "Note on Mercantilism" in chap. 23 of John Maynard Keynes, The General Theory of Employment, Interest, and Money (New York: Harcourt, Brace, 1936). Thus, in a prefiguration of the Keynesian "multiplier," William Potter, one of the first advocates of paper money in the Western world (1650), wrote:
The greater quantity … of money … the more commodity they sell, that is, the greater is their trade. For whatsoever is taken amongst men … though it were ten times more than now it is, yet if it be one way or other laid out by each man, as fast as he receives it … it doth occasion a quickness in the revolution of commodity from hand to hand … much more than proportional to such increase of money.Quoted in Viner, Studies in the Theory of International Trade, p. 38.
And the German mercantilist F.W. von Schrötter wrote of the importance of money changing hands, for one person's spending is another's income; as money "pass[es] from one hand to another … the more useful it is to the country, for … the sustenance of so many people is multiplied," and employment increased. Thrift, according to von Schrötter, causes unemployment, since saving withdraws money from circulation. And John Cary wrote that if everyone spent more, everyone would obtain larger incomes, and "might then live more plentifully."Quoted in Eli F. Heckscher, Mercantilism, 2nd ed. (New York: Macmillan, 1955), 2, pp. 208–9. Also see Edgar S. Furniss, The Position of the Laborer in a System of Nationalism (New York: Kelley and Millman, 1957), p. 41.
Historians have had an unfortunate tendency to depict the mercantilists as inflationists and therefore as champions of the poor debtors, while the classical economists have been considered hardhearted apologists for the status quo and the established order. The truth was almost precisely the reverse. In the first place, inflation did not benefit the poor; wages habitually lagged behind the rise in prices during inflations, especially behind agricultural prices. Furthermore, the "debtors" were generally not the poor but large merchants and quasi-feudal landlords, and it was the landlords who benefited triply from inflation: from the habitually steep increases in food prices, from the lower interest rates and the lower purchasing power of money in their role as debtors, and from the particularly large increases in land values caused by the fall in interest rates. In fact, the English government and Parliament was heavily landlord dominated, and it is no coincidence that one of the main arguments of the mercantilist writers for inflation was that it would greatly raise the value of land.
Exploitation of Workers Far from being true friends of laborers, the mercantilists were frankly interested in exploiting their labor to the utmost; full employment was urged as a means of maximizing such exploitation. Thus, the mercantilist William Petyt wrote frankly of labor as "capital material … raw and undigested … committed into the hands of supreme authority, in whose prudence and disposition it is to improve, manage, and fashion it to more or less advantage."Quoted in ibid., p. 41. Professor Furniss comments that
it is characteristic of these writers that they should be so readily disposed to trust in the wisdom of the civil power to "improve, manage, and fashion" the economic "raw material" of the nation. Bred of this confidence in statecraft, proposals were multiplied for exploiting the labor of the people as the chief source of national wealth, urging upon the rulers of the nation diverse schemes for directing and creating employment.Ibid.
The mercantilists' attitude toward labor and full employment is also indicated by their dislike of holidays, by which the "nation" was deprived of certain amounts of labor; the desire of the individual worker for leisure was never considered worthy of note.
Compulsory Employment The mercantilist writers realized frankly that corollary to a guarantee of full employment is coerced labor for those who don't wish to work or to work in the employment desired by the guarantors. One writer summed up the typical view: "it is absolutely necessary that employment should be provided for persons of every age that are able and willing to work, and the idle and refractory should be sent to the house of correction, there to be detained and constantly kept to labor." Henry Fielding wrote that "the constitution of a society in this country having a claim on all its members, has a right to insist on the labor of the poor as the only service they can render." And George Berkeley asked rhetorically "whether temporary servitude would not be the best cure for idleness and beggary?… Whether sturdy beggars may not be seized and made slaves to the public for a certain term of years?"See ibid., pp. 79–84. William Temple proposed a scheme to send the children of laborers, from the age of four on, to public workhouses, where they would be kept "fully employed" for at least twelve hours a day, "for by these means we hope that the rising generation will be habituated to constant employment." And another writer expressed his amazement that parents tended to balk at these programs:
Parents … from whom to take for time the idle, mischievous, least useful and most burdensome part of their family to bring them up without any care or expense to themselves in habits of industry and decency is a very great relief; are very much adverse to sending their children … from what cause, it is difficult to tell.Ibid., p. 115.
Perhaps the most misleading legend about the classical economists is that they were apologists for the status quo; on the contrary, they were "radical" libertarian opponents of the established Tory mercantilist order of big government, restrictionism, and special privilege. Thus, Professor Fetter writes that during the first half of the 19th century, the
Quarterly Review and Blackwood's Edinburgh Magazine, staunch supporters of the established order, and opponents of change in virtually all fields, had no sympathy with political economy or with laissez-faire, and were constantly urging maintenance of tariffs, expenditures by government, and suspension of the gold standard in order to stimulate demand and increase employment. On the other hand the Westminster's [journal of the classical liberals] support of the gold standard and free trade, and its opposition to any attempt to stimulate the economy by positive government action, came not from believers in authority or from defenders of the dominant social force behind authority, but from the most articulate intellectual radicals of the time and the severest critics of the established order.Frank W. Fetter, "Economic Articles in the Westminster Review and their Authors, 1824–51," Journal of Political Economy (December 1962): 572.
Southey Favors Nationalization In contrast, let us consider the Quarterly Review, a high Tory journal which always "assumed that the unreformed Parliament, the dominance of a landed aristocracy … the supremacy of the established church, discrimination of some sort against Dissenter, Catholic, and Jew, and the keeping of the lower classes in their place were the foundations of a stable society." Their leading writer on economic problems, the poet Robert Southey, repeatedly urged government expenditure as a stimulant to economic activity and attacked England's resumption of specie payments (return to the gold standard) after the Napoleonic Wars. Indeed, Southey proclaimed that an increase in taxes or in the public debt was never a cause for alarm, since they "give a spur to the national industry, and call forth national energies." And, in 1816, Southey advocated a large public works program for relief of unemployment and depression.See Frank W. Fetter, "Economic Articles in the Quarterly Review and their Authors, 1809–52," Journal of Political Economy (February 1958): 48–51.
The Quarterly Review's desire for stringent government control and even ownership of the railroads was at least frankly linked with its hatred of the benefits that railroads were bringing to the mass of the British population. Thus, where the classical liberals hailed the advent of railroads as bringing cheaper transportation and as thereby increasing the mobility of labor, the Quarterly's John Croker denounced railroads as "rendering travel too cheap and easy — unsettling the habits of the poor, and tempting them to improvident migration."Ibid., p. 62.
The arch-Tory, William Robinson, who often denounced his fellow Tories for compromising even slightly on such principles as high tariffs and no political rights for Catholics, wrote many pre-Keynesian articles, advocating inflation to stimulate production and employment, and denouncing the hard-money effects of the gold standard. And the Tory Sir Archibald Alison, inveterate advocate of inflation, who even ascribed the fall of the Roman Empire to a shortage of money, frankly admitted that it was the "agricultural class" that had suffered from the lack of inflation since resumption of the gold standard.See Frank W. Fetter, "Economic Articles in Blackwood's Edinburgh Magazine, and their Authors, 1817–1853," Scottish Journal of Political Economy (June 1960): 91–96.
Controls Under Elizabeth A few case studies will illustrate the nature of mercantilism, the reasons for mercantilist decrees, and some of the consequences that they brought to the economy.
One important part of mercantilist policy was wage controls. In the 14th century, the Black Death killed one-third of the laboring population of England, and naturally brought sharp advances in wage rates. Wage controls came in as wage ceilings, in desperate attempts by the ruling classes to coerce wage rates below their market rates. And since the vast bulk of employed laborers were agricultural workers, this was clearly legislation for the benefit of the feudal landlords and to the detriment of the workers.
Textiles vs. Agriculture The result was a persistent shortage of agricultural and other unskilled laborers for centuries, a shortage mitigated by the fact that the English government did not try to enforce the laws very rigorously. When Queen Elizabeth tried to enforce the wage controls strictly, the agricultural labor shortage was aggravated, and the landlords found their statutory privileges defeated by the more subtle laws of the market. Consequently, Elizabeth passed, in 1563, the famous Statute of Artificers, imposing comprehensive labor control.
Attempting to circumvent the shortage caused by previous interventions, the statute installed forced labor on the land. It provided that:
whoever had worked on the land until the age of 12 be compelled to remain there and not leave for work at any other trade;
all craftsmen, servants, and apprentices who had no great reputation in their fields be forced to harvest wheat; and
unemployed persons were compelled to work as agricultural laborers.
In addition, the statute prohibited any worker from quitting his job unless he had a license proving that he had already been hired by another employer. And, furthermore, justices of the peace were ordered to set maximum wage rates, geared to changes in the cost of living.
The statute also acted to restrict the growth of the woolen textile industry; this benefited two groups: the landlords, who would no longer lose laborers to industry and suffer the pressure of paying higher wage rates, and the textile industry itself, which received the privilege of keeping out the competition of new firms or new craftsmen. The coerced immobility of labor, however, led to suffering for all workers, including textile craftsmen; and to remedy the latter, Queen Elizabeth imposed a minimum wage law for textile craftsmen, thundering all the while that the wicked clothing manufacturers were responsible for the craftsmen's plight. Fortunately, textile employers and workers persisted in agreeing on terms of employment below the artificially set wage rate, and heavy textile unemployment did not yet arise.
Enforcing Bad Laws The programs of wage controls could not cause undue dislocations until they were stringently enforced, and this came to pass under King James I, the first Stuart king of England. Upon assuming the throne in 1603, James decided to enforce the Elizabethan control program with great stringency, including extremely heavy penalties against employers. Rigorous enforcement was imposed on minimum-wage controls for textile craftsmen, and on maximum-wage decrees for agricultural laborers and servants.
The consequences were the inevitable result of tampering with the laws of the market: chronic severe unemployment throughout the textile industry, coupled with a chronic severe shortage of agricultural labor. Misery and discontent spread throughout the land. Citizens were fined for paying their servants more than ceiling wages, and servants fined for accepting the pay. James, and his son Charles I, decided to stem the tide of unemployment in textiles by compelling employers to remain in business even when they were losing money. But even though many employers were jailed for infractions, such Draconian measures could not keep the textile industry from depression, stagnation, and unemployment. Certainly the consequences of the policy of wage controls were one of the reasons for the overthrow of the Stuart tyranny in the mid-17th century.
Mercantilist Practices in Colonial Massachusetts The young colony of Massachusetts engaged in a great many mercantilist ventures, with invariably unfortunate results. One attempt was a comprehensive program of wage and price controls, which had to be abandoned by the 1640s. Another was a series of subsidies to try to create industries in the colony before they were economically viable, and therefore before they would be created on the free market. One example was iron manufacture. Early iron mines in America were small and located in coastal swamps ("bog iron"); and primarily manufactured, or "wrought," iron was made cheaply in local bloomeries, at an open hearth. The Massachusetts government decided, however, to force the creation of the more imposing — and far more expensive — indirect process of wrought iron manufacture at a blast furnace and forge. The Massachusetts legislature therefore decreed that any new iron mine must have a furnace and forge constructed near it within ten years of its discovery. Not content with this measure, the legislature in 1645 granted a new Company of Undertakers for an Iron Works in New England, a 21-year monopoly of all iron making in the colony. In addition, the legislature granted the company generous subsidies of timberland.
But despite these subsidies and privileges, as well as additional large grants of timberland from the town governments of Boston and Dorchester, the Company's venture failed dismally and almost immediately. The Company did its best to salvage its operations, but to no avail. A few years later, John Winthrop, Jr., the main promoter of the older venture, induced the authorities of New Haven colony to subsidize an iron manufacture of his at Stony River. From the governments of New Haven colony and New Haven township, Winthrop was granted a whole host of special subsidies: land grants, payment of all costs of building the furnace, a dam on the river, and the transportation of fuel. One of Winthrop's partners in the venture was the deputy governor of the colony, Stephen Goodyear, who was thus able to use the power of government to grant himself substantial privileges. But again, economic law was not to be denied, and the ironworks proved to be another rapidly failing concern.
Debtors' Relief: A Scheme to Aid the Rich One of the most vigorously held tenets of the dominant neo-Marxist historians of America has been the view that inflation and debtors' relief were always measures of the "lower classes," the poor farmer-debtors and sometimes urban workers, engaging in a Marxian class struggle against conservative merchant-creditors. But a glance at the origins of debtors' relief and paper money in America easily shows the fallacy of this approach; inflation and debtors' relief were mercantilist measures, pursued for familiar mercantilist ends.
Debtors' relief began in the colonies, in Massachusetts in 1640. Massachusetts had experienced a sharp economic crisis in 1640, and the debtors turned immediately to special privilege from the government. Obediently, the legislature of Massachusetts passed the first of a series of debtors' relief laws in October, including a minimum-appraisal law to force creditors to accept insolvent debtors' property at an arbitrarily inflated assessment, and a legal-tender provision to compel creditors to accept payment in an inflated, fixed rate in the monetary media of the day: corn, cattle, or fish.
Further privileges to debtors were passed in 1642 and 1644, the latter permitting a debtor to escape foreclosure simply by leaving the colony. The most drastic proposal went to the amazing length of providing that the Massachusetts government assume all private debts that could not be paid! This plan was passed by the upper house, but defeated in the house of deputies.
The fact that this astounding bill was passed by the upper house — the council of magistrates — is evidence enough that this was not a proto-Marxian eruption of poor debtors. For this council was the ruling group of the colony, consisting of the wealthiest merchants and landowners. If not for historical myths, it should occasion no surprise that the biggest debtors were the wealthiest men of the colony, and that in the mercantilist era a drive for special privilege should have had typically mercantilist aims. On the other hand, it is also instructive that the more democratic and popularly responsible lower house was the one far more resistant to the debt relief program.
Paper Money Inflation Massachusetts has the dubious distinction of having promulgated the first governmental paper money in the history of the Western world — indeed, in the history of the entire world outside of China. The fateful issue was made in 1690, to pay for a plunder expedition against French Canada that had failed drastically. But even before this, the leading men of the colony were busy proposing paper-money schemes. The Rev. John Woodbridge, greatly influenced by William Potter's proposals for an inflationary land bank, proposed one of his own, as did Governor John Winthrop, Jr., of Connecticut. Captain John Blackwell proposed a land bank in 1686, the notes of which would be legal tender in the colony, and such wealthy leaders of the colony as Joseph Dudley, William Stoughton, and Wait Winthrop were prominently associated with the plan.
The most famous of the inflationary land-bank schemes was the Massachusetts Land Bank of 1740, which has generally been limned in neo-Marxist terms as the creation of the mass of poor farmer-debtors over the opposition of wealthy merchant-creditors of Boston. In actuality, its founder, John Colman, was a prominent Boston merchant and real-estate speculator; and its other supporters had similar interest — as did the leading opponents, who were also Boston businessmen. The difference is that the advocates had generally been receivers of land grants from the Massachusetts government, and desired inflation to raise the value of their speculatively held land claims.See the illuminating study by Dr. George Athan Billias, "The Massachusetts Land Bankers of 1740," University of Maine Bulletin (April 1959). Once again — a typically mercantilist project.
Keynes Wouldn't Learn From just a brief excursion into mercantilist theory and practice, we may conclude that Lord Keynes might have come to regret his enthusiastic welcome to the mercantilists as his forbears. For they were his forbears indeed; and the precursors as well of the interventions, subsidies, regulations, grants of special privilege, and central planning of today. But in no way could they be considered as "progressives" or lovers of the common man; on the contrary, they were frank exponents of the Old Order of statism, hierarchy, landed oligarchy, and special privilege — that entire "Tory" regime against which laissez-faire liberalism and classical economics leveled their liberating "revolution" on behalf of the freedom and prosperity of all productive individuals in society, from the wealthiest to the humblest. Perhaps the modern world will learn the lesson that the contemporary drive for a new mercantilism may be just as profoundly "reactionary," as profoundly opposed to the freedom and prosperity of the individual, as its pre-19th-century ancestor.
This article originally appeared in the Freeman, 1963, Mises Daily, May 12, 2010, and chapter 34 in Economic Controversies, pp. 641 –54.]
Volume 1, Number 4 (1977) New York's current financial woes have a precedent, and perhaps a solution, in the pages of the distant past. Well back in its history, in the late 1830s, New York State was spending and lending money lavishly. By the early 1840s, the rapidly mounting debt had occasioned a severe financial crisis. To avert the imminent possibility of bankruptcy and default, the state legislature in 1842 passed what was known as "the stop and tax law", a levy of one mill on each dollar of taxable property. The new revenue helped the state meet its most pressing obligations. But, even more importantly in terms of the future, New York decided to take steps to prevent another such fiscal disaster. Ambitious projects for internal improvements — mostly canal construction and loans for railroad building — were cut back or abandoned unless there was a reasonable expectation that they could be funded from tolls or taxation. And the legislature also issued a call for a constitutional convention. The new Constitution adopted in 1846 placed strict limits on the state's ability to borrow money. Thus the people of New York, facing problems similar to the state's later predicament, found the answer in an old-fashioned program of reduced spending and new taxes. What is surprising, however, is that such policies had the popular support of the most democratic and liberal elements in the state.
To understand the unusual sequence of events which culminated in the New York State Constitution of 1846, one must go back in history to the Jacksonian era and the political struggles between the Democrats and the Whigs. In New York the Jacksonian Democrats included a wide-ranging constituency of radical workingmen, Irish immigrants, farmers, intellectuals, and representatives of the new rising business or small capitalist class. The preponderance of the older landed aristocracy and wealthier classes, together with the most English or Anglo-Saxon elements in the population, gravitated toward the Whig Party. The Whigs, united nationally by their opposition to Andrew Jackson's Presidency, were the ideological heirs in New York State of DeWitt Clinton, five times governor and father of the Erie Canal. Like Clinton, the Whigs supported the generous use of state funds for internal improvements as well as for various cultural, humanitarian, and educational endeavors. The Whigs' belief in positive government and social reform reflected their paternalistic conception of politics and economics.Useful general interpretations include: Dixon Ryan Fox, The Decline of Aristocracy in the Politics of New York, 1801–1840, ed. Robert V. Remini (1st pub. 1919; New York: Harper Torchbooks, 1965); Edward Pessen, Jacksonion America: Society, Personality, and Politics (Homewood, Ill.: Dorsey Press, 1968); Glyndon G. Van Deusen, "Aspects of Whig Thought in the Jacksonian Period," American Historical Review, Vol. 63 (January, 1958). pp. 305–322.
Quite different were the ideas of the Democrats who, in contrast to their Whig opponents, stood for a strict construction of the United States Constitution, limiting the governing power to its least essentials. Both nationally and in New York State, the Jacksonian Democrats adhered to the Jeffersonian agrarian maxim that the least government it the best government. In New York the leader of the Democratic Party was Martin Van Buren, head of the famed Albany Regency which controlled the state governmental machinery through most of the 1830s and '40s. The most radical Democrats, known as Locofocos, were somewhat to the left of Van Buren and the Regency. They included an interesting collection of intellectuals and politicians who espoused a negative, anti-statist democracy. As against the paternalistic philosophy of the Whigs, the Locofoco Democrats stressed complete laissez faire in government-business relations. For example, the introduction in 1837 to the first issue of the United States Magazine and Democratic Review, organ of the more radical Democrats, defined the party's belief in democratic republicanism and majority rule. But the editors added:
The best government is that which governs least. No human depositories can, with safety, be trusted with the power of legislation upon the general interests of society so as to operate directly or indirectly on the industry and property of the community. Such power must be perpetually liable to the most pernicious abuse, from the natural imperfection, both in wisdom of judgment and purity of purpose, of all human legislation, exposed constantly to the pressure of partial interests; interests which, at the same time that they are essentially selfish and tyrannical, are ever vigilant. persevering, and subtle in all the arts of deception and corruption."Introduction," United States Magazine and Democratic Review, Vol. 1 (October, 1837), p. 6.
Most forthright of the radical Democrats was William Leggett, a Locofoco colleague in the 1830s of such New York Democratic writers as James Fenimore Cooper, William Cullen Bryant, Theodore Sedgwick, and Parke Godwin. Leggett coupled adherence to the Jeffersonian natural rights philosophy with demands for the equal right to property, not its abolition. Governments had no warrant to interfere with individual pursuits by offering financial advantages to any particular class or industry. Specially chartered banks, including the Bank of the United States, were a favorite target of Leggett's scorn. "Let the banks perish," he wrote. "Now is the time for the complete emancipation of trade from legislative thralldom."On Leggett, see his A Collection of the Political Writings, ed. Theodore Sedgwick, Jr. (2 vols.; New York: Taylor & Dodd, 1840); and the studies by Richard Hofstadter, "William Leggett: Spokesman of Jacksonian Democracy," Political Science Quarterly, Vol. 58 (December, 1943), pp. 581–594; Marvin Meyers, The Jacksonsian Persuasian: Politics and Belief (Stanford, Calif.: Stanford University Press, 1957), chap. 9; Edward K. Spann, Ideals & Politics: New York Intellectuals and Liberal Democracy, 1820–1880 (Albany: State University of New York Press, 1972).
As a part of their general laissez-faire philosophy and opposition to Whig paternalism, the Democrats were also dubious of those social and humanitarian reform movements which infringed upon individual liberty and private property. Thus they were hostile to the abolitionists even though this meant ignoring the question of freedom for the black slave. Imprisonment for debt attracted little attention from either Democrats or workingmen until public interest in the matter became too strong to be ignored. The workingmen's parties were, however, in a peculiar position because wage earners wanted preferential creditor status through a mechanics' lien law. Even public schools had difficulty winning Democratic support because their expense involved heavier taxation. Charity schools and use of the Lancastrian system of pupil tutors instead won Democratic favor. A system of statewide public education would also interfere with parents' control over their children and might undermine religious freedom.Herbert Ershkowitz and William G. Shade, "Consensus or Conflict? Political Behavior in the State Legislatures during the Jacksonian Era," Journal of American History, Vol. 58 (December, 1971), pp. 591–621, reinforces the view of the age of Jackson as essentially one of laissez Faire. See also Peter J. Coleman, Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607–1900 (Madison: State Historical Society of Wisconsin, 1974).
In Washington, Andrew Jackson, the Democrats' hero, enjoyed an uneasy and controversial Presidency. His years in office from 1829 to 1837 formed an era in which easy credit, cheap land, and internal improvements all contributed to an inflationary prosperity. At the same time, Jackson's own inclinations tended toward the limitations on federal spending favored by his friend and political adviser Van Buren. As governor of New York in 1828, Van Buren had secured passage of the Safety Fund System to safeguard the banks and assure the state of a source of credit and wealth to go along with the Erie Canal. The state-chartered New York banks cast doubt on the need for the federal United States Bank, while the state-constructed Erie Canal rebuked the western states' clamor for federal aid for their own internal improvements. Moreover, the Jeffersonian principle of states' rights and opposition to federal centralized power, espoused by Van Buren and the New York Locofoco Democrats, was also able to gain national success by Jackson's Bank of the United States and Maysville Road vetoes.New York and Van Buren's influence on Washington and Jackson is discussed in Bray Hammond, Banks and Politics in America from the Revolution to the Civil War (Princeton, N.J.: Princeton University Press, 1957), p. 352.
In 1836 the United States for the only time in its history was without a national debt; a year later the federal government was briefly in a position to distribute its surplus revenues to the states. But the Jacksonians, despite the President's efforts to moderate or level out the economic boom, were unable to ward off its financial aftermath in the Panic of 1837. Van Buren, Jackson's successor in the White House, fell a political victim to the Panic, and in New York in 1838 the Democrats were overturned by the Whigs who elected William H. Seward as governor. Governor Seward, it should be noted, was an admirer of DeWitt Clinton who had earlier helped inaugurate the transportation revolution in New York. Upon completion of the Erie Canal in 1825, he had urged further state expenditures for new canals, turnpikes, and eventually railroads, as well as a generous policy of chartering banks and insurance companies. Now, in 1840, the Whigs under Governor Seward called for the appropriation of four million dollars for ten years to build additional canals and railroads. Henceforth dubbed "the forty million dollar party", the Whigs to their misfortune had ignored the adverse effects of the Panic of 1837 on the state's declining credit. Alarmed critics warned that the cost of public works would soon increase the state debt to as much as 75 million dollars with annual interest charges of 4.5 million. Already by 1842, when the Democrats regained control of the legislature and passed the stop and tax law, the state debt which five years earlier amounted to 7 million dollars had grown to 27 million dollars, and state bonds were unmarketable even at a discount of 20%. Instead of continuing to spend money for internal improvements, the Democrats, at a cost of 40 million dollars in principal and interest, proposed to extinguish the statedebt in twenty years. As a result of such conservative fiscal policies, within two months of the stop and tax law the state's 7% bonds sold at par, while 5% bonds reached that level in 15 month.Charles Z. Lincoln, The Constitutional History of New York (5 vols.; Rochester, N.Y.: Layers Co-Operative, 1906), Vol. 2, pp. 76, 81–84, 91ff., 165; Steward Mitchell, Horatio Seymour of New York (Cambridge, Mass.; Harvard University Press, 1938), p. 53.
By the 1840s national opinion in regard to state aid for internal improvements was undergoing a change. The former public enthusiasm for heavy state expenditures had run its course. Some of the new states in the West were in default on their bonds. State initiative and responsibility had been necessary earlier for such ambitious undertakings as the Erie Canal, but after the return of prosperity in the 1840s private capital, just beginning to be accumulated by American manufacturing and industry, was available for investment. Railroads were now becoming the most important means of transportation, but railroads with their special rolling stock could not be considered public in the same sense as a canal, a river, or a turnpike. Although railroad builders frequently turned to the states to help raise the large amounts of capital they required, most of their funds in New York came from individual savings and from credit extended by American banks. Accordingly, while there was little foreign investment in, or municipal aid for, New York State railroads until after the Civil War, the New York Central by 1853 had 2331 stockholders.Fox, Decline of Aristocracy, pp. 405–408; Carter Goodrich, "The Revulsion Against Internal Improvements," Journal of Economic History, Vol. 10 (November, 1950), pp. 145–169; Harry H. Pierce, Railroads of New York: A Study of Government Aid, 1826–1875 (Cambridge, Mass.: Harvard University Press, 1953), pp. 8. 16.
The decline of public aid and intervention in economic enterprise was most marked in some of the eastern states where the old colonial concept of the commonwealth fell victim to a surge of anti-government feeling. Although various economic and social groups continued to desire political intervention in behalf of their own self-interests, the fear of more state taxes and increasing state indebtedness blocked heavy public expenditures throughout the 1840s. Instead of continuing to take a positive, direct role in the economy, the state granted its economic powers to private banks and stock companies. For example, the Free Banking Act passed by New York in 1838 abolished the old system requiring special legislation for each bank charter and in effect introduced competition into banking. Under general incorporation laws, state charters were now granted to all manner of enterprises which, in pursuing their own private ends, were largely freed of the public responsibility associated with governmental agencies and the earlier semiprivate corporation. Democratic reluctance to continue the specially chartered corporation for a favored few had dispersed the privilege of incorporation among many stockholders and had separated it from responsibility to the state.Oscar and Mary Flug Handlin, Commonwealth: A Study of the Role of Government in the American Economy (1st pub. 1947; rev. ed. Cambridge, Mass.: Belknap-Harvard University Press, 1969), pp. 106ff., 160–161, 191.
Legislation for free banking and general incorporation laws accordingly had the support not only of the business community but also of those opposed to all governmental aid and protection for selected enterprises. Locofoco Democrats and workingmen united in the crusade against economic monopoly and special privilege, although labor sometimes identified its own true interest with that of the whole community. In any case, the state was usually too weak in an administrative sense to enforce either its own definition of the public interest, or to give its full support to various private or special interest groups. Thus laissez faire and the cry of equal rights for all and special privileges for none was a more appealing political philosophy in the 1830s and '40s than any Whiggish notions of a paternalistic and expensive government.Compare Walter Hugins, Jacksonian Democracy and the Working Class: A Study of the New York Workingmen's Movement, 1829–1837 (Stanford, Calif.: Stanford University Press, 1960) and Douglas T. Miller, Jacksonian Aristocracy: Class and Democracy in New York (New York: Oxford University Press, 1967).
It was in response to these views that the Democrats pushed ahead with their plans for drafting a new state constitution. William C. Bouck, the conservative or Hunker Democratic successor to Seward as governor in 1843 and 1844, favored a moderate course on internal improvements despite the Democrats' stop and tax law of 1842. But when Silas Wright, a close friend of Van Buren and the staunchest disciple of Jeffersonian agrarian democracy in New York State, was put forward for the nomination of governor, Bouck and the conservative Hunker faction had to retreat. Wright in his first annual governor's message in January 1845 praised the stop and tax law for restoring the state's credit. Three fifths of the state's debt charged to the General Fund, he pointed out, had been incurred by unwise loans to railroads that had proved unable to pay their obligations. Wright also announced that he favored calling a constitutional convention.John A. Garraty, Silas Wright (New York: Columbia University Press, 1949), pp. 292, 235.
In a series of articles analyzing the progress of constitutional reform, which appeared at this time in the Democratic Review, John Bigelow, one of the party's intellectuals, listed some of the changes which he believed New York and other states should adopt. These included a provision that "The state should have no power to contract debts, or loan its credit, except in case of war, invasion, or insurrection." In the matter of a general incorporation law, Bigelow urged: "The members of such Corporations, (not excepting those established for education or charity) should be individually liable for the debts, liabilities, and acts of such Corporation, and for the consequences resulting therefrom." Furthermore: "All laws or regulations interfering with the liberty of trade or industry (such as license and inspection laws) should be abolished, and their enactment for the future prohibited." Bigelow added as miscellaneous proposals the abolishment of the death penalty and permission for women to control their own property after marriage."The Progress of Constitutional Reform in the United States," United States Magazine and Democractic Review, Vol. 18 (June, 1846), pp. 408–412, 420.
The New York Constitutional Convention, which met in the summer of 1846, completed its labors in time for the voters to approve its handiwork that same year. Although the anti-statist views of such Jeffersonian Democrats as Bigelow and Wright were subject to some modification and compromise, the New York Constitution of 1846 embodied the laissez-faire position better than any document in the state's history. Only after all debts were paid through a sinking fund could the state appropriate any surplus for canal improvements and extensions not already mandated by law. Corporations including banks were to be chartered under general laws rather than by special act. Stockholders were made liable to the amount of their shares for all debts and liabilities contracted by their banks. As an epitaph to the anti-rent wars which had reached a climax in 1846, the Constitution abolished all feudal tenures and perpetual leases. Male suffrage was made universal except for Negroes who had to possess an estate of the value of $250, unless the people in a referendum on the question voted otherwise.New York State Constitution of 1846, Article I, Section 12; II, 1; VII, 1, 2, 3; VIII, 1, 4 7. This curious and illiberal provision, which was approved by the voters, retained the clause in the 1821 Constitution in which the property qualification was removed for whites but not for blacks. The Negro vote, traditionally cast in favor of the old Federalist slaveowning class, had continued to be exercised in behalf of Clinton and then the Whigs. Though never a large vote, it was opposed by the Democrats chiefly because of labor's influence.Fox, Decline of Aristocracy, p. 269.
In a retrospectwe article on constitutional government in the Democratic Review, Bigelow reiterated his libertarian views with the warning that "A great source of inequality in the conditions of men in respect of wealth and comfort arises from the action of law. Too much government has a direct tendency to aid one man or one set of men in the 'pursuit of happiness', and in the 'acquiring, possessing, and protecting property', if not at the expense of the rest, at least without rendering them the like assistance.""Constitutional Governments," United States Magazine and Democratic Review, Vol. 20 (March, 1847), p. 202. Unfortunately the Jacksonians, despite their defeat of the Bank of the United States, had not been able to slow the growth of wealth and inequality in New York and some of the larger cities in the East in the era before the Civil War. But their more radical laissez-faire views, as embodied in the stop and tax law and 1846 Constitution, disenchanted the wealthier business class which moved more than ever into the Whig Party. Work on the Erie Canal, which the Democrats had stopped in 1842, was resumed in 1847. Moreover, until 1850 railroads had to pay canal tolls to protect the state's vested interested in "Clinton's ditch". After that, canal tolls were reduced to provide competition to the growing volume of traffic carried by the railroad.Edward Pessen, Riches, Class, and Power before the Civil War (Lexington, Mass.: D.C. Heath, 1973); Frank Otto Gatell, "Money and Party in Jacksonian America: A Quantitative Look at New York City's Men of Quality," Political Science Quarterly, Vol. 82 (January, 1967), pp. 235–252; Don C. Sowers, The Financial History of New York State from 1789 to 1912 (New York: Columbia University Studies, 1914(, pp. 75, 85, 87.
Historians of a later generation have grown accustomed to interpreting democracy and liberalism in terms of the modern welfare state. The negative democracy of the New York Democrats of the 1840s accordingly wins little contemporary approval. Democracy in the eyes of its later adherents has become synonymous with power, preferably such power as may be exercised by a strong executive in the name of people. Some historians even question whether the negative state can be democratic and reason that laissez faire must automatically favor an aristocracy of wealth.See, for example, Arthur M. Schlesinger, Jr., The Age of Jackson (Boston: Little-Brown, 1945), pp. 512–514, 519–521; Lee Benson, The Concept of Jacksonian Democracy: New York as a Test Case (Princeton, N.J.: Princeton University Press, 1961), pp. 220ff. But what passes for the welfare state today rewards most of all its largest investors in the military-industrial complex. Beneficiaries of the welfare-warfare state's largesse would be horrified by a return to the spirit of the 1840s or to any consistent across-the-board application of laissez faire. Meanwhile New York's Constitution of 1846 remains an interesting, though passing, example of the enactment of Jeffersonian anti-statism into the fundamental law.
[Originally from Joseph R. Peden and Fred R. Glahe, eds., The American Family and the State (San Francisco: Pacific Research Institute, 1986).]
While the "Progressive Era" used to be narrowly designated as the period 1900–1914, historians now realize that the period is really much broader, stretching from the latter decades of the nineteenth century into the early 1920s. The broader period marks an era in which the entire American polity—from economics to urban planning to medicine to social work to the licensing of professions to the ideology of intellectuals—was transformed from a roughly laissez-faire system based on individual rights to one of state planning and control. In the sphere of public policy issues closely related to the life of the family, most of the change took place, or at least began, in the latter decades of the nineteenth century. In this paper we shall use the analytic insights of the "new political history" to examine the ways in which the so-called progressives sought to shape and control selected aspects of American family life.
ETHNORELIGIOUS CONFLICT AND THE PUBLIC SCHOOLSIn the last two decades, the advent of the "new political history" has transformed our understanding of the political party system and the basis of political conflict in nineteenth century America. In contrast to the party systems of the twentieth century (the "fourth" party system, 1896–1932, of Republican supremacy; the "fifth" party system, 1932–? of Democratic supremacy), the nineteenth century political parties were not bland coalitions of interests with virtually the same amorphous ideology, with each party blurring what is left of its image during campaigns to appeal to the large independent center. In the nineteenth century, each party offered a fiercely contrasting ideology, and political parties performed the function of imposing a common ideology on diverse sectional and economic interests. During campaigns, the ideology and the partisanship became fiercer and even more clearly demarcated, since the object was not to appeal to independent moderates—there were virtually none—but to bring out the vote of one's own partisans. Such partisanship and sharp alternatives marked the "second" American party system (Whig versus Democrat, approximately 1830 to the mid-1850s) and the "third" party system (closely fought Republican versus Democrat, mid-1850s to 1896).
Another important insight of the new political history is that the partisan passion devoted by rank-and-file Democrats and Republicans to national economic issues, stemmed from a similar passion devoted at the local and state level to what would now be called "social" issues. Furthermore, that political conflict, from the 1830s on, stemmed from a radical transformation that took place in American Protestantism as a result of the revival movement of the 1830s.
The new revival movement swept the Protestant churches, particularly in the North, like wildfire. In contrast to the old creedal Calvinist churches that stressed the importance of obeying God's law as expressed in the church creed, the new "pietism" was very different. The pietist doctrine was essentially as follows: Specific creeds of various churches or sects do not matter. Neither does obedience to the rituals or liturgies of the particular church. What counts for salvation is only each individual being "born again"—a direct confrontation between the individual and God, a mystical and emotional conversion in which the individual achieves salvation. The rite of baptism, to the pietist, therefore becomes secondary; of primary importance is his or her personal moment of conversion.
But if the specific church or creed becomes submerged in a vague Christian interdenominationalism, then the individual Christian is left on his own to grapple with the problems of salvation. Pietism, as it swept American Protestantism in the 1830s, took two very different forms in North and South, with very different political implications. The Southerners, at least until the 1890s, became "salvationist pietists," that is, they believed that the emotional experience of individual regeneration, of being born again, was enough to ensure salvation. Religion was a separate compartment of life, a vertical individual-God relation carrying no imperative to transform man-made culture and interhuman relations.
In contrast, the Northerners, particularly in the areas inhabited by "Yankees," adopted a far different form of pietism, "evangelical pietism." The evangelical pietists believed that man could achieve salvation by an act of free will. More particularly, they also believed that it was necessary to a person's own salvation—and not just a good idea—to try his best to ensure the salvation of everyone else in society:
"To spread holiness," to create that Christian commonwealth by bringing all men to Christ, was the divinely ordered duty of the "saved." Their mandate was "to transform the world into the image of Christ."The quotations are, respectively, from the Minutes of the Ohio Annual Conference of the Methodist Episcopal Church, 1875, p. 228; and the Minutes of the Annual Meeting of the Maine Baptist Missionary Convention. 1890. p. 13. Both are cited in Paul Kleppner, The Third Electoral System, 1853–1892: Parties. Voters. and Political Culture (Chapel Hill: University of North Carolina Press, 1979), p. 190. Professor Kleppner is the doyen of the "new political," also known as the "ethnocultural," historians See also his The Cross of Culture: A Social Analysis of Midwestern Politics, 1850–1900 (New York: The Free Press, 1970).
Since each individual is alone to wrestle with problems of sin and salvation, without creed or ritual of the church to sustain him, the evangelical duty must therefore be to use the state, the social arm of the integrated Christian community, to stamp out temptation and occasions for sin. Only in this way could one perform one's divinely mandated duty to maximize the salvation of others.In contrast to previous Christian groups, which were either amillennial (the return of Jesus will bring an end to human history) or premillennial (the return of Jesus will usher in a thousand-year reign of the Kingdom of God on earth), most evangelical pietists were postmillennialists. In short. whereas Catholics, Lutherans, and most Calvinists believed that the return of Jesus is independent of human actions, the postmillennialists held that Christians must establish a thousand-year reign of the Kingdom of God on earth as a necessary precondition of Jesus' return. In short, the evangelicals will have to take over the state and stamp out sin, so that Jesus can then return. And to the evangelical pietist, sin took on an extremely broad definition, placing the requirements for holiness far beyond that of other Christian groups. As one antipietist Christian put it, "They saw sin where God did not." In particular, sin was any and all forms of contact with liquor, and doing anything except praying and going to church on Sunday. Any forms of gambling, dancing, theater, reading of novels—in short, secular enjoyment of any kind—were considered sinful.
The forms of sin that particularly agitated the evangelicals were those they held to interfere with the theological free will of individuals, making them unable to achieve salvation. Liquor was sinful because, they alleged, it crippled the free will of the imbibers. Another particular source of sin was Roman Catholicism, in which priests and bishops, arms of the Pope (whom they identified as the Antichrist), ruled the minds and therefore crippled the theological freedom of will of members of the church.
Evangelical pietism particularly appealed to, and therefore took root among, the "Yankees," i.e., that cultural group that originated in (especially rural) New England and emigrated widely to populate northern and western New York, northern Ohio, northern Indiana, and northern Illinois. The Yankees were natural "cultural imperialists," people who were wont to impose their values and morality on other groups; as such, they took quite naturally to imposing their form of pietism through whatever means were available, including the use of the coercive power of the state.
In contrast to evangelical pietists were, in addition to small groups of old-fashioned Calvinists, two great Christian groups, the Catholics and the Lutherans (or at least, the high-church variety of Lutheran), who were "liturgicals" (or "ritualists") rather than pietists. The liturgicals saw the road to salvation in joining the particular church, obeying its rituals, and making use of its sacraments; the individual was not alone with only his emotions and the state to protect him. There was no particular need, then, for the state to take on the functions of the church. Furthermore, the liturgicals had a much more relaxed and rational view of what sin really was; for instance, excessive drinking might be sinful, but liquor per se surely was not.
The evangelical pietists, from the 1830s on, were the northern Protestants of British descent, as well as the Lutherans from Scandinavia and a minority of pietist German synods; the liturgicals were the Roman Catholics and the high-church Lutherans, largely German.
Very rapidly, the political parties reflected a virtually one-to-one correlation of this ethnoreligious division: the Whig, and later the Republican, party consisting chiefly of the pietists, and the Democratic party encompassing almost all the liturgicals. And for almost a century, on a state and local level, the Whig/Republican pietists tried desperately and determinedly to stamp out liquor and all Sunday activities except church (of course, drinking liquor on Sunday was a heinous double sin). As to the Catholic church, the pietists tried to restrict or abolish immigration, since people coming from Germany and Ireland, liturgicals, were outnumbering people from Britain and Scandinavia. Failing that and despairing of doing anything about adult Catholics poisoned by agents of the Vatican, the evangelical pietists decided to concentrate on saving Catholic and Lutheran youth by trying to eliminate the parochial schools, through which both religious groups transmitted their precious religious and social values to the young. The object, as many pietists put it, was to "Christianize the Catholics," to force Catholic and Lutheran children into public schools, which could then be used as an instrument of pietist Protestantization. Since the Yankees had early taken to the idea of imposing communal civic virtue and obedience through the public schools, they were particularly receptive to this new reason for aggrandizing public education.
To all of these continuing aggressions by what they termed "those fanatics," the liturgicals fought back with equal fervor. Particularly bewildered were the Germans who, Lutheran and Catholic alike, were accustomed to the entire family happily attending beer gardens together on Sundays after church and who now found the "fanatic" pietists trying desperately to outlaw this pleasurable and seemingly innocent activity. The pietist Protestant attacks on private and parochial schools fatally threatened the preservation and maintenance of the liturgicals' cultural and religious values; and since large numbers of the Catholics and Lutherans were immigrants, parochial schools also served to maintain group affinities in a new and often hostile world—especially the world of Anglo-Saxon pietism. In the case of the Germans, it also meant, for several decades, preserving parochial teaching in the beloved German language, as against fierce pressures for Anglicization.
In the last three decades of the nineteenth century, as Catholic immigration grew and the Democratic party moved slowly but surely toward a majority status, the Republican, and—more broadly—pietist pressures became more intense. The purpose of the public school, to the pietists, was "to unify and make homogeneous the society." There was no twentieth century concern for separating religion and the public school system. To the contrary, in most northern jurisdictions only pietist-Protestant church members were allowed to be teachers in the public schools. Daily reading of the Protestant Bible, daily Protestant prayers and Protestant hymns were common in the public schools, and school textbooks were rife with anti-Catholic propaganda. Thus, New York City school textbooks spoke broadly of "the deceitful Catholics," and pounded into their children, Catholic and Protestant alike, the message that "Catholics are necessarily, morally, intellectually, infallibly, a stupid race.”Cited in David B. Tyack, The One Best System: A History of American Urban Education (Cambridge: Harvard University Press, 1974), pp. 84–85.
Teachers delivered homilies on the evils of Popery, and also on deeply felt pietist theological values: the wickedness of alcohol (the "demon rum") and the importance of keeping the Sabbath. In the 1880s and 1890s, zealous pietists began working ardently for antialcohol instruction as a required part of the public-school curriculum; by 1901, every state in the Union required instruction in temperance.
Since most Catholic children went to public rather than parochial schools, the Catholic authorities were understandably anxious to purge the schools of Protestant requirements and ceremonies, and of anti-Catholic textbooks. To the pietists, these attempts to de-Protestantize the public schools were intolerable "Romish aggression." The whole point of the public schools was moral and religious homogenization, and here the Catholics were disrupting the attempt to make American society holy—to produce, through the public school and the Protestant gospel, "a morally and politically homogeneous people." As Kleppner writes:
When they [the pietists] spoke of "moral education," they had in mind principles of morality shared in common by the adherents of gospel religion, for in the public school all children, even those whose parents were enslaved by "Lutheran formalism or Romish supersitition," would be exposed to the Bible. That alone was cause for righteous optimism, for they believed the Bible to be "the agent in converting the soul," "the volume that makes human beings men."Kleppner, Third Electoral System, n. 1, p. 222.
In this way, "America [would] be Saved Through the Children.”Our Church Work (Madison, Wis.), July 17, 1890. Cited in ibid., p. 224.
The pietists were therefore incensed that the Catholics were attempting to block the salvation of America's children—and eventually of America itself—all at the orders of a "foreign potentate." Thus, the New Jersey Methodist Conference of 1870 lashed out with their deepest feelings against this Romish obstructionism:
Resolved, That we greatly deprecate the effort which is being made by "Haters of Light," and especially by an arrogant priesthood, to exclude the Bible from the Public Schools of our land; and that we will do all in our power to defeat the well-defined and wicked design of this "Mother of Harlots.”Minutes of the New Jersey Annual Conference of the Methodist Episcopal Church, 1870, p. 24. Cited in ibid., p. 230. Similar reactions can be found in the minutes of the Central Pennsylvania Methodists in 1875, the Maine Methodists in 1887, the New York Methodists of 1880, and the Wisconsin Congregationalists of 1890.
Throughout the nineteenth century, "nativist" attacks on "foreigners" and the foreign-born were really attacks on liturgical immigrants. Immigrants from Britain or Scandinavia, pietists all, were "good Americans" as soon as they got off the boat. It was the diverse culture of the other immigrants that had to be homogenized and molded into that of pietist America. Thus, the New England Methodist Conference of 1889 declared:
We are a nation of remnants, ravellings from the Old World. . . . The public school is one of the remedial agencies which work in our society to diminish this . . . and to hasten the compacting of these heterogeneous materials into a solid nature.Minutes of the Session of the New England Annual Conference of the Methodist Episcopal Church, 1889, p. 85. Cited in ibid., p. 223.
Or, as a leading citizen of Boston declared, "the only way to elevate the foreign population was to make Protestants of their children.”Tyack, n. 3, p. 84.
Since the cities of the North, in the late nineteenth century, were becoming increasingly filled with Catholic immigrants, pietist attacks on sinful cities and on immigrants both became aspects of the anti-liturgical struggle for a homogeneous Anglo-Saxon pietist culture. The Irish were particular butts of pietist scorn; a New York City textbook bitterly warned that continued immigration could make America "the common sewer of Ireland," filled with drunken and depraved Irishmen.Tyack, n. 3, p. 85.
The growing influx of immigrants from southern and eastern Europe toward the end of the nineteenth century seemed to pose even greater problems for the pietist progressives, but they did not shrink from the task. As Elwood P. Cubberley of Stanford University, the nation's outstanding progressive historian of education, declared, southern and eastern Europeans have served to dilute tremendously our national stock, and to corrupt our civil life. . . . Everywhere these people tend to settle in groups or settlements, and to set up here their national manners, customs, and observances. Our task is to break up these groups or settlements, to assimilate and amalgamate these people as a part of our American race and to implant in their children. . . the Anglo-Saxon conception of rightousness, law and order, and popular government. . . . Ellwood P. Cubberley. Changing Conceptions of Education in America (Boston: Houghton, Mifflin, 1909), pp. 15–16.
PROGRESSIVES, PUBLIC EDUCATION, AND THE FAMILY: THE CASE OF SAN FRANCISCOThe molding of children was of course the key to homogenization and the key in general to the progressive vision of tight social control over the individual via the instrument of the state. The eminent University of Wisconsin sociologist Edward Alsworth Ross, a favorite of Theodore Roosevelt and the veritable epitome of a progressive social scientist, summed it up thus: The role of the public official, and in particular of the public school teacher, is "to collect little plastic lumps of human dough from private households and shape them on the social kneadingboard."Edward Alsworth Ross, Social Control (New York, 1912). Cited in Paul C Violas, "Progressive Social Philosophy: Charles Horton Cooley and Edward Alsworth Ross," in C.J. Karier, P. C. Violas, and J. Spring. eds., Roots of Crisis: American Education in the 20th Century (Chicago: Rand McNally, 1973). Pp. 40–65.
The view of Ross and the other progressives was that the state must take up the task of control and inculcation of moral values once performed by parents and church. The conflict between middle and upper-class urban progressive Anglo-Saxon Protestants and largely working-class Catholics was sharply delineated in the battle over control of the San Francisco public school system during the second decade of the twentieth century. The highly popular Alfred Roncovieri, a French-Italian Catholic, was the elected school superintendent from 1906 on. Roncovieri was a traditionalist who believed that the function of schools was to teach the basics, and that teaching children about sex and morality should be the function of home and church. Hence, when the drive for sex hygiene courses in the public schools got under way, Roncovieri consulted with mothers' clubs and, in consequence, kept the program out of the schools.
By 1908, upper-class progressives launched a decade-long movement to oust Roncovieri and transform the nature of the San Francisco public school system. Instead of an elected superintendent responding to a school board elected by districts, the progressives wanted an all-powerful school superintendent, appointed by a rubber-stamp board that in turn would be appointed by the mayor. In other words, in the name of "taking the schools out of politics," they hoped to aggrandize the educational bureaucracy and maintain its power virtually unchecked by any popular or democratic control. The purpose was threefold: to push through the progressive program of social control, to impose upper-class control over a working-class population, and to impose pietist Protestant control over Catholic ethnics. The cities were already beginning to reach the point where class and ethnic divisions almost coincided, where, in other words, few working-class Anglo-Saxon Protestants resided in the cities.
The ethnoreligious struggle over the public schools in San Francisco was nothing new; it had been going on tumultuously since the middle of the nineteenth century.For an excellent study and analysis of the ethnoreligious struggle over the San Francisco public schools from the mid-nineteenth through the first three decades of the twentieth century, see the neglected work of Victor L. Shradar, "Ethnic Politics, Religion, and the Public Schools of San Francisco, 1849–1933" (Ph.D. dissertation. School of Education. Stanford University, 1974). In the last half of the nineteenth century, San Francisco was split into two parts. Ruling the city was a power elite of native-born old Americans, hailing from New England, including lawyers, businessmen, and pietist Protestant ministers. These comprised successively the Whig, Know-Nothing, Populist, and Republican parties in the city. On the other hand were the foreign-born, largely Catholic immigrants from Europe, Irish, Germans, French, and Italians, who comprised the Democratic party.
The Protestants early tried to use the public schools as a homogenizing and controlling force. The great theoretician and founder of the public school system in San Francisco, John Swett, "the Horace Mann of California," was a lifelong Republican and a Yankee who had taught school in New Hampshire before moving West. Moreover, the Board of Education was originally an all-New England show; consisting of emigrants from Vermont, New Hampshire, and Rhode Island. The mayor of San Francisco was a former mayor of Salem, Massachusetts, and every administrator and teacher in the public schools was a transplanted New Englander. The first superintendent of schools was not exactly a New Englander, but close: Thomas J. Nevins, a Yankee Whig lawyer from New York and an agent of the American Bible Society. And the first free public school in San Francisco was instituted in the basement of a small Baptist chapel.
Nevins, installed as superintendent of schools in 1851, promptly adopted the rule of the New York City schools: Every teacher was compelled to begin each day by a Protestant Bible reading and to conduct daily Protestant prayer sessions. And John Swett, elected as Republican state superintendent of public instruction during the 1860s, declared that California needed public schools because of its heterogeneous population: "Nothing can Americanize these chaotic elements, and breathe into them the spirit of our institutions," he warned, "except the public schools."Shradar, n. 13. p. 14.
Swett was keen enough to recognize that the pietist educational formula meant that the state takes over jurisdiction of the child from his parents, since "children arrived at the age of maturity belong, not to the parents, but to the State, to society, to the country."Rousas John Rushdoony, "John Swett: The Self-Preservation of the State," in The Messianic Character of American Education: Studies in the History of the Philosophy of Education (Nutley. N.J.: Craig Press, 1963). Pp 79–80.
A seesaw struggle between the Protestant Yankees and Catholic ethnics ensued in San Francisco during the 1850s. The state charter of San Francisco in 1855 made the schools far more responsive to the people, with school boards being elected from each of a dozen wards instead of at large, and the superintendent elected by the people instead of appointed by the board. The Democrats swept the Know-Nothings out of office in the city in 1856 and brought to power David Broderick, an Irish Catholic who controlled the San Francisco as well as the California Democratic party. But this gain was wiped out by the San Francisco Vigilance Movement, a private organization of merchants and New England-born Yankees, who, attacking the "Tammany" tactics of Broderick, installed themselves in power and illegally deported most of the Broderick organization, replacing it with a newly formed People's party.
The People's party ran San Francisco with an iron hand for ten years, from 1857 to 1867, making secret nominations for appointments and driving through huge slates of at-large nominees chosen at a single vote at a public meeting. No open nomination procedures, primaries, or ward divisions were allowed, in order to ensure election victories by "reputable" men. The People's party promptly reinstalled an all-Yankee school board, and the administrators and teachers in schools were again firmly Protestant and militantly anti-Catholic. The People's party itself continually attacked the Irish, denouncing them as "micks" and "rank Pats." George Tait, the People's party-installed superintendent of schools in the 1860s, lamented, however, that some teachers were failing to read the Protestant Bible in the schools, and were thus casting "a slur on the religion and character of the community."
By the 1870s, however, the foreign-born residents outnumbered the native-born, and the Democratic party rose to power in San Francisco, the People's party declining and joining the Republicans. The Board of Education ended the practice of Protestant devotions in the schools, and Irish and Germans began to pour into administrative and teaching posts in the public school system.
Another rollback began, however, in 1874, when the Republican state legislature abolished ward elections for the San Francisco school board, and insisted that all board members be elected at large. This meant that only the wealthy, which usually meant well-to-do Protestants, were likely to be able to run successfully for election. Accordingly, whereas in 1873, 58 percent of the San Francisco school board was foreign-born, the percentage was down to 8 percent in the following year. And while the Irish were approximately 25 percent of the electorate and the Germans about 13 percent, the Irish were not able to fill more than one or two of the twelve at-large seats, and the Germans virtually none.
The seesaw continued, however, as the Democrats came back in 1883, under the aegis of the master politician, the Irish Catholic Christopher "Blind Boss" Buckley. In the Buckley regime, the post-1874 school board dominated totally by wealthy native-born, Yankee businessmen and professionals, was replaced by an ethnically balanced ticket with a high proportion of working-class and foreign-born. Furthermore, a high proportion of Irish Catholic teachers, most of them single women, entered the San Francisco schools during the Buckley era, reaching 50 percent by the turn of the century.
In the late 1880s, however, the stridently anti-Catholic and anti-Irish American party became strong in San Francisco and the rest of the state, and Republican leaders were happy to join them in denouncing the "immigrant peril." The American party managed to oust the Irish Catholic Joseph O'Connor, principal and deputy superintendent, from his high post as "religiously unacceptable.” This victory heralded a progressive Republican "reform” comeback in 1891, when none other than John Swett was installed as superintendent of schools in San Francisco. Swett battled for the full reform program: to make everything, even the mayoralty, an appointive rather than an elective office. Part of the goal was achieved by the state's new San Francisco charter in 1900, which replaced the twelve-man elected Board of Education by a four-member board appointed by the mayor.
The full goal of total appointment was still blocked, however, by the existence of an elective superintendent of schools who, since 1907, was the popular Catholic Alfred Roncovieri. The pietist progressives were also thwarted for two decades by the fact that San Francisco was ruled, for most of the years between 1901 and 1911, by a new Union Labor party, which won on an ethnically and occupationally balanced ticket, and which elected the German-Irish Catholic Eugene Schmitz, a member of the musician's union, as mayor. And for eighteen years after 1911, San Francisco was governed by its most popular mayor before or since, "Sunny Jim" Rolph, an Episcopalian friendly to Catholics and ethnics, who was pro-Roncovieri and who presided over an ethnically pluralistic regime.
It is instructive to examine the makeup of the progressive reform movement that eventually got its way and overthrew Roncovieri. It consisted of the standard progressive coalition of business and professional elites, and nativist and anti-Catholic organizations, who called for the purging of Catholics from the schools. Particular inspiration came from Stanford educationist Elwood P. Cubberley, who energized the California branch of the Association of Collegiate Alumnae (later the American Association of University Women), led by the wealthy Mrs. Jesse H. Steinhart, whose husband was later to be a leader in the Progressive party. Mrs. Steinhart got Mrs. Agnes De Lima, a New York City progressive educator, to make a survey of the San Francisco schools for the association. The report, presented in 1914, made the expected case for an "efficient," business-like, school system run solely by appointed educators. Mrs. Steinhart also organized the Public Education Society of San Francisco to agitate for progressive school reform; in this she was aided by the San Francisco Chamber of Commerce.
Also backing progressive reform, and anxious to oust Roncovieri, were other elite groups in the city, including the League of Women Voters, and the prestigious Commonwealth Club of California.
At the behest of Mrs. Steinhart and the San Francisco Chamber of Commerce, which contributed the funds, Philander Claxton of the U.S. Office of Education weighed in with his report in December 1917. The report, which endorsed the Association of Collegiate Alumnae study and was extremely critical of the San Francisco school system, called for all power over the system to go to an appointed superintendent of schools. Claxton also attacked the teaching of foreign languages in the schools, which San Francisco had been doing, and insisted on a comprehensive "Americanization" to break down ethnic settlements.
The Claxton Report was the signal for the Chamber of Commerce to swing into action, and it proceeded to draft a comprehensive progressive referendum for the November 1918 ballot, calling for an appointed superintendent and an appointed school board. This initiative, Amendment 37, was backed by most of the prominent business and professional groups in the city. In addition to the ones named above, there were the Real Estate Board, elite women's organizations such as the Federation of Women's Clubs, wealthy neighborhood improvement clubs, and the San Francisco Examiner. Amendment 37 lost, however, by two to one, since it had little support in working-class neighborhoods or among the teachers.
Two years later, however, Amendment 37 passed, aided by a resurgence of pietism and virulent anti-Catholicism in postwar America. Prohibition was now triumphant, and the Ku Klux Klan experienced a nationwide revival as a pietist, anti-Catholic organization. The KKK had as many as 3,500 members in the San Francisco Bay Area in the early 1920s. The anti-Catholic American Protective Association also enjoyed a revival, led in California by a British small businessman, the anti-Irish Grand Master Colonel J. Arthur Petersen.
In opposing Amendment 37 in the 1920 elections, Father Peter C. Yorke, a prominent priest and Irish immigrant, perceptively summed up the fundamental cleavage: "The modern school system," he declared, "is not satisfied with teaching children the 3 Rs . . . it reaches out and takes possession of their whole lives."
Amendment 37 passed in 1920 by the narrow margin of 69,200 to 66,700. It passed in every middle- and upper-class Assembly District, and lost in every working-class district. The higher the concentration of foreign-born voters in any district, the greater the vote against. In the Italian precincts 1 to 17 of the 33rd A.D., the Amendment was beaten by 3 to 1; in the Irish precincts, it was defeated by 3 to 1 as well. The more Protestant a working-class district, the more it supported the Amendment.
The bulk of the lobbying for the Amendment was performed by the ad hoc Educational Conference. After the victory, the conference happily presented a list of nominees to the school board, which now consisted of seven members appointed by the mayor, and which in turn appointed the superintendent. The proposed board consisted entirely of businessmen, of whom only one was a conservative Irish Catholic. The mayor surrendered to the pressure, and hence, after 1921, cultural pluralism in the San Francisco school system gave way to unitary progressive rule. The board began by threatening to dock any teacher who dared to be absent from school on St. Patrick's Day (a San Francisco tradition since the 1870s), and proceeded to override the wishes of particular neighborhoods in the interest of a centralized city.
The superintendent of schools in the new regime, Dr. Joseph Marr Gwinn, fit the new dispensation to a tee. A professional "scientist" of public administration, his avowed aim was unitary control. The entire package of typical progressive educational nostrums was installed, including a department of education and various experimental programs. Traditional basic education was scorned, and the edict came down that children should not be "forced" to learn the 3 Rs if they didn't feel the need. Traditional teachers, who were continually attacked for being old-fashioned and "unprofessional," were not promoted.
Despite continued opposition by teachers, parents, neighborhoods, ethnic groups, and the ousted Roncovieri, all attempts to repeal Amendment 37 were unsuccessful. The modern dispensation of progressivism had conquered San Francisco. The removal of the Board of Education and school superintendent from direct and periodic control by the electorate had effectively deprived parents of any significant control over the educational policies of public schools. At last, as John Swett had asserted nearly sixty years earlier, schoolchildren belonged "not to the parents, but to the State, to society, to the country."
ETHNORELIGIOUS CONFLICT AND THE RISE OF FEMINISMWomen's Suffrage
By the 1890s, the liturgically oriented Democracy was slowly but surely winning the national battle of the political parties. Culminating the battle was the Democratic congressional victory in 1890 and the Grover Cleveland landslide in the presidential election of 1892, in which Cleveland carried both Houses of Congress along with him (an unusual feat for that era). The Democrats were in way of becoming the majority party of the country, and the root was demographic: the fact that most of the immigrants were Catholic and the Catholic birthrate was higher than that of the pietist Protestants. Even though British and Scandinavian immigration had reached new highs during the 1880s, their numbers were far exceeded by German and Irish immigration, the latter being the highest since the famous post-potato-famine influx that started in the late 1840s. Furthermore, the "new immigration" from southern and eastern Europe, almost all Catholic—and especially Italian—began to make its mark during the same decade.
The pietists became increasingly embittered, stepping up their attacks on foreigners in general and Catholics in particular. Thus, the Reverend T.W. Cuyler, President of the National Temperance Society, intemperately exclaimed in the summer of 1891: "How much longer [will] the Republic . . . consent to have her soil a dumping ground for all Hungarian ruffians, Bohemian bruisers, and Italian cutthroats of every description?"
The first concrete political response by the pietists to the rising Catholic tide was to try to restrict immigration. Republicans successfully managed to pass laws partially cutting immigration, but President Cleveland vetoed a bill to impose a literacy test on all immigrants. The Republicans also managed to curtail voting by immigrants, by getting most states to disallow voting by aliens, thereby reversing the traditional custom of allowing alien voting. They also urged the lengthening of the statutory waiting period for naturalization.
The successful restricting of immigration and of immigrant voting was still not enough to matter, and immigration would not really be foreclosed until the 1920s. But if voting could not be restricted sharply enough, perhaps it could be expanded—in the proper pietist direction.
Specifically, it was clear to the pietists that the role of women in the liturgical "ethnic" family was very different from what it was in the pietist Protestant family. One of the reasons impelling pietists and Republicans toward prohibition was the fact that, culturally, the lives of urban male Catholics—nd the cities of the Northeast were becoming increasingly Catholic—evolved around the neighborhood saloon. The men would repair at night to the saloon for chitchat, discussions, and argument—nd they would generally take their political views from the saloonkeeper, who thus became the political powerhouse in his particular ward. Therefore, prohibition meant breaking the political power of the urban liturgical machines in the Democratic party.
But while the social lives of liturgical males revolved around the saloon, their wives stayed at home. While pietist women were increasingly independent and politically active, the lives of liturgical women revolved solely about home and hearth. Politics was strictly an avocation for husbands and sons. Perceiving this, the pietists began to push for women's suffrage, realizing that far more pietist than liturgical women would take advantage of the power to vote.
As a result, the women's suffrage movement was heavily pietist from the very beginning. Ultrapietist third parties like the Greenback and the Prohibition parties, which scorned the Republicans for being untrustworthy moderates on social issues, supported women's suffrage throughout, and the Populists tended in that direction. The Progressive party of 1912 was strongly in favor of women's suffrage; theirs was the first major national convention to permit women delegates. The first woman elector, Helen J. Scott of Wisconsin, was chosen by the Progressive party.
Perhaps the major single organization in the women's suffrage movement was the Women's Christian Temperance Union, founded in 1874 and reaching an enormous membership of 300,000 by 1900. That the WCTU was also involved in agitating for curfew, antigambling, antismoking, and antisex laws—ll actions lauded by the women's suffrage movement—s clear from the official history of women's suffrage in the nineteenth century:
[The WCTU] has been a chief factor in State campaigns for statutory prohibition, constitutional amendment, reform laws in general and those for the protection of women and children in particular, and in securing anti-gambling and anti-cigarette laws. It has been instrumental in raising the "age of protection" for girls in many States, and in obtaining curfew laws in 400 towns and cities. . . . The association [WCTU] protests against the legalization of all crimes, especially those of prostitution and liquor selling.Susan B. Anthony and Ida H. Harper. The History of Woman Suffrage. Vol. 4 (Rochester: Susan B. Anthony, 1902), pp. 1046–47.
Not only did Susan B. Anthony begin her career as a professional prohibitionist, but her two successors as president of the leading women's suffrage organization, the National American Woman Suffrage Association—Mrs. Carrie Chapman Catt and Dr. Anna Howard Shaw—also began their professional careers as prohibitionists. The leading spirit of the WCTU, Frances E. Willard, was prototypically born of New England-stock parents who had moved westward to study at Oberlin College, then the nation's center of aggressive, evangelical pietism, and had later settled in Wisconsin. Guided by Miss Willard, the WCTU began its prosuffrage activities by demanding that women vote in local option referendums on prohibition. As Miss Willard put it, the WCTU wanted women to vote on this issue because "majorities of women are against the liquor traffic. . . .”Cited in Eleanor Flexner, Century of Struggle: The Woman's Rights Movement in the United States (New York: Atheneum, 1970), p. 183.
Conversely, whenever there was a voters' referendum on women's suffrage, the liturgicals and the foreign-born, responding to immigrant culture and reacting against the pietist-feminist support of prohibition, consistently opposed women's suffrage. In Iowa, the Germans voted against women's suffrage, as did the Chinese in California. The women's suffrage amendment in 1896 in California was heavily supported by the bitterly anti-Catholic American Protective Association. The cities, where Catholics abounded, tended to be opposed to women's suffrage, while pietist rural areas tended to favor it. Thus, the Oregon referendum of 1900 lost largely because of opposition in the Catholic "slums" of Portland and Astoria.
A revealing religious breakdown of votes on an 1877 women's suffrage referendum was presented in a report by a Colorado feminist. She explained that the Methodists (the most strongly pietistic) were "for us," the (less pietistic) Presbyterians and Episcopalians "fairly so," while the Roman Catholics "were not all against us"—clearly they were expected to be.Anthony and Harper, n 15, Vol. 3, p. 724. And, testifying before the U.S. Senate Judiciary Committee in favor of women's suffrage in 1880, Susan B. Anthony presented her own explanation of the Colorado vote:
In Colorado . . . 6,666 men vote "Yes." Now, I am going to describe the men who voted "Yes." They were native-born men, temperance men, cultivated, broad, generous, just men, men who think. On the other hand, 16,007 voted "No." Now, I am going to describe that class of voters. In the southern part of that State are Mexicans, who speak the Spanish language. . . . The vast population of Colorado is made up of that class of people. I was sent out to speak in a voting precinct having 200 voters; 150 of those voters were Mexican greasers, 40 of them foreign-born citizens, and just 10 of them were born in this country; and I was supposed to be competent to convert those men to let me have so much right in this Government as they had. . . Quoted in Alan P. Grimes, The Puritan Ethic and Woman Suffrage (New York: Oxford University Press, 1967), p. 87.
A laboratory test of which women would turn out to vote occurred; in Massachusetts, where women were given the power to vote in school board elections from 1879 on. In 1888, large numbers of Protestant women in Boston turned out to drive Catholics off the school board. In contrast, Catholic women scarcely voted, "thereby validating the, nativist tendencies of suffragists who believed that extension of full suffrage to women would provide a barrier against further Catholic influence.”Jane Jerome Camhie "Women Against Women: American Antisuffragism, 1880–1920" (Ph.D. dissertation in history, Tufts University, 1973), p. 198. See also James J, Kenneally, "Catholicism and Woman Suffrage in Massachusetts," Catholic Historical Review 53 (April 1967): 253. Joining in the demand that only Protestants be elected to the Boston school board were, in addition to British-American clubs and numbers of Protestant ministers, the WCTU, the Loyal Women of American Liberty, the National Women's League, and the League of Independent Women Voters. See Kleppner. Third Electoral System. n 1, p. 350. See also Tyack. n. 3, pp 105–6: and Lois Bannister Merk, "Boston's Historic Public School Crisis," New England Quarterly 31 (June 1958): 172–99. During the last two decades of the nineteenth century "the more hierarchical the church organization and the more formal the ritual, the greater was its opposition to women suffrage, while the democratically organized churches with little dogma tended to be more receptive.”Camhi, n. 20, p. 200. Hierarchically organized pietist churches, like the Methodist or the Scandinavian Lutheran, were no less receptive to women's suffrage than the others.
Four mountain states adopted women's suffrage in the early and mid-1890s. Two, Wyoming and Utah, were simply ratifying, as new states, a practice they had long adopted as territories: Wyoming in 1869 and Utah in 1870. Utah had adopted women's suffrage as a conscious policy by the pietistic Mormons to weight political control in favor of their polygamous members, who contrasted to the Gentiles, largely miners and settlers who were either single men or who had left their wives back East. Wyoming had adopted women's suffrage in an effort to increase the political power of its settled householders, in contrast to the transient, mobile, and often lawless single men who peopled that frontier region.
No sooner had Wyoming Territory adopted women's suffrage, than it became evident that the change had benefited the Republicans, particularly since women had mobilized against Democratic attempts to repeal Wyoming's Sunday prohibition law. In 1871, both houses of the Wyoming legislature, led by its Democratic members, voted to repeal women's suffrage, but the bill was vetoed by the Republican territorial governor.
Two additional states adopting women's suffrage in the 1890s were Idaho and Colorado. In Idaho the drive, adopted by referendum in 1896, was led by the ultrapietistic Populists and by the Mormons, who were dominant in the southern part of the state. The Populist counties of Colorado gave a majority of 6,800 for women's suffrage, while the Republican and Democratic counties voted a majority of 500 against.Furthermore, in the Colorado legislature that submitted the women's suffrage amendment to the voters in 1893, the party breakdown of voting was as follows: Republicans, 19 for women's suffrage and 25 against; Democrats, 1 in favor and 8 against; Populists, 34 in favor and 4 against. See Grimes, n. 19, p. 96 and passim.
It may be thought paradoxical that a movement—women's suffrage—born and centered in the East should have had its earliest victories in the remote frontier states of the Mountain West. But the paradox begins to clear when we realize the pietist-Anglo-Saxon-Protestant nature of the frontiersmen, many of them Yankees hailing originally from that birthplace of American pietism, New England. As the historian Frederick Jackson Turner, that great celebrant of frontier ideals, lyrically observed:
In the arid West these pioneers [from New England] have halted and have turned to perceive an altered nation and changed social ideals. . . . If we follow back the line of march of the Puritan farmer, we shall see how responsive he has always been to isms. . . . He is the Prohibitionist of Iowa and Wisconsin, crying out against German customs as an invasion of his traditional ideals. He is the Granger of Wisconsin, passing restrictive railroad legislation. He is the Abolitionist, the Anti-mason, the Millerite, the Woman Suffragist, the Spiritualist, the Mormon, of Western New York.Frederick Jackson Turner, "Dominant Forces in Western Life," in The Frontier in American History (New York: Holt. Rinehart & Winston, 1962), pp. 239–40. Quoted in Grimes, n. 19, pp. 97–98.
Eugenics and Birth Control
Thus the women's suffrage movement, dominated by pietist progressives, was not directed solely to achieving some abstract principle of electoral equality between males and females. This was more a means to another end: the creation of electoral majorities for pietist measures of direct social control over the lives of American families. They wished to determine by state intervention what those families drank and when and where they drank, how they spent their Sabbath day, and how their children should be educated.
One way of correcting the increasingly pro-Catholic demographics was to restrict immigration; another to promote women's suffrage. A third way, often promoted in the name of "science," was eugenics, an increasingly popular doctrine of the progressive movement. Broadly, eugenics may be defined as encouraging the breeding of the "fit" and discouraging the breeding of the "unfit," the criteria of "fitness" often coinciding with the cleavage between native, white Protestants and the foreign born or Catholics—or the white-black cleavage. In extreme cases, the unfit were to be coercively sterilized.
To the founder of the American eugenics movement, the distinguished biologist Charles Benedict Davenport, a New Yorker of eminent New England background, the rising feminist movement was beneficent provided that the number of biologically superior persons was sustained and the number of the unfit diminished. The biologist Harry H. Laughlin, aide to Davenport, associate editor of the Eugenical News, and highly influential in the immigration restriction policy of the 1920s as eugenics expert for the House Committee on Immigration and Naturalization, stressed the great importance of cutting the immigration of the biologically "inferior" southern Europeans. For in that way, the biological superiority of Anglo-Saxon women would be protected.
Harry Laughlin's report to the House Committee, printed in 1923, helped formulate the 1924 immigration law, which, in addition to drastically limiting total immigration to the United States, imposed national origin quotas based on the 1910 census, so as to weight the sources of immigration as much as possible in favor of northern Europeans. Laughlin later emphasized that American women must keep the nation's blood pure by not marrying what he called the "colored races," in which he included southern Europeans as well as blacks: for if "men with a small fraction of colored blood could readily find mates among the white women, the gates would be thrown open to a final radical race mixture of the whole population." To Laughlin the moral was clear: "The perpetuity of the American race and consequently of American institutions depends upon the virtue and fecundity of American women.”Cited in Donald K. Pickens. Eugenics and the Progressives (Nashville, Tenn.: Vanderbilt University Press, 1968), p. 67.
But the problem was that the fecund women were not the pietist progressives but the Catholics. For, in addition to immigration, another source of demographic alarm to the pietists was the far higher birthrate among Catholic women. If only they could be induced to adopt birth control! Hence, the birth control movement became part of the pietist armamentarium in their systemic struggle with the Catholics and other liturgicals.
Thus, the distinguished University of California eugenicist, Samuel J. Holmes, lamented that "the trouble with birth control is that it is practiced least where it should be practiced most." In the Birth Control Review, leading organ of the birth control movement, Annie G. Porritt was more specific, attacking "the folly of closing our gates to aliens from abroad, while having them wide open to the overwhelming progeny of the least desirable elements of our city and slum population.”Annie G. Porritt. "lmmigration and Birth Control, an Editorial," The Birth Control Review 7 (Sept. 1923): 219. Cited in Pickens. n. 24, p. 73. In short, the birth controllers were saying that if one's goal is to restrict sharply the total number of Catholics, "colored" southern European or no, then there is no point in only limiting immigration while the domestic population continues to increase.
The birth control and the eugenics movement therefore went hand in hand, not the least in the views of the well-known leader of the birth control movement in the United States: Mrs. Margaret Higgins Sanger, prolific author, founder and long-time editor of the Birth Control Review. Echoing many of the various strains of progressivism, Mrs. Sanger hailed the emancipation of women through birth control as the latest in applied science and "efficiency." As she put it in her Autobiography:
In an age which has developed science and industry and economic efficiency to their highest points, so little thought has been given to the development of a science of parenthood, a science of maternity which could prevent this appalling and unestimated waste of womankind and maternal effort.Quoted in Pickens. n. 24, p. 80.
To Mrs. Sanger, “science" also meant stopping the breeding of the unfit. A devoted eugenicist and follower of C.B. Davenport, she in fact chided the eugenics movement for not sufficiently emphasizing this crucial point:
The eugenists wanted to shift the birth control emphasis from less children for the poor to more children for the rich. We went back of that and sought first to stop the multiplication of the unfit. This appeared the most important and greatest step toward race betterrnent.Ibid., p. 83.
GATHERED TOGETHER: PROGRESSIVISM AS A POLITICAL PARTYProgressivism was, to a great extent, the culmination of the pietist Protestant political impulse, the urge to regulate every aspect of American life, economic and moral—even the most intimate and crucial aspects of family life. But it was also a curious alliance of a technocratic drive for government regulation, the supposed expression of "value-free science," and the pietist religious impulse to save America—and the world—by state coercion. Often both pietistic and scientific arguments would be used, sometimes by the same people, to achieve the old pietist goals. Thus, prohibition would be argued for on religious as well as on alleged scientific or medicinal grounds. In many cases, leading progressive intellectuals at the turn of the twentieth century were former pietists who went to college and then transferred to the political arena, their zeal for making over mankind, as a "salvation by science." And then the Social Gospel movement managed to combine political collectivism and pietist Christianity in the same package. All of these were strongly interwoven elements in the progressive movement.
All these trends reached their apogee in the Progressive party and its national convention of 1912. The assemblage was a gathering of businessmen, intellectuals, academics, technocrats, efficiency experts and social engineers, writers, economists, social scientists, and leading representatives of the new profession of social work. The Progressive leaders were middle and upper class, almost all urban, highly educated, and almost all white Anglo-Saxon Protestants of either past or present pietist concerns.
From the social work leaders came upper-class ladies bringing the blessings of statism to the masses: Lillian D. Wald, Mary Kingsbury Simkhovitch, and above all, Jane Addams. Miss Addams, one of the great leaders of progressivism, was born in rural Illinois to a father, John, who was a state legislator and a devout nondenominational evangelical Protestant. Miss Addams was distressed at the southern and eastern European immigration, people who were "primitive" and "credulous," and who posed the danger of unrestrained individualism. Their different ethnic background disrupted the unity of American culture. However, the problem, according to Miss Addams, could be easily remedied. The public school could reshape the immigrant, strip him of his cultural foundations, and transform him into a building block of a new and greater American community.See Paul C Violas. "Jane Addams and the New Liberalism," in Karier et al., eds. Roots of Crisis, n. 11, pp. 66–83.
In addition to writers and professional technocrats at the Progressive party convention, there were professional pietists galore. Social Gospel leaders Lyman Abbott, the Reverend R. Heber Newton, and the Reverend Washington Gladden were Progressive party notables, and the Progressive candidate for governor of Vermont was the Reverend Fraser Metzger, leader of the Inter-Church Federation of Vermont. In fact, the Progressive party proclaimed itself as the "recrudescence of the religious spirit in American political life."
Many observers, indeed, reported in wonder at the strongly religious tone of the Progressive party convention. Theodore Roosevelt's acceptance address was significantly entitled, "A Confession of Faith," and his words were punctuated by "amens" and by a continual singing of Christian hymns by the assembled delegates. They sang "Onward, Christian Soldiers," "The Battle Hymn of the Republic," and finally the revivalist hymn, "Follow, Follow, We Will Follow Jesus," except that "Roosevelt" replaced the word "Jesus" at every turn.
The New York Times of August 6, 1912, summed up the unusual experience by calling the Progressive assemblage "a convention of fanatics." And, "It was not a convention at all. It was an assemblage of religious enthusiasts. It was such a convention as Peter the Hermit held. It was a Methodist camp following done over into political terms.”Cited in John Allen Gable, The Bull Moose Years: Theodore Roosevelt and the Progressive Party (Port Washington, N.Y.: Kennikat Press, 1978), p. 75.
Thus the foundations of today's massive state intervention in the internal life of the American family were laid in the so-called "progressive era" from the 1870s to the 1920s. Pietists and "progressives" united to control the material and sexual choices of the rest of the American people, their drinking habits, and their recreational preferences. Their values, the very nurture and education of their children, were to be determined by their betters. The spiritual, biological, political, intellectual, and moral elite would govern, through state power, the character and quality of American family life.
SIGNIFICANCEIt has been known for decades that the Progressive Era was marked by a radical growth in the extension and dominance of government in America's economic, social, and cultural life. For decades, this great leap into statism was naively interpreted by historians as a simple response to the greater need for planning and regulation of an increasingly complex economy. In recent years, however, historians have come to see that increasing statism on a federal and state level can be better interpreted as a profitable alliance between certain business and industrial interests, looking for government to cartelize their industry after private efforts for cartels and monopoly had failed, and intellectuals, academics, and technocrats seeking jobs to help regulate and plan the economy as well as restriction of entry into their professions. In short, the Progressive Era re-created the age-old alliance between Big Government, large business firms, and opinion-molding intellectuals—an alliance that had most recently been embodied in the mercantilist system of the sixteenth through eighteenth centuries.
Other historians uncovered a similar process at the local level, especially that of urban government beginning with the Progressive Era. Using the influence of media and opinion leaders, upper-income and business groups in the cities systematically took political power away from the masses and centralized this power in the hands of urban government responsive to progressive demands. Elected officials, and decentralized ward representation, were systematically replaced either by appointed bureaucrats and civil servants, or by centralized at-large districts where large-scale funding was needed to finance election races. In this way, power was shifted out of the hands of the masses and into the hands of a minority elite of technocrats and upper-income businessmen. One result was an increase of government contracts to business, a shift from "Tammany" type charity by the political parties to a taxpayer-financed welfare state, and the imposition of higher taxes on suburban residents to finance bond issues and redevelopment schemes accruing to downtown financial interests.
During the last two decades, educational historians have described a similar process at work in public, especially urban, school systems. The scope of the public school was greatly expanded, compulsory attendance spread outside of New England and other "Yankee" areas during the Progressive Era, and a powerful movement developed to try to ban private schools and to force everyone into the public school system.
From the work of educational historians, it was clear that the leap into comprehensive state control over the individual and over social life was not confined, during the Progressive and indeed post-Progressive eras, to government and the economy. A far more comprehensive process was at work. The expansion of compulsory public schooling stemmed from the growth of collectivist and anti-individualist ideology among intellectuals and educationists. The individual, these "progressives" believed, must be molded by the educational process to conform to the group, which in practice meant the dictates of the power elite speaking in the group's name. Historians have long been aware of this process.For further discussion of education, see Robert B. Everhart. ed., The Public School Monopoly: A Critical Analysis of Education and the State in American Society (San Francisco: Pacific Institute for Public Policy Research, 1982). But the accruing insight into progressivism as a business cartelizing device led historians who had abandoned the easy equation of "businessmen" with "laissez faire" to see that all the facets of progressivism—the economic and the ideological and educational—were part of an integrated whole. The new ideology among business groups was cartelist and collectivist rather than individualist and laissez faire, and the social control over the individual exerted by progressivism was neatly paralleled in the ideology and practice of progressive education. Another parallel to the economic realm, of course, was the increased power and income accruing to the technocratic intellectuals controlling the school system and the economy.
If the action of business and intellectual elites in turning toward progressivism was now explained, there was still a large gap in the historical explanation and understanding of progressivism and therefore of the leap into statism beginning in the early twentieth century. There was still a need to explain mass voting behavior and the ideology and programs of the political parties in the American electoral system. This chapter applies the illuminating findings of recent "ethnoreligious historians" to significant changes that took place during the Progressive Era in the power of government over the family. In particular, we discuss the movement to expand the power of the public school and the educationist elite over the family, as well as the women's suffrage and eugenics movement, all important features of the Progressive movement. In every case, we see the vital link between these intrusions into the family and the aggressive drive by Anglo-Saxon Protestant "pietists" to use the state to "make America holy," to stamp out sin and thereby assure their own salvation by maximizing the salvation of others. In particular, all of these measures were part and parcel of the long-standing crusade by these pietists to reduce if not eliminate the role of "liturgicals," largely Roman Catholics and high-church Lutherans, from American political life. The drive to stamp out liquor and secular activities on Sundays had long run into successful Catholic and high-church Lutheran resistance. Compulsory public schooling was soon seen as an indispensable weapon in the task of "Christianizing the Catholics," of saving the souls of Catholic children by using the public schools as a Protestantizing weapon. The neglected example of San Francisco politics was urged as a case study of this ethnoreligious political battle over the schools and hence over the right of Catholic parents to transmit their own values to their children without suffering Anglo-Saxon Protestant obstruction. Women's suffrage was seized upon as a means of increasing Anglo-Saxon Protestant voting power, and immigration restriction as well as eugenics was a method of reducing the growing demographic challenge of Catholic voters.
In sum, recent insights into the cartelizing drive of various business interests have provided an important explanation of the rapid growth of statism in the twentieth century. Ethnoreligious history provides an explanation of mass voting behavior and political party programs that neatly complement the cartelizing explanation of the actions of business elites.
Mises saw essentialist values as fallacies because they were unverifiable and saw metaphysical ideas as a key component of authoritarianism. His solution was utilitarianism.
Original Article: "Libertarian Law by Democratic Means: Utilitarianism and the Demythologization of Authority"
This Audio Mises Wire is generously sponsored by Christopher Condon.
On this episode of Radio Rothbard, Ryan McMaken and Tho Bishop look at the topic of nationalism and the role it can play in political decentralization. In his recent book, Breaking Away: The Case for Secession, Radical Decentralization, and Small Polities, Ryan notes how nationalist sentiments have helped ethnic, religious, and linguistic groups resist centralizing political states, such as the Soviet Union. This contrasts the ways nationalism served as a centralizing force in 19th-century Europe. Ryan and Tho look at how recent nationalist sentiments are challenging authoritarian globalist pressures, as well as how strengthening regional and state cultural identities may offer the best chance to roll back the Washington regime in America.
Looking for Christmas gifts? Use promo code ROTHPOD for a 20% discount on select books featured on Radio Rothbard. Or, use code MURRAYCHRISTMAS for a special 10% discount on select new Mises apparel: Mises.org/RR_110_Store
Recommended ReadingBreaking Away: The Case for Secession, Radical Decentralization, and Small Polities by Ryan McMaken: Mises.org/RR_110_A
"Is Nationalism a Good Thing? It Depends." by Ryan McMaken: Mises.org/RR_110_B
"Mises on Nationalism, the Right of Self-Determination, and the Problem of Immigration" by Joe Salerno: Mises.org/RR_110_C
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
A serious political discussion at the federal level would center on structural problems of war and peace, debt and the dollar, and entitlements. But America in 2022 is a deeply unserious country.
Original Article: "Can a Deeply Unserious America Fix Its Economy?"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Ryan McMaken and Tho Bishop talk with economic anthropologist Jovana Diković about how a focus on "solving" global warming endangers the food supply for much of the globe, especially in the developing world. Even rich nations face a world of less food at higher prices.
Use promo code ROTHPOD for a 20% discount on Ryan McMaken's new book Breaking Away: The Case for Secession, Radical Decentralization, and Smaller Polities: Mises.org/RR_108_Book
Recommended Reading "Environmental and Political Elites Are Destroying Food Production for Climate Goals" by Diković: Mises.org/RR_108_A
"Eat or Heat: Europeans Already Are Facing Previously Unthinkable Dilemmas" by Claudio Grass: Mises.org/RR_108_B
"Regime Pseudoscientists Enforce Climate Change Narrative" by Michael Rectenwald: Mises.org/RR_108_C
"Germany's (and Europe's) Self-Inflicted Upcoming Energy Crunch" by Weimin Chen: Mises.org/RR_108_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Daniel McCarthy joins Jeff and Bob to consider the deep unseriousness of American politics and electorate.
Willmoore Kendall's The Conservative Affirmation: Mises.org/Kendall
On this episode of Radio Rothbard, Tho Bishop and Ryan McMaken break down the results of this year's midterms. American anxiety over inflation and crime failed to create the red wave many expected. While Republicans took back the House, and maybe the Senate, this year's midterms underperformed traditional midterm elections. Tho and Ryan discuss why this is, as well as what a DeSantis victory might mean for a potential civil war with Trump.
Use promo code ROTHPOD for a 20% discount on Ryan McMaken's new book Breaking Away: The Case for Secession, Radical Decentralization, and Smaller Polities: Mises.org/RR_107_Book
Recommended Reading "Antidemocratic Just Means Something the Regime Doesn't Like" by Ryan McMaken: Mises.org/RR_107_A
"The Realistic Market for Private Governance" by Jeff Deist: Mises.org/RR_107_B
"Murray Rothbard versus the Progressives" by Joseph T. Salerno: Mises.org/RR_107_C
"Breaking Away: The Case for Smaller Polities" by Ryan McMaken (video): Mises.org/RR_107_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Jeff joins Chris Casey of WindRock Wealth Management for a deep analysis of next week's punishing midterm elections.
On this episode of Radio Rothbard, Tho Bishop and Ryan McMaken preview next week's midterms. How big of a red wave is on the horizon, and how much does it really matter? Should the real focus be on governor races? Can a Republican actually win in New York? And, what about Blake Masters? Ryan and Tho consider these questions and more in this week's episode.
Use promo code ROTHPOD for a 20% discount on Ryan McMaken's new book Breaking Away: The Case for Secession, Radical Decentralization, and Smaller Polities: Mises.org/RR_106_Book
Recommended Reading "Can National Conservatism Threaten the Regime?" by Tho Bishop: Mises.org/RR_106_A
"The Realistic Market for Private Governance" by Jeff Deist: Mises.org/RR_106_B
"Practicing Politics as Self-Defense" by L. W. Blakely: Mises.org/RR_106_C
"Breaking Away: The Case for Smaller Polities" by Ryan McMaken (video): Mises.org/RR_106_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Connor Mortell joins Ryan McMaken and Tho Bishop to discuss his recent article entitled "We Are Not the Government, but America Is No Longer Anything More than the Government" and to consider what it means to be an American in the current era. As Americans become increasingly divided politically and culturally, and as those divides fuel a great migration within the country, what truly unites Americans—beyond sharing a common oppressive regime? How modern is this development? What can be done to further build on these trends, to undermine the control of that regime further? These questions and more are considered in this episode of Radio Rothbard.
Recommended Reading "We Are Not the Government, but America Is No Longer Anything More than the Government" by Connor Mortell: Mises.org/RR_103_A
"College Conference Switching as Secession? A Case Study in 'Nations by Consent'" by Connor Mortell: Mises.org/RR_103_B
"Nations by Consent" by Murray N. Rothbard: Mises.org/RR_103_C
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Daniel McAdams of the Ron Paul Institute joins Jeff and Bob to discuss the economic and political ramifications of the Nord Stream 2 pipeline sabotage.
Read "The Economics of War" from Human Action: Mises.org/HAP363-1 Read a study Bob co-authored on Europe's energy crisis: Mises.org/HAP363-2
David French, maybe National Review’s most reliably wrong scribe, issued this gem in response to the FBI raid on Donald Trump’s residence in Florida:
[[{"fid":"136137","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"TA french twitter","field_file_image_title_text[und][0][value]":"TA french twitter","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"TA french twitter","field_file_image_title_text[und][0][value]":"TA french twitter","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"TA french twitter","title":"TA french twitter","class":"media-element file-default","data-delta":"1"}}]]
Imagine thinking federal police agents and lawyers will be “held accountable,” or that presidents are not above the law! Is this an afterschool special? “Let’s wait and see, folks, before we judge the situation. It might be perfectly on the up and up! Have faith in the rule of law and trust the process!”
French, in keeping with the listless residue of Conservative Inc., either can’t or won’t face the reality of postgoodwill America. This starts and ends with politics. If politics is war by other means, subterfuge is part and parcel of every battle and skirmish in that war. We are not required to take a combatant’s claims at face value, blundering ahead like Lucan and Cardigan at Balaclava. The contrary, in fact. Any political statement made today, by any politician or candidate or public official, can be answered thus: “We don’t believe you.” And with this comes a corollary: “We don’t trust you.”
When the Left talks about banning assault rifles, for example, we all know the true ambition of the gun controllers—many of whom are open and honest about their desire to completely eliminate private ownership of firearms in America. Progressives apply the same lens to bans on late-term abortion. But the Trump era, enhanced by the perverse dopamine incentives of social media, took this disbelief and distrust to a new rhetorical level. Witness today’s poisonous political lexicon, one that makes clear any presumption of good intentions is gone: insurrection, treason, racist, Nazi, fascist, domestic terrorist, MAGAt. These terms are not used to persuade, but to dehumanize and banish. Which of course is nothing new in politics. But it’s worth pointing out the Frenchist folly of claiming that democratic norms are poised to reassert themselves and bring us together once Orange Man is gone.
The FBI raid on Mar-a-Lago is an obvious example of America watching two politicized movies. We are not required to judge it apart from the broader political context, like children examining a single rock. The entire event is bound up with the larger war against Trump, one which began almost immediately after he was elected, with the Russiagate campaign. The goal of that ongoing war is to ruin both Trump and his family, salting the earth with their populist movement of Deplorables. Trump and his supporters must be destroyed politically (at the very least), ensuring Trump cannot run for president again but also that no candidate outside the uniparty’s acceptable parameters can ever run again. So one of the most important campaigns in America’s political war effectively seeks to criminalize a whole category of dissent—or at least place dissenters outside the bounds of acceptable society. If you doubt any or all of the 2020 presidential election results, you are an election denier. If you protested at the Capitol, you are an insurrectionist. If you question Russian collusion, you are a Putin supporter. And so forth.
We have not seen the FBI’s warrant or the supporting evidence presented to the magistrate. Was the raid an actual step toward a criminal prosecution? What were the actual crimes contemplated and the specific evidence sought? We don’t know, but at this point, it doesn’t matter. Merrick Garland surely knew Republican partisans would view the raid as pure political harassment, a warning to Trump, his family, and close associates. He also surely knew that many Democratic partisans hope to gin up legal arguments to disqualify the former president from running again (either under the Fourteenth Amendment or, more dubiously, under this federal statute). And of course he knew a media brouhaha would ensue. So there are two broad but conflicting interpretations of Garland’s actions. First, he is a brave defender of the rule of law who doggedly follows the evidence wherever it goes, with no consideration for politics, appearances, or timing whatsoever. Second, he knew exactly how ardent Trump fans would react to the warrant and seizures, and actively intended this effect. In other words, he intended to send a threatening message and quell political enthusiasm for Trump 2024.
Decent people can and should resist a world organized around politics, and deplore the politicized state of America. Ordinary Americans don’t want to live political lives and have their personal and professional relationships defined by this terrible environment. But politics is interested in us, as the saying goes. So we arm ourselves with a clear-eyed worldview, put away childish things, and never accept political pronouncements at face value. “We don’t believe you” is always the default position.
On this episode of Radio Rothbard, Ryan McMaken and Tho Bishop are joined by Brandan Buck, a historian on the anti-war right and a recent participant at the Rothbard Graduate Seminar. The conversation looks at the parallels between modern American politics and the political climate that gave rise to America's foreign policy in the second half of the 20th Century. How did the American right get dragged into the project of liberal imperialism? Is China the new Evil Empire? How important are figures like Tucker Carlson in questioning the war narrative? These questions and more are answered in this episode.
SPECIAL OFFER: Use coupon code RothPod at the Mises Store to save 20% off of Murray Rothbard's classic The Betrayal of the American Right: Mises.org/Betray.
Follow Brandan Buck on Twitter: @Brandan_Buck
Recommended Reading "No ‘Putin apologia’ and certainly not new: the Old American Right on war" by Brandan Buck: Mises.org/RR_97_A
"Bear Any Burden: Military Sacrifice and Rise of American Populism" by Brandan Buck: Mises.org/RR_97_B
"A History of Distrust: How the Right Lost Faith in Institutions" by Brandan Buck: Mises.org/RR_97_C
"Fly Over Country, the Gunbelt, and the Nationalization of America Internationalism" by Brandan Buck: Mises.org/RR_97_D
The Betrayal of the American Right by Murray N. Rothbard: Mises.org/RR_97_E
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
In June 2004, Professor Hoppe visited the Mises Institute in Auburn to deliver an ambitious series of lectures titled Economy, Society, and History.
This project brings together the core of Hoppe’s lifetime of theoretical work in one vital and cohesive source. Here we find provocative themes developed by Hoppe in the 1980s and 90s, particularly in his essays found in A Theory of Socialism and Capitalism and The Economics and Ethics of Private Property. We also find his devastating critique of democracy, made famous in his seminal book Democracy—The God That Failed.
This audiobook is narrated by Paul Strikwerda.
Download the complete audiobook (12 MP3 files) here. This audiobook is also available on Soundcloud and via RSS.
In this episode of Radio Rothbard, Ryan McMaken and Tho Bishop look at the popularizing of the term "regime" being used against the Federal government. As a recent Bulwark article notes, this change in framing can be seen in conservative politicians like Ron DeSantis to publications like The Federalist. Ryan and Tho welcome the American right sounding more and more like Lew Rockwell, and touch on the contributions of paleoconservatives like Sam Francis.
Recommended Reading "World War I as Fulfillment: Power and the Intellectuals" by Murray N. Rothbard: Mises.org/RR_96_A
"The Problem With Right-Wing Regime Talk" by Joshua Tait: Mises.org/RR_96_B
"The Violent Fantasies of Blake Masters" by Sam Adler-Bell (New York Times): Mises.org/RR_96_C
"Inside the New Right, Where Peter Thiel Is Placing His Biggest Bets" by James Pogue (Vanity Fair): Mises.org/RR_96_D
"The Paranoid Style in American Politics" by Richard Hofstadter (Harper’s Magazine): Mises.org/RR_96_E
"Secede From the Regime" with Ryan McMaken and Lew Rockwell: Mises.org/RR_96_F
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Comic Dave Smith joins Jeff and Bob for a compelling look at the poisonous political landscape in post-goodwill America.
In this celebratory episode of Radio Rothbard, Ryan McMaken and Tho Bishop look at the fall of the Cheney and Bush dynasties and what it means for American politics. Other topics include former CIA directors declaring war on half of America, and just how much money Liz Cheney made in DC.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
The IRS plans to hire 87,000 new armed agents, while an FBI raid on Trump–the administration's open political rival–draws allegations of corruption. Economists and political scientists, from Mises to Robert Higgs to James Burnham to public choice scholars, explain why mission creep and abuse by state agencies is the rule rather than the exception.
Jonathan Turley on Trump being disqualified from office: Mises.org/HAP356-1 Mises on the managerial state: Mises.org/Bureaucracy James Burnham's The Managerial Revolution: Mises.org/Burnham Bob Murphy Show Episode on the FBI: Mises.org/BMS92
Has economics fallen to politics? Court economists like Paul Krugman–we might call them "regime economists"–represent a profession in big trouble. Jeff and Bob discuss.
Michael Tanner, "PIketty Gets it Wrong": Mises.org/HAP355-1 Bob Murphy on the economics establishment vs. Judy Shelton: Mises.org/HAP355-2 Jeff Deist on Nancy McLean's unprofessional attacks: Mises.org/HAP355-3 Bob's article with Phillip Magness on Piketty: Mises.org/HAP355-4
“The worst thing that can happen to a good cause is, not to be skillfully attacked, but to be ineptly defended." —Frédéric Bastiat
Tho Bishop gave this talk at Mises University 2021.
Additional Resources WhatHasGovernmentDoneToOurMoney.com
Watch or listen to Mises University 2022 at Mises.org/VMU22
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Featuring Joseph Becker, Anthony Cesari, Felicia Jones, and Alex Voss. Recorded at the Mises Institute in Auburn, Alabama, on 30 July 2022.
Fellowships in Residence at the Mises Institute in Auburn, Alabama, are available to graduate students and post-docs interested in scientific research in the Austrian school and libertarian political economy. For more information, visit Mises.org/fellows.
The Mises Institute’s Master of Arts in Austrian Economics is the first graduate program in the United States dedicated exclusively to the teaching of economics as expounded in the works and great treatises of Ludwig von Mises and Murray N. Rothbard. For more information, visit Mises.org/edu.
Students can also apply for scholarships to Mises Institute events at Mises.org/events.
Featuring Per Bylund, Tom DiLorenzo, Lucas Engelhardt, Sandy Klein, Robert Murphy, Patrick Newman, and Tim Terrell. Recorded at the Mises Institute in Auburn, Alabama, on 29 July 2022.
On this episode of Radio Rothbard, Tho Bishop is joined by Mises Research Fellow Marcel Gautreau for a wide-ranging conversation about challenges to the American-dominated neoliberal order. Marcel is a Ph.D. candidate studying economic and other policy reforms in non-liberal states and offers his perspective on how Rothbardian power-elite analysis is a powerful tool in understanding the world's most pressing issues today. He also shares his favorite Mises U lecture.
Additional Resources "Egalitarianism as a Revolt Against Nature" by Murray Rothbard: Mises.org/RR_91_A
For a New Liberty: The Libertarian Manifesto by Murray Rothbard: Mises.org/RR_91_B
Never a Dull Moment: A Libertarian Look at the Sixties by Murray Rothbard: Mises.org/RR_91_C
"A Rothbardian Analysis of the Constitutional Convention" by Patrick Newman: Mises.org/RR_91_Video
Marcel Gautreau on Twitter: @anarchyinblack
Watch Mises University 2022 live: Mises.org/Live
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Richard Arneson has been a major figure in political philosophy for the last few decades, and in this week’s article, I’d like to look at some points he raises in his article “Liberal Egalitarian Critiques,” his contribution to The Routledge Companion to Libertarianism, pp. 564–78. In the article, Arneson distinguishes between “hard” libertarianism, which accepts self-ownership and Lockean acquisition of resources, viewing these as rights that are taken as “side constraints” that cannot be violated; and “soft libertarianism,” which accepts these rights but doesn’t take them to be absolute.
Arneson directs most of his attention to the “soft” variety of libertarianism, evidently viewing “hard” libertarianism as absurd. He writes from an “egalitarian liberal” perspective, which holds that libertarians do not give sufficient weight to equality. Egalitarian liberals ground this claim on distributional or relational considerations. According to the distributional position, “there is a fair distributive pattern to which the quality of people’s lives or resource holdings should conform. If Tom or Sally by bad fortune of genetic inheritance or similar bad luck falls through the cracks of market competition, justice puts special priority on improving their condition” (p. 569). The relational egalitarian view is rather different, holding that “what matters for justice is that people relate as equals, as befits their equal dignity as rational agents, able to avoid relations in which some have unreciprocal power over others, de facto authority to command, and hierarchical standing or rank” (p. 570). I think Arneson’s own position inclines more toward the relational view, though he is favorable to the distributional view as well.
His strategy directed at “soft” libertarians is to say, in effect, “you think that you can make a few concessions and retain the bulk of your libertarian position intact, but you will soon discover that you cannot do so. Once you admit the importance of equality, you will find yourself pressured to go further by the logic of your case and give up libertarianism altogether.” I won’t try to assess the strength of the liberal egalitarian case against “soft” libertarianism; Arneson doesn’t contend that “hard” libertarianism, which I favor, is vulnerable to his argument as is “soft” libertarianism. Instead, I’ll try to show that liberal egalitarianism can be criticized in an analogous way: a little pressure on it suffices to show it has little real commitment to liberty.
Before looking at some of Arneson’s arguments, I should note that in fairness to him (though noting this isn’t required by respect for his libertarian rights), he doesn’t claim to have set forward a full defense of libertarian egalitarianism: “This chapter states liberal egalitarian objections to libertarianism. Arguing conclusively for these objections would be a further matter. At this point there seems to be little recourse except through the long march through reflective equilibrium or coherentist methods—which set of moral views taken as a whole matches our considered convictions after sustained argument?” (p. 577).
One of the “soft” libertarians Arneson discusses is John Tomasi, who holds that although libertarian property rights aren’t absolute, people do have the right to engage in productive economic enterprise, as well as to own personal property as “basic liberties.” Arneson disagrees (or at least represents the liberal egalitarian as disagreeing). He thinks that Robert Nozick, whom he admires, was correct that “liberty upsets patterns,” but Arneson takes this point in a different direction: if the pattern the egalitarian favors requires interference with liberty, so be it. He is not even prepared to grant that people have the right to own homes and books.
In order to be able to carry out any of many wonderful plans of life, one will need some secure control over certain material objects for extended periods of time…. To enjoy a secure home, extended control over some shelter is needed, but this need not involve private ownership of houses. To read books, one needs secure access to particular books, but a public library can satisfy this aim, as can access to books downloadable from the internet onto rented computers…. Consistently with securing for all the wherewithal to pursue any of an indefinitely wide array of worthwhile life plans, a society can choose ownership and property arrangements on instrumental grounds, with a view to promoting a range of justice values. This point is quite compatible with its being the case that private ownership has attractive instrumental properties in some ways, in some contexts. (p. 572)
John Rawls thinks that you cannot be compelled to work in a certain job, but Arneson is ready to challenge this too.
The freedom to seek employment from an array of job opportunities is formal. That liberty might leave unskilled Dick with no employment options except in relevant respects identical options of getting work for bad pay. Alternative arrangements that include elements of a command economy could in some circumstances make everyone better off and should not be ruled out of court a priori as violations of inviolable basic liberty. (p. 573)
In other words, because Dick doesn’t earn high pay, “alternative arrangements” in which the state compels Tom and Jerry to accept certain jobs are fine, so long as everyone is “better off.” It is a bit of a puzzle why, if they are among those better off, Tom and Jerry must be compelled to accept the jobs.
One reason “relational egalitarians” give for redistribution is that this might be necessary to secure equal political influence. If the rich have more money than the poor, it’s unlikely that a poor person will have as good a chance to influence political decisions as a rich person. But isn’t reducing the state’s power to such an extent that it becomes unimportant who influences it a plausible solution to this alleged problem? If the relational egalitarian responds that a strong state is needed to promote other egalitarian goals, we can answer that on relational egalitarian grounds, these other goals must be weighed against the goal of securing equal political influence and that the best outcome for the relational egalitarian, all things considered, may be to reduce the state’s power.
Arneson considers an objection many libertarians raise to egalitarianism. Isn’t what matters to you, or what should matter, how well you are doing, not whether you are equal to others in your society? So long as you have what is sufficient for a good life, why do egalitarian considerations enter the scene at all? If you think they do, you are open to the leveling down objection. “We could achieve equality in wealth and income across persons by destroying resources so that better-off persons drop down to the level of the current worse-off individual” (p. 576).
One response to this argument Arneson offers appeals to a point raised by Derek Parfit, who argues that the benefit you get from something may depend on how much you’d lose if you didn’t get the benefit. (A corresponding rule holds for harms.) It might turn out that poor people would gain more from certain sorts of benefits than a rich person, so we would have grounds for egalitarian redistribution that do not appeal directly to equality as a value.
This argument appears to be a variation of the familiar claim that, because of the diminishing marginal utility of money, a dollar is worth less to a rich person than to a poor one; Arneson mentions “Pigou-Dalton … components of prioritarianism (p. 577n2). Readers will be no doubt be familiar with the Austrian point that interpersonal utility comparisons are invalid, so I will instead say something else. So long as people are doing reasonably well, it is doubtful whether prioritarian considerations would mandate redistribution. Even if you allowed interpersonal utility comparisons, a dollar might not be worth more to a reasonably well-off person than to a rich one.
I’ve concentrated on Arneson’s criticisms of “soft” libertarianism, but he makes one comment that would apply to Rothbardians, whom he doesn’t mention, that astonished me. He says, “Consider the natural duty to promote justice or bring about rights-fulfillment. Since anarchy is a disaster, the natural duty to promote justice straightforwardly implies a duty to establish states, agencies that claim and effectively maintain a monopoly on the legitimate use of violence in a territory and that authoritatively and impartially enforce particular resolutions of them” (p. 568).So much for arguments that private protection agencies could supply protection and justice! Rothbard might never have written a line.
Congress enjoys exorbitant political privilege in the form of cheap deficit spending—but it may soon come to an end.
Original Article: "Rising Interest Rates May Blow Up the Federal Budget"
This Audio Mises Wire is generously sponsored by Christopher Condon.
The end of Roe may force many Americans to recognize that the United States is not one place. It is many places. The key is to reject uniform federal policy.
Original Article: "To Avoid Civil War, Learn to Tolerate Different Laws in Different States"
This Audio Mises Wire is generously sponsored by Christopher Condon.
On this episode of Radio Rothbard, Ryan McMaken and Tho Bishop talk about the increasing decay of federal legitimacy. Republicans are threatening to nullify federal law. Democrats want to nullify Supreme Court decisions.
Oh, and the Supreme Court just eliminated one of the most political, ill-reasoned decisions in its history.
Recommended Reading "Abolish the Supreme Court" by Ryan McMaken: Mises.org/RR_87_A
"Make Every State a Sanctuary State" by Ryan McMaken: Mises.org/RR_87_B
"End Roe v. Wade: It's Time to Defederalize Abortion Policy" by Ryan McMaken: Mises.org/RR_87_C
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Ryan McMaken and Tho Bishop look at the question of election integrity and what it means for the regime. How should we look at the allegations made in the film 2,000 Mules? How should we view the concept of election security? What does history tell us about the relationship between state power and voter turnout? Tune in for this and more on this week's episode of Radio Rothbard.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Jeff and Bob take a look at the misnamed "World Economic Forum" and its conference this past week in Davos, focusing on their recently published report.
Read the WEF's Chief Economists Outlook: Mises.org/WEF22
In his ambitious new book, Conservatism: A Rediscovery (Regnery, 2022), the distinguished Israeli philosopher Yoram Hazony poses a sharp challenge to the view that freedom is the highest political value, and in this week’s column, I’d like to address his challenge, which I find illuminating, though mistaken. By “freedom,” I mean what Rothbard, following Locke, calls “self-ownership.” Hazony does not reject freedom, but he thinks it is only one of several competing political values and, further, that it has been overemphasized by free-market liberals who neglect the values of public order, the inculcation of virtue by the state, and the assertion of national self-interest.
Hazony states the thesis we will be looking at in this way, criticizing F.A. Hayek:
It is clear that the freedom of the individual is not, for Hayek, an empirically derived moral rule which must be balanced against other such principles in seeking to steer the ship of state. What he calls our “faith in freedom” is, in fact, an axiom or dogma from which other articles of belief can be deduced as in any rationalist system. And this insistence on individual freedom as a dogma, as “the supreme principle” and the “highest ideal” of politics, is not something that can be reconciled with an empiricist or conservative political outlook. It is a statement of a liberal faith that is intended to override evidence and argument. (p. 312. All page references are to the Amazon Kindle edition)
It would be better to say that self-ownership is a right that imposes constraints on what may permissibly be done to the bearer of the right than to say that it is the “supreme” or “highest” value, because the highest value might by outweighed by other values, in sufficient combinations, and thus this sort of talk invites the balancing that it is the essence of Hayekian position to reject. But I have spoken of “highest value” in the title because this is the way Hazony chooses to consider the issue. Further, acceptance of self-ownership does not preclude acknowledging the good of loyalty—far from it. Politics is not the sum and substance of morality, but rather a framework—in the language of Douglas B. Rasmussen and Douglas J. Den Uyl, a “metanormative” framework—within which individuals can pursue the good life. Hazony is aware of this position, or something very much like it, as he shows in his discussion of the “fusionism” of Frank Meyer, but he rejects it because it counts freedom as always of overriding importance in politics.
What I find most interesting in this is the contrast that Hazony draws between rationalism and empiricism in regard to ethics. John Locke is his main enemy in the argument about the supremacy of freedom, and though in epistemology the rationalist René Descartes usually is taken to be an opponent of the empiricist Locke, this was not so, Hazony avers, in ethics. In this area, Locke is a rationalist, holding that morality can be derived from the self-evident axiom of freedom. He says,
Locke is often described as an empiricist. But his reputation in this regard is based on his Treatise Concerning Human Psychology [sic] (1689), which is an influential exercise in empirical psychology. His Second Treatise on Government is not, however a similar effort to formulate a theory of the state from an empirical standpoint. Instead, it begins with a series of axioms that are without any connection to what can be known from the historical and empirical study of the state. (p. 44)
Hazony proceeds to raise a series of objections to what Locke says. States in fact do not arise by voluntary agreement through a social contract. Far from being self-evident, the axiom of equal freedom is rejected by most people; instead, they sharply distinguish between members of their family, tribe, and nation, on the one hand, and outsiders, on the other, when they delimit the bounds of freedom. As an empiricist, Locke doesn’t earn a passing grade.
To this, there is an obvious response, to which I’ll return below: one doesn’t have to defend freedom through a rationalist procedure that starts from an unsupported axiom but instead can defend it by an argument from human nature. But even if for the moment we accept the starting point Hazony attributes to Locke, his argument still fails, as it neglects an important feature of ethics; there is an apparent difference between descriptive and normative statements that needs to be addressed. Judgments about ethics are claims about what ought to be the case. Even if Hazony is right that governments aren’t formed by consent, maybe they should be dependent on consent. Hasn’t Hazony confused the normative and the descriptive?
Hazony anticipates this objection and responds by denying the relevance of the distinction I have just made.
Liberals sometimes reply that the empirical falsity of their premises should be ignored because what they propose is not meant to be a descriptive political theory, but a normative one…. But words such as “normative,” or “what ought to be,” are not a magic wand that can, simply by being waved, turn an argument that is entirely detached from reality into one that is competent and true. For instance, if it is empirically untrue that human beings can sprout wings and fly about if they choose to do so, then it is nonsensical to say that, as a normative matter, human beings “ought to” sprout wings and fly about. (p. 131)
Hazony’s response does not work. It is true that there is a widely accepted principle of ethics that “ought implies can” (though the limits of that principle are hard to state accurately): a principle cannot require people to do what is impossible. But what is supposed to be the impossibility in people’s following the self-ownership principle? Again, Hazony confuses a view about what people should do with a descriptive theory about what people actually do or are likely to do. It is as if in response to “thou shalt not commit adultery” one were to object that many people do commit adultery, so this commandment is entirely detached from reality.
Suppose, though, that one follows Hazony and, rejecting “rationalism” and embracing “empiricism,” one provides a descriptively accurate account of how people behave, with due attention to their loyalty to kith and kin. Why would this be more than a description; why would it tell people what they ought to do? Hazony answers in this way:
Academics often say that one cannot make a legitimate inference from what is to what ought to be. In the present case, the argument would be that there is no legitimate way to move from a description of relations of mutual loyalty that are the basic building blocks of all human hierarchies (“what is”) to a description of the political obligations that arise from such realities (“what ought to be”). But this argument overlooks the fact that ideas or concepts are always normative in character, describing what an object ought to be if it is to be a tolerably good instance of a certain kind of object. Similarly, relations among ideas or concepts are always normative in character, describing what a relation ought to be if it is to be a tolerably good instance of a certain type of relation. That means that every object and every relation is known in our experience through a normative standard that we use to recognize it, and that this same normative standard is also what we use to distinguish a better from a worse object or relation of its kind. (p. 443n22)
Hazony’s point is well taken, but it does not do the ethical work he wants it to. We can speak of a good thief or a good communist, but “good” in this sense does not get us to morality. To do that while acknowledging Hazony’s point, one would have to speak of “good human being”; and if one did that, one would of necessity deal with the essence of being human in a way that Hazony’s reliance on empirical description does not. Hazony is of course aware of Aristotelian and Thomistic natural law ethics and says this can be seen as a “rationalized reconstruction” of the biblical tradition (p. 446n20); elsewhere he notes that he is “not an adherent of the rationalist natural law teaching of Thomas Aquinas” (p. 20).
Hazony urges us to follow the empirical method of trial and error, but there is a difference between the application of that method in science and in ethics that he neglects. In science, one can say that a hypothesis has been confirmed or falsified, but in ethics, the standards for judging are themselves matters in dispute. Whether a proposed course of conducts “works” or not, whether our trial of it has led to “error,” is itself a matter for ethical evaluation. For Hazony, the answer to this question lies in God’s revelation at Sinai, which he holds gives a universally valid natural law imperfectly understood by human beings. He may well be right, but whether he is or not is not sufficiently shown in this book.
I hope in future columns to return to Hazony’s stimulating book.
In this episode of Radio Rothbard, Ryan McMaken and Tho Bishop consider progressivism as a form of modern colonialism. The response to the prospects of the Supreme Court overturning Roe vs. Wade has highlighted the degree to which the American left—particularly those that reside in major blue cities—can't live with the concept of other areas of the country not abiding by what they see as moral absolutes. Ryan and Tho look at how this tension is shaping the modern political landscape, and they discuss the history of this impulse towards "liberal" centralization.
Recommended Reading "The New Postliberalism" by Jeff Deist: Mises.org/RR_83_A
"Federal Control of Abortion Laws Is Modern Colonialism" by Ryan McMaken: Mises.org/RR_83_B
"The Clash of Metropolis and Colony" by Charles and Mary Beard: Mises.org/RR_83_C
"Why the US Supports Secession for Africans, but Not for Americans" by Ryan McMaken: Mises.org/RR_83_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
We spend a lot of time on this show talking about central banking. This week we talk about central bankers themselves, from Powell to Brainard to Lagarde to Greenspan. Robert Aro joins.
Social issues, from abortion to critical race theory to teaching gender identity in elementary schools, dominate our politics and media.
Original Article: "Why Social Issues Dominate"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Would you give up voting in exchange for no more taxes? Stephan Livera joins the show to discuss the curious distinction between economic freedom and personal or political freedoms, and how we weigh those freedoms.
The Fraser/Cato Human Freedom Index: Mises.org/HFI The Heritage Index of Economic Freedom: Mises.org/IEF
Jeff is solo this week and hosts Tom Woods to ask a simple question: Why do social issues dominate our attention, to the detriment of economics and fiscal reality?
Read Jeff's article "Why Social Issues Dominate" Mises.org/Dominate
Why did Europe advance economically in the postmedieval period? Bas Spliet looks to the writings of Ralph Raico and Hans-Hermann Hoppe for answers.
Original Article: "Decentralization and the Rise of the West: The European Miracle Revisited"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Michael Rectenwald takes on the progressive canard of "socialism for the rich, capitalism for the poor," in which the government protects the wealthy but throws everyone else to the tender mercies of rapacious capitalism.
Original Article: "The Great Reset VII: Capitalism for the Rich and Socialism for the Poor"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Russian oligarchs, American pols, and state-connected billionaires are all cut from the same cloth: they didn't earn, or fully earn, their wealth and position in society. We must withdraw our sanction of these people.
Original Article: "The Wrong Elites"
This Audio Mises Wire is generously sponsored by Christopher Condon.
Jeff and Bob discuss whether America has its own oligarchs instead of Hoppe's "natural elites."
Hoppe's essay mises.org/Hoppe338 Jeff on the wrong elites: mises.org/WrongElites Bob on Piketty's bad inequality numbers: mises.org/Bob338
It has been more than fifty years since Egyptian strongman Gamal Abdel Nasser died, but his unfortunate legacy of imposing socialism on Egypt still harms the nation and its economy.
Original Article: "Egypt Is Still Haunted By Its Ghosts of Socialism"
This Audio Mises Wire is generously sponsored by Christopher Condon.
In this episode of Radio Rothbard, Ryan McMaken and Tho Bishop discuss whether Lindsey Graham is the worst member of the US Senate. The two carefully compare him to other terrible American senators — including Mitch McConnell and Tom Cotton — before settling on a definite conclusion.
Also on this episode, Ryan and Tho identify a silver lining to the Senate's Supreme Court confirmation hearing.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
In many ways, the liberal democracy that had its roots in nineteenth-century liberalism seems to have run its course. Can we revive it, or does something more authoritarian take its place?
Original Article: "The Progressives' Liberal Democracy Has Failed. Radical Decentralization Is the Answer."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Jeff and Bob discuss Biden's SOTU, the immorality of sanctions, and Fed chair Powell's pregnant comments.
In this episode of Liberty vs. Power, Dr. Patrick Newman and Tho Bishop look at the connection between the imperialism of the Jacksonians and the corruption of America as an "empire of liberty." As manifest destiny — and the annexation of Texas — brings the United States to the Pacific Ocean, and the issue of slavery heightens sectional differences in Washington, the party of Jackson and Van Buren comes to embrace many of the same policies that it was created to tame.
Recommended Reading "Shadow Imperialism: American Filibusters in Latin America" by Chris Calton — Mises.org/LP11_A
"The Folly of 1845: Texas and the Evils of Annexation" by Ryan McMaken — Mises.org/LP11_B
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
On this episode of Radio Rothbard, Tho Bishop interviews Norm Singleton, senior fellow of the Market Institute and former legislative director for Congressman Ron Paul. Tho and Norm discuss the experience of being an Austro-libertarian within the belly of DC, the challenges Dr. Paul faced in office, and what Norm sees as some of the most important battles in Washington today.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
In this episode of Liberty vs. Power, Dr. Patrick Newman and Tho Bishop look at the record of the Jackson administration on trade, spending, and corporate privilege, and how it tied into a larger shift within the Anglosphere.
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
On this episode of Radio Rothbard, Ryan McMaken and Tho Bishop are joined by Ash Navabi, a Canadian economist. Ash breaks down the differences in culture and political traditions between the US and Canada, and offers his take on the clash between the Freedom Convoy protests and the Trudeau regime.
Recommended Reading "Canada Nice No Longer: Trudeau's Totalitarian Response to Trucker Protests" by Mitch Nemeth: Mises.org/RR_70_A
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
General Andrew Jackson, fresh off the election of 1828, assumes the office of the presidency, armed with a battle plan to bring down the institutions he blames for the corruption of the republic: America's National Bank.
In this episode of Liberty vs. Power, Dr. Patrick Newman and Tho Bishop look at the Jacksonians' embrace of executive power and their battle against Nicholas Biddle of the Second Bank of the United States.
Recommended Reading "Bureaucracy and the Civil Service in the United States" by Murray Rothbard — Mises.org/LP9_A
"The War on Cash: Old and New" by Louis Rouanet — Mises.org/LP9_B
A Short History of Paper Money and Banking in the United States by William Gouge — Mises.org/LP9_C
The Jacksonian Persuasion: Politics and Belief by Marvin Meyers — Mises.org/LP9_D
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
The election of 1824 pits the Old Republicans against the entrenched interests of one-party rule in America. In this episode of Liberty vs. Power, Dr. Patrick Newman and Tho Bishop discuss the collapse of the first party system of the United States, the corrupt bargain that haunts the political career of John Quincy Adams and Henry Clay, and the rise of a new political movement inspired by Jeffersonian ideals: the Jacksonians.
Recommended Reading Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
In this episode, Ryan McMaken and Tho Bishop consider the counterfactual of what would have happened if Donald Trump were still president. What would the political landscape look like if it were a Republican administration dealing with historic unemployment? How would the reaction to the covid regime have looked in 2021? What would be the significance of the 2022 midterms and other political trends? That and more are covered on the latest Radio Rothbard.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
It is time to get back to normal life, and that starts with visible human faces.
Original Article: "Unmask America"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The transformation of Jeffersonians into National Republicans continues under President James Madison. Following the Louisiana Purchase, the new administration sets its eyes on Florida and Canada for new American expansion. The result is the disastrous War of 1812 and the rise of a new central bank.
Recommended Reading "The Feds Before the Fed" by Scott Trask — Mises.org/LP6_A
"Our Oligarchs Can Thank James Madison" by Ryan McMaken — Mises.org/LP6_B
"Why James Madison Hated Democracy" by Ryan McMaken — Mises.org/LP6_C
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
We will win. But how long will it take, and at what price victory?
Original Article: "How We Will Win"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Revolution of 1800 removed the Hamiltonians from power, and in Jefferson's first term, America witnessed a major reduction of federal power. In his second term, however, an offer by French Emperor Napoleon to purchase the Louisiana territory would mark the fall of the Old Republicans.
In this episode, Patrick and Tho look at how dreams of conquest in Canada, Spanish Florida, Mexico, and beyond have had tragic consequences for Americans' liberty.
Recommended Reading "The Louisiana Purchase: Jefferson's Constitutional Crisis that Risked Dissolving the Union" by Dave Benner — Mises.org/LP5_A
"Was Thomas Jefferson a Great President?" by Scott Trask — Mises.org/LP5_B
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
To kick off the New Year, Jeff recently had the opportunity to address a Discord channel dedicated to Austrian Economics. His talk focused on the state of economics generally, whether the profession is serving society, how economists failed us throughout the Covid hysteria, and especially the health and relevance of the Austrian school. This is a great survey of the role economics (and economists) should play in society.
Also includes questions from the audience, emceed by channel host JW Rich.
In this episode of Radio Rothbard, Ryan and Tho trade predictions for the year ahead. Topics include the importance of internal primaries ahead of next year's mid-terms, predictions on what the Fed will do with rising inflationary pressure, and what comes next from the covid regime.
Additional Reading "Americans May Finally Be Losing Confidence in the Woke Military" by Jose Nino: Mises.org/RR_64_A
"Could 2022 Bring the Collapse of the Euro?" by Alasdair Macleod: Mises.org/RR_64_B
"Will Senate Republicans Endorse Biden-Powell Inflation?" by Tho Bishop: Mises.org/RR_64_C
"The Fed Is Hawkish Now? I’ll Believe It When I See It." by Ryan McMaken: Mises.org/RR_64_D
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
In this episode of Liberty vs. Power, Patrick and Tho look at the success of the Jeffersonians following the corruption of Hamilton's Federalist Party. With the support of Treasury Secretary Albert Gallatin, the Jeffersonian Administration is able to slash the size of the federal bureaucracy. Unfortunately, the influence of Republican moderates — like James Madison — undermined a true restoration of old republican ideals.
Recommended Reading "Jefferson's Philosophy" by Murray Rothbard — Mises.org/LP4_A
"Jefferson as President: His Judicial Blunders" by Scott Trask — Mises.org/LP4_B
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
An abstract state is built on patriotism. And when patriotism becomes "the highest of all virtues and the source of all the remaining ones,” states can get away with almost anything.
Original Article: "'The State' Is an Abstract Idea. So How Is the State Also So Murderous?"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
With the Constitution in place and George Washington made president, Treasury Secretary Alexander Hamilton was empowered to make the new government in his image. Unsurprisingly, a man who celebrated the corruption of the old European order was quick to install a regime inspired by mercantilists like Jean-Baptiste Colbert.
In this episode, Patrick and Tho pinpoint the special interest that benefitted most from the Hamiltonian era, and how its failings sowed the seeds for the Jeffersonian Revolution of 1800.
Recommended Reading "The Founding Father of Crony Capitalism" by Thomas DiLorenzo — Mises.org/LP3_A
"Alexander Hamilton: Centralist and Nationalist" by Daren A. Wiseley — Mises.org/LP3_B
"Central Banking as an Engine of Corruption" by Thomas DiLorenzo — Mises.org/LP3_C
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
Hamilton's Curse: How Jefferson's Arch Enemy Betrayed the American Revolution—and What It Means for Americans Today by Thomas J. DiLorenzo — Mises.org/LP_Curse
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
The Human Action Podcast wraps up the year with none other than the venerable Professor Paul Gottfried!
This is our final show focused on the Old Right, the early 20th century political tradition which animated later libertarian figures like Murray Rothbard. How was this great legacy of peace and freedom on the Right—the Old Republic—lost to Cold Warriors and neoconservatives? Nobody is a better sociologist of American conservatism than Dr. Gottfried, and nobody is more compelling and erudite when it comes explaining how the Right went so horribly wrong (hint: former Commies). Lots of great names discussed, from Rothbard and Nock to Kirk, Strauss, Jaffa, Buckley, Meyer, and even Gore Vidal.
Don't miss this show!
Additional Resources Read Professor Gottfried's work on Conservatism: Mises.org/Gottfried-Book
How did a handful of colonies created by the European Old Order establish a unique nation conceived in liberty? In Episode 2 of the Liberty vs. Power Podcast, Patrick Newman and Tho Bishop discuss the lasting tension between the Spirit of 1776 and the Constitution of 1787. The results of America's successful war for independence is one of the most important victories for the cause of liberty, but the forces of power adapted to new opportunities.
Patrick and Tho also discuss the career of the infamous Robert Morris, and follow the rise of two men who are determined to mold America into the European nationalist tradition: Alexander Hamilton and James Madison.
Articles "America's Libertarian Revolution" by Murray Rothbard — Mises.org/LP2_A
"Bacon's Rebellion" by Murray Rothbard — Mises.org/LP2_B
"How the Constitutional Convention Vastly Expanded the Powers of the President" by Murray Rothbard — Mises.org/LP2_C
"The Founding Fathers' Coup d'État" by Albert Jay Nock — Mises.org/LP2_D
"Economic Determinism, Ideology, and the American Revolution" by Murray Rothbard — Mises.org/LP2_E
"Liberty and Property: the Levellers and Locke" by Murray Rothbard — Mises.org/LP2_F
Books Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP_Crony
Conceived in Liberty, Volumes I-IV by Murray Rothbard — Mises.org/LP2_G
Conceived in Liberty, Volume V by Murray Rothbard, Edited by Patrick Newman — Mises.org/LP2_H
Movie The Patriot — Mises.org/LP2_J
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
The historian Allen C. Guelzo in the epilogue to his rather hostile Robert E. Lee: A Life (Knopf, 2021) raises important questions about the value of nationalism that I’d like to discuss in this week’s column. Guelzo has favorable things to say about some of Lee’s personal qualities, but in his mind Lee committed one unforgiveable sin—he betrayed his native country. I don’t think that Lee was guilty of treason, not, at any rate, if you look at the definition of that crime in the US Constitution, but that isn’t the main issue I want to discuss here.
Before getting to what Guelzo says in his epilogue, we should recognize that people generally feel attached to their country, and this is a good thing. In the familiar words of Sir Walter Scott, “Breathes there the man, with soul so dead, / Who never to himself hath said, / This is my own, my native land!” Ludwig von Mises in Socialism speaks in a related way of people who fight for their country’s survival:
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.”
We’ll see later that the rest of this passage offers a clue to what is right and wrong about nationalism.
We’re now in a position to look at Geulzo’s epilogue. He criticizes two people for what they say about nationalism: one is the political philosopher A. John Simmons and the other is Murray Rothbard. He quotes Simmons as saying that membership in a nation-state “does not free a man from the burdens of moral reasoning” (p. 433) and suggests this gives inadequate recognition to national loyalty. On reading this, I wondered whether Guelzo was serious. Can he really believe that national loyalty is so important that the aim of keeping your nation together obviates the need for moral reasoning? Would it be all right to commit any atrocity, no matter how grave, if this were required to preserve your nation? That is a doctrine more suited to European fascism than to any doctrine recognizably American.
Guelzo criticizes Rothbard as an example of libertarians for whom “the charge of treason loses its taint of moral betrayal and becomes a mechanism by which an all-powerful state prevents dangers” to its own existence (p. 433). He gives a citation to Rothbard’s Anatomy of the State, pp. 45–46.
If you look up these pages, you will see that as usual, Rothbard is right on target. He says that the state uses accusations of disloyalty and treason to get people to fight for the government. A political system has value only to the extent that it helps individuals to survive and prosper. In Rothbard’s words,
War and revolution, as the two basic threats, invariably arouse in the State rulers their maximum efforts and maximum propaganda among the people. As stated above, any way must always be used to mobilize the people to come to the State’s defense in the belief that they are defending themselves. The fallacy of the idea becomes evident when conscription is wielded against those who refuse to “defend” themselves and are, therefore, forced into joining the State’s military band: needless to add, no “defense” is permitted them against this act of “their own” State…. We may test the hypothesis that the State is largely interested in protecting itself rather than its subjects by asking: which category of crimes does the State pursue and punish most intensely—those against private citizens or those against itself? The gravest crimes in the State’s lexicon are almost invariably not invasions of private person or property, but dangers to its own contentment, for example, treason, desertion of a soldier to the enemy, failure to register for the draft, subversion and subversive conspiracy, assassination of rulers and such economic crimes against the State as counterfeiting its money or evasion of its income tax.
In brief, the feeling of attachment to your own native land should never be confused with allegiance to a particular government. If we continue with the quotation from Mises given above, we see that he too makes the essential point that fighting for your country is valuable to the extent it protects your interest as an individual. You aren’t committing “treason” if you refuse to fight to preserve the government. Mises says,
War carried on pro aris et focis [for hearth and home] 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.”
There is another problem in Guelzo’s book, and this returns us to his accusation that Lee committed treason. The feeling of attachment to your own land does not delimit the proper boundaries of your land. Lee’s “country” was his own native state above the federal union; what is the matter with that? Feelings of loyalty to your nation are valuable to the extent they ward off attempts to subject people to international government bureaucracies, as in the recent Brexit movement, but they do not properly rule out secessionist movements, which themselves rest on attachment to a people’s own land.
In the first episode of the Liberty vs. Power Podcast, Tho Bishop and Patrick Newman take a deep dive into the intellectual framework of Rothbardian historical analysis. This includes looking at the "conspiracy analyst" as a praxeologist, identifying what personal incentives may motivate individual actors that directly influence government policy.
Tho and Patrick also discuss the importance of history as a vital tool in what Murray Rothbard considered "the science of liberty," and look at how battles over issues like Critical Race Theory highlight the ways the progressive left have leveraged historical narrative to strengthen their political agenda.
Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman — Mises.org/LP1_Crony
Important Links "The Conspiracy Theory of History Revisited" by Murray Rothbard — Mises.org/LP1_A
"Murray Rothbard and Jacksonian Banking" by Leonard Liggio — Mises.org/LP1_B
"Coming of Age With Murray" by Hans Hermann Hoppe — Mises.org/LP1_C
"The Forgotten Greatness of Rothbard’s Preface to Theory and History" by George Pickering — Mises.org/LP1_D
"The Fight over Economics Is a Fight over Culture" by Ryan McMaken — Mises.org/LP1_E
"How to Do Economic History" by Joseph T. Salerno — Mises.org/LP1_F
"The Case for Revisionism (and Against A Priori History)" by Murray N. Rothbard — Mises.org/LP1_J
Additional Reading Theory and History: An Interpretation of Social and Economic Evolution by Ludwig von Mises — Mises.org/LP1_G
The Economic Mind in American Civilization: 1606-1865, Volume One by Joseph Dorfman — Mises.org/LP1_H
To subscribe to the Liberty vs. Power Podcast on your favorite platform, visit Mises.org/LvP.
In this week’s column, I’d like to discuss an important criticism of the modern state that the historian Martin van Creveld raises in his classic book The Rise and Decline of the State (Cambridge University Press, 1999). By “state,” Van Creveld means something different from contemporary libertarians, for whom the state means a person or group exercising a monopoly over coercion in a territory.
Van Creveld has something less broad in mind.
The state … is an abstract entity which can be neither seen, nor touched. The entity is not identical with either the rulers or the ruled … it is a corporation in the sense that it possesses a legal persona of its own, which means that it has rights and duties and may engage in various activities as if it were a real, flesh and blood, living individual…. Understood in this way, the state—like the corporation of which it is a subspecies—is a comparatively recent invention. (p. 1)
On the surface, this sounds like a topic of interest only to legal and political theorists: Why should the rest of us care about it? As Van Creveld makes clear, the rise of the state in his sense has had disastrous consequences for human life and liberty. Any effective movement for a free society must fully understand this enemy.
Before the seventeenth century, political rule was personal. The Greek city-states and the Roman Republic most closely approached the modern distinction between public and private affairs; but even here, e.g., “in Rome and possibly elsewhere, each time a levy [for troops] was held the men had to be sworn in afresh—not to the Republic, it should be noted, but to the person of the commanding consul” (p. 30).
As you might expect under personal rule, warfare also bore a strongly personal character. “Rulers such as Charles V, Francis I, and their contemporaries fought each other to determine who would rule this province or that. The personal nature of their quarrels is indicated by the fact that the Emperor repeatedly offered to fight his rival in a duel” (p. 159).
You might at first sight think that personal rule is disastrous for individual liberty. If personal rule “neither was able, or indeed attempted, to guarantee the security of either the life or the property of individuals” (p. 54), shouldn’t we regard the state in Van Creveld’s sense as an improvement?
Surely, you might think, nothing could be so bad as personal rule of this sort. And yet in medieval and early modern Europe, more scope for individual freedom than in modern times existed. The power of a monarch to dominate his subjects met checks from every side. Local lords, independent or semi-independent towns, the emperor, and the church could be played off against the king, and against one another, to give the subject refuge from oppression. Further, premodern rulers lacked the skill of their latter-day successors to extract resources from their subjects. Governmental inefficiency is all to the good, as far as the cause of liberty is concerned.
Van Creveld contends that a twofold process disrupted the premodern conception of rule. First, the notion of the state as an abstract entity apart from the ruler developed. According to the leading theorist of the new notion, Thomas Hobbes, the state’s law knew no bounds: it need recognize no competing source of authority, whether church or emperor.
“Hobbes deserves the credit,” Van Creveld remarks,
for inventing the “state” … as an abstract entity separate both from the sovereign (who is said to “carry” it) and the ruled, who, by means of a contract among themselves, transferred their rights to him…. Bound by no law except that which he himself laid down (and which, of course, he could change at any moment), Hobbes’s sovereign was much more powerful than … any Western ruler since late antiquity. (p. 179)
As the new notion of state and sovereignty took hold, the importance of the ruler as a person declined. Sometimes, as with Louis XV, the king took little part in affairs of state. He spent “almost half of his time hunting and the rest with Madame de Pompadour” (p. 138). Even a monarch who took a very active role in government, Frederick II of Prussia, described himself in 1756 as “the first servant of the state” (p. 137).
Once more, though, the question arises, What is so bad about the state as an abstract entity? To grasp Van Creveld’s answer, you must consider the second part of the twofold process he describes. In the early modern period “the relationship between … the state and its citizens was based not on sentiment but on reason and interest” (p. 190). Under this conception, a citizen would meet undue demands with reluctance or outright resistance.
If, however, emotion could be mobilized for the new abstract entity, what Van Creveld calls a “Great Transformation” was in the offing. Jean-Jacques Rousseau acted as the prime theorist of the new order. In his view, everyone must be subordinated to the “general will” which embodied one’s patrie or community. “Patriotism—the active submission to, and participation in, the general will—becomes the highest of all virtues and the source of all the remaining ones” (p. 192).
With Rousseau, though, we have not yet reached the modern state in its culminating form. He took the patrie to be local. But when, after the French Revolution, various writers identified the general will with the nation, the process that led to disaster was complete.
How so? Let us see what we have amassed. We have an abstract entity, staffed by a professional bureaucracy, to which all citizens in a nation had to give themselves without limit. And what was the purpose of the new entity? War, fought with unprecedented manpower and armaments and without restraint.
To accomplish its purpose, the state gradually seized total control of the monetary system. (Van Creveld is, with Murray Rothbard, one of the few historians who see the centrality of this control.) In the book’s central passage, our author notes that the
states having finally succeeded in their drive to conquer money, the effect of absolute economic dominance on the states themselves was to allow them to fight each other on a scale and with a ferocity never equalized before or since…. The concentration of all economic power in the hands of the state would not have been necessary, nor could it have been justified, if its overriding purpose had not been to impose order on the one hand and fight its neighbors on the other. (pp. 241–42)
A seemingly recondite concept, the state as an abstract entity took on bodily form and was revealed, in the world wars of the twentieth century, to be an all-devouring monster. Of course, the blessings of the new order had to be spread beyond Europe. Most of Asia, Africa, and Latin America proved no match in the eighteenth and nineteenth centuries for the newly armed Leviathans, and Van Creveld tells the story of imperialism in a grisly chapter. In the book’s best-written passage, he remarks that the imperial “system was cheap to run, the number of white administrators usually being only one per 70,000–100,000 natives; as Winston Churchill … might have said, never did so few keep down so many with the aid of so little” (p. 319).
HL Mencken is the writer you need to read immediately. He was savagely brilliant, caustic, and witty, but also prolific across genres in ways almost unthinkable of journalists today. His skill with the English language was virtually unmatched in the 20th century, as was his deep and abiding contempt for utopian statism in any form. And his broadsides against two world wars were incredibly courageous at the time.
Our great friend Jim Bovard joins the show to discuss Mencken's work, his complicated elitism, his Old Right politics and social views, and the magnificent pleasure of reading this master.
"H.L. Mencken, The Joyous Libertarian" by Murray N. Rothbard: Mises.org/Joyous
Mencken Wikiquote: Mises.org/HLQ
Garet Garrett was among the most important figures from the literary, political, and laissez-faire economic traditions of the Old Right, but his name is hardly known today. In 1938 he penned "The Revolution Was," a remarkable essay about FDR's revolutionary New Deal and, more importantly, how it was accomplished. FDR's revolution had already happened, though few Americans understood it or grasped what the triumph of an administrative state would mean. The New Deal was a revolution "with the form," because the old trappings of constitutionalism and separation of powers remained intact. What had changed was the substance of American government, engineered through skillful propaganda and marked by radically increased control over the nation's capital and businesses. This essay is entirely relevant to our current politics, and explains with tremendous clarity the the ongoing revolution happening under our noses today. Ryan McMaken joins Jeff Deist for a deep exploration of the essay and its lessons for us today.
You owe it to yourself to read this masterpiece.
Read Garet Garrett's prescient essay: Mises.org/GaretWas
This week's show features a panel discussion recorded in late October at our annual Supporters Summit. Panelists Ryan McMaken, Jeff Deist, Mike Maharrey, and Tho Bishop lay out real strategies for achieving decentralization.
Includes an introduction by Joey Clark. Recorded in St. Petersburg, Florida on October 22, 2021.
McAuliffe could not dissociate himself entirely from national politics because he was a national Democratic figure closely allied to the Clintons for decade
Original Article: "Paul Gottfried on the Virginia Election"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
On the latest Free Man beyond the Wall podcast, Pete Quiñones, Patrick Newman, and Tho Bishop discuss Andrew Jackson and his cadre who fought against central banks—and cronyism in general. What can libertarians learn from the strategy they deployed and the power they were willing to wield?
Additional Resources Cronyism: Liberty versus Power in Early America, 1607–1849 by Patrick Newman
"Cronyism from the Constitution to the Mexican-American War": Pete Quiñones interviews Patrick Newman
Daniel McAdams of the Ron Paul Institute joins the show to discuss what might be termed the Ron Paul Doctrine: a combination of laissez-faire at home, decentralized domestic political power (up to and including secession), robust free trade, and strict non-intervention abroad, This doctrine—which mirrors Mises's prescription for a liberal society—makes no phony distinctions between foreign and domestic policy, or between military and economic interventions. It places peace and property at the center of a free society, and calls for humility rather than hubris in politics. Daniel also gives his thoughts on Dr. Paul's doctrine as it applies today to China, Turkey, Russia, and Iran.
The federal government, along with pharmaceutical, alcohol, and tobacco companies have spent money trying to put the legalization genie back in the prohibition bottle, so any argument or propaganda will suit their purposes.
Original Article: "Some Conservatives Still Pine for the Good Ol' Days of Cannabis Prohibition"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Many landlords just received a crash course about how irrelevant their property rights are in Washington.
Original Article: "An End to the Bizarre CDC Rent Moratorium"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Some economists are good at political philosophy as well. Mises and Rothbard of course come to mind, but the good philosophers aren’t confined to Austrian school economists. Amartya Sen and Kenneth Arrow know what they are talking about when it comes to philosophy, agree with them or not. But some eminent economists don’t, and, judging by Nicholas Wapshott’s new book, Samuelson Friedman (Norton, 2021), the most famous American economist of the twentieth century, Paul Samuelson, was not a philosophical giant. The book is a study of the Newsweek columns of Samuelson and Milton Friedman, and Samuelson doesn’t appear to have thought through philosophical issues very deeply. Friedman does much better, but I’m going to be talking only about Samuelson.
One of the clichés of anti–free market thought is the claim that human rights are more important than property rights. This is nonsense; property rights are rights of human beings to property. Samuelson accepts an extreme version of this cliché:
“The rights of property shrink as the rights of man expand,” he wrote. While some suffered because the government intervened in the market, an unfettered market had winners and losers, too, he argued. While the free market suggested that everyone was free to buy what they wanted, there was such a thing as rationing by price, which put many items well beyond the reach of those without the means. The children of those who could not afford good education, for instance, were deprived by the market setting too high a price. The “freedom” of individuals provided by the market was therefore only notional. (p. 80)
Samuelson has confused two different things. Suppose I would like to visit Paris but can’t afford an airplane ticket. I’m unable to do what I want, but no one is using force against me, or threatening to use force, to prevent me from going to Paris. I can’t go because I am unable to meet the price that the owner of the airplane has set for the use of its services. The situation would be quite different if I bought a ticket and government agents forcibly removed me from the plane. Samuelson could counter in this way: the distinction between being unable to do something because doing it requires the consent of someone else, which he declines to give, and to be forcibly prevented from doing something isn’t important. Nevertheless, there is a distinction, and Samuelson for the most part ignores it.
Indeed he soon makes even clearer that he doesn’t understand the distinction. “Samuelson saw prices merely as a means of rationing scarce goods…. Indeed, the deliberate raising and lowering of prices was often a means of guiding human behavior rather than following it. Throwing Friedman’s words back at him, Samuelson wrote, ‘libertarians fail to realize that the price system is, and ought to be, a method of coercion’” (p. 80).
There are, though, some indications that he acknowledges the distinction, but just doesn’t see why coercion, as libertarians understand it, is bad. “And even if ‘coercion’ were the right word, Samuelson believed such compulsion to be way down the list of important issues for economists to be concerned about. ‘The notion that any form of coercion whatever is in itself so evil a thing as to outweigh all other evils is to set up freedom as a monstrous shibboleth,’ he wrote” (p. 86).
In other words, Samuelson is saying that if the state coerces you to make an exchange with someone or taxes you, this isn’t much of a problem. And why not? In an incredible passage, Samuelson gives us his answer. If you exercise your right to freedom, you are coercing those who want you to do things that you refuse to do. “‘My privacy is your loneliness,’ he wrote. ‘My freedom to have privacy is your lack of freedom to have company. Your freedom to “discriminate” is the denial of my freedom to “participate”’” (p. 86).
This passage enables us to resolve a seeming contradiction in what Samuelson says. He first says that there really isn’t a distinction between government coercion and the “coercion” of the price system but then seems to acknowledge there is a distinction, only to dismiss it as not important. The “reconciliation” is that Samuelson takes exercises of freedom to be in conflict with one another in a way that necessarily involves coercion. When he seems to admit a distinction between freedom and coercion, this is merely a slip on his part. He hasn’t thought through consistently his rejection of the distinction.
He falls into another confusion. He conflates freedom with anarchy, taken as the absence of rules. ‘’‘The modern city is crowded. Individualism and anarchy will lead to friction. We now have to coordinate and cooperate,’ Samuelson wrote” (p. 86). He several times gives the example of traffic lights at a crossroads restricting individual freedom. He does not see that if the owner of a road sets rules for its use, this does not coerce people who prefer to ignore these rules.
It will come as no surprise that he likes taxes. “It is not possible for individuals to cut themselves off from society, he argued, and the price of belonging to society was the obligation to pay for common services through taxation…. Taxation, which was an example of how the state coerced free individuals, was to Samuelson the means for a good citizen to pay his debt to society” (p. 85). How we contracted this debt to society he does not bother to explain. Why is more required than individuals who freely associate with one another? Where does “society” come in apart from this? Samuelson does not tell us.
As you would expect, “Samuelson preferred the democratic process over the market. It was fairer, kinder, more civilized” (pp. 87–88). Those who disagree are enemies of civilization who need to be coerced to pay their debt to society. Such is the wisdom of Paul Samuelson.
If every new virus or variation warrants shutdowns or new vaccines, we will face an unending dystopian hellscape of state intervention in our medical decisions.
Original Article: "End the Shutdown, Again"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The philosopher Michael Huemer is usually favorable to the free market, and he is also a strong defender of anarchism. Although I disagree with some of the arguments in his defense of anarchism, The Problem of Political Authority, it is an excellent book.
In a recent blog post, he surprisingly suggests that taxation may in some cases be justified. He offers two examples, Pigouvian taxes on negative externalities and Georgist land taxes. In what follows, I’ll concentrate on the first of these.
He offers the following argument for Pigouvian taxes (named for the Cambridge economist A.C. Pigou).
Sometimes, people do stuff that harms other people, and the people who are harmed don’t consent to the harm. I.e., people “produce negative externalities”, as the economists say….
Example: Pollution. Whenever you drive your car, you release a little bit of pollution into the air, which imposes a tiny expected harm on a huge number of other people and animals, including future generations. I bet you don’t get their consent, either.
On some absolute deontological views, you always need consent before imposing (certain kinds of) harm on others. But that’s impractical. You can’t get the consent of everyone in the world, including the future generations who will be affected by your pollution. So we’d have to say either
(a) “You can’t pollute at all.” This requires shutting down modern civilization. Or
(b) “Pollution isn’t the right kind of harm” (it’s not aggressive, people don’t have rights against pollution, or something like that). But this would mean that it would be fine to completely destroy the atmosphere with pollution (if someone had the ability to do that).
(a) and (b) are both bad. We shouldn’t completely prohibit all pollution, nor should we take no action at all against pollution. While complete destruction of the atmosphere may not be on the table (yet), we would surely have too much pollution if we didn’t do anything at all to polluters.
This point of course applies to other kinds of externalities. If people get to impose negative externalities for free, there will be too many negative externalities. Lots of activities will get done that impose greater total costs than their total benefits. And almost everyone is going to lose out overall from all the negative externalities.
Solution: Pigouvian taxes. These are taxes on externality-producing activities. They’re supposed to be set so that the tax is about equal to the amount of external harm produced by the activity. This deters people from doing the activity, if and only if the total cost created by it exceeds the total benefit. Example: A carbon tax that would approximate to the amount of harm caused by greenhouse gas emissions. This would deter the least economically valuable carbon-emitting activities, while still allowing the most valuable ones.
Huemer now asks, How does this argument justify taxation?
Wait—you can see what the utilitarian rationale is for Pigouvian taxes, but why isn’t it still theft (even if a beneficial theft)? My thinking is that the person creating the negative externality actually owes compensation for doing so. Extracting owed compensation from someone isn’t theft. So this form of taxation isn’t theft. But note that the government would be obligated to use the money collected to actually compensate the people who are harmed by the taxed activity.
I do not think that this argument succeeds. Huemer mentions “absolute deontological” views, which hold that you must get someone’s consent before harming them and suggests this has unacceptable consequences as regards pollution. I don’t deny that’s a possible view, but a more common deontological position is that you can’t violate someone’s rights without his consent. Not every harm counts as a rights violation, at least if you characterize “harming” as “making worse off.” For example, if you are hired for a job that I wanted and would have gotten had you not been chosen, you have harmed me but haven’t violated my rights.
If you adopt the more common deontological position, then the problem Huemer raises does not come up. Pollution from your car requires consent only from those whose rights would be violated by what you do. But hasn’t Huemer already considered and rejected this response? He says that if you hold pollution isn’t aggressive and doesn’t violate rights, then you would have to accept that it would be all right for someone to destroy the atmosphere, if he could do so.
Huemer has wrongly taken for granted an all-or-nothing position, a common failing among libertarians. Either any amount of pollution violates deontological constraints, or none does. But why assume this? The scope of property rights is to an extent conventional within a society, and it is irrational to delimit property rights in either of the ways Huemer indicates. In a classic paper, “Law, Property Rights, and Air Pollution,” Murray Rothbard shows how pollution problems have been dealt with in the common law. Surely this is a better rights-based approach to pollution than either of the views based on rights that Huemer mentions.
Suppose that we adopt the view of pollution rights I suggest. Should we then say that it’s all right for someone to pollute, so long as he compensates those whose rights he violates? That seems wrong; in general, you aren’t at liberty to violate someone’s rights so long as you make him no worse off than before your rights violation. The rights holder usually can demand more than this or refuse consent altogether to the rights violation.
As I mentioned, Huemer has another case in which taxation might be justified. He says,
I think Henry George may be right. Henry George thought that (a) everyone is entitled to the value that they themselves produce, but (b) they’re not entitled in the same way to value produced by nature. If you happen to be the first person to claim some valuable natural object, that doesn’t really give you a greater claim to its value than other people who arrived later.
So when you build a building on some land, you should own the value that you added via your labor. But you don’t have any special claim to the value that the land had prior to your arrival. Instead, George thought, everyone should get an equal portion of the value of all land & natural resources. (We can simplify this to just “land”, since natural resources are generally part of the land.)
Huemer goes on to indicate that a land tax on the “intrinsic value” of the land, paid to those who aren’t using it, can be seen as a form of compensation to the nonusers. I’m not going discuss this further, as the initial Georgist starting point is implausible and Huemer hasn’t argued for it. In the view I take to be correct, which I haven’t argued for either, you initially acquire physical resources, not “value.” The value of what you acquire depends on the preferences of people in society but isn’t itself an acquisition. Further, on Huemer’s assumption that you don’t own the intrinsic value of the land, why does “society” own it in a way that requires compensation for what has been “taken” by the land user?
Huemer’s ingenious arguments leave us where we started: taxation is theft.
Professor Bradley Birzer from Hillsdale College joins the show to dissect Russell Kirk's famous 1981 essay condemning libertarians. Is libertarianism necessarily utopian and unworkable, as Kirk suggests? Is it hubris to imagine we don't need the state—or even God—to prevent social chaos? Do libertarians have more in common with Communists than conservatives? Or was Kirk simply attacking an absurd strawman of the atomistic individual, with Rothbard as the particular (unstated) target of his ire? Dr. Birzer is a thoroughgoing scholar of Kirk, and provides great insights into the context and thinking behind this critique.
Russel Kirk's "Libertarians, The Chirping Sectaries": Mises.org/Kirk Rothbard's "Myth and Truth About Libertarianism": Mises.org/HAP77a Dr. Birzer's "Kirk and the Libertarians": Mises.org/HAP77b Hornberger's "An Open Letter to Russell Kirk": Mises.org/HAP77c
Featuring Joseph Becker, Felicia Jones, Karras Lambert, and David McClain. Recorded at the Mises Institute in Auburn, Alabama, on 24 July 2021.
Fellowships in Residence at the Mises Institute in Auburn, Alabama, are available to graduate students and post-docs interested in scientific research in the Austrian school and libertarian political economy. For more information, visit Mises.org/fellows.
The Mises Institute’s Master of Arts in Austrian Economics is the first graduate program in the United States dedicated exclusively to the teaching of economics as expounded in the works and great treatises of Ludwig von Mises and Murray N. Rothbard. The goal of the program is to assist students in mastering the principles of this great body of work and putting these principles to use in their chosen endeavors. For more information, visit Mises.org/edu.
Eric Mack is one of the foremost contemporary philosophers who support the free market. He has for many years been concerned with the “anarchist-minarchist” dispute. In a “state of nature” in which people’s rights to self-ownership and private property are generally recognized, most individuals would find it in their interest to hire private protection agencies to defend their rights rather than handle disputes about rights themselves. Robert Nozick argues in part 1 of Anarchy, State, and Utopia (1974) that competing private protection agencies in a given area would tend to coalesce into a single “state-like entity” that would have a de facto monopoly over protective services. Nozick’s minimal state lacks the power to tax people, but in his view most people would buy its services.
Mack is a leading critic of Nozick’s argument and in a number of papers has raised difficulties for it. With the details of these difficulties we are not here concerned, but suffice it to say that he shows Nozick has not proved that a minimal state would likely arise from the state of nature described above.
Despite this, Mack in his recent book Libertarianism (Polity Press, 2018) offers a possible justification for a minimal state that has more powers than Nozick’s minimal state. In particular, it possesses the power of taxation. In today’s article, I’d like to examine Mack’s argument.
He first raises for Nozick’s minimal state the problem of public goods.
For our purposes here, we can think of a public good as a good which, if it is produced and enjoyed by some members of a given public, cannot readily be withheld from other members of that public…. The standard and useful example of a public good is national-scale defense…. The conventional economic wisdom … is that the total value of the orders that the state or firm [that offers defense services] will receive will be markedly less than it naively expects.
People will prefer to free ride, hoping that others will pay for the good; but if everyone reasons this way, the good will not be purchased.
Mack is certainly right that if anarchist protective agencies or a Nozickian minimal state, lacking the power of taxation, prove unable to supply effective defense, that would be a serious objection to them indeed. But I think his argument has moved too fast. According to the customary neoclassical analysis, public goods will not be supplied efficiently. It does not follow from that, though, that the good will not be supplied at all, or in a quantity insufficient to “do the job.” The extent of the supply is an empirical matter. If a libertarian theory of rights doesn't maximize neoclassical efficiency, this isn't a fatal defect.
There are two other problems with invoking public goods problems to justify taxation. First, why couldn’t people supply public goods through contracts in which they agreed to pay for these goods only if the contract secured a sufficient number of such conditional offers of payment to supply the good? Under such arrangements, the problem of “free riders” would be substantially alleviated. Further, the whole notion of “public goods” can be challenged from the standpoint of Austrian economics. The idea depends on conjectures about what people would demand under various hypothetical circumstances, but resort to such constructions is hardly consistent with Austrian “demonstrated preference,” in which only the actual choices of people in the free market are taken account of in analysis.
Suppose, though, that the free market turns out to be unable to supply defense. Would Mack then be correct when he says that a taxation minimal state (TMS) may be justifiable? He says,
Persons’ rights indicate what must not be done to them—or more specifically, what must not be done to them without their consent. But what about cases in which consent is not feasible? … A person’s right over her own body entails that she has a right not to be cut open without her consent even by an expert surgeon seeking to save her life. However, what if the person who needs that surgery to save her life is already unconscious and, hence, unable to give consent? If it is permissible for the surgeon to proceed with the needed surgery on the already unconscious individual, this seems to be true because the requirement that the subject consent to the physical intervention is really a requirement that she consent if and only if consent is feasible.
If this is right, then, “the libertarian advocate of the TMS may argue that, precisely because of the non-feasibility of attaining consent from individuals to make payments in exchange for the public good of rights-protection, it is permissible to impose those payments without actual consent.”
I do not think this argument succeeds. In Mack’s first case, it seems permissible to proceed with the life-saving operation because there is reason to believe that is what the patient would want. Most people would want to be saved in these circumstances. If she had given instructions beforehand not to operate, then the operation would not be permissible. In the taxation case, the reason consent is not feasible is that people refused to pay taxes voluntarily in a sufficient amount to enable the minimal state to function. It is hardly plausible to say that I may force you to pay me for my services, because, owing to your refusal of my services, getting your consent is not feasible.
Mack himself raises an important problem for the argument for the taxation minimal state. “Recall…. that this defense of the TMS turns on a striking assumption about information. It assumes that the state’s tax assessors would know, for each assessed party, what magnitude of taxation would leave that party net better off in light of the value for that party of her receipt of the tax-funded public good of protective services.”
The TMS has collapsed, with no prospect of emergency surgery to revive it.
Featuring Per Bylund, Tom DiLorenzo, Sandy Klein, Patrick Newman, Tim Terrell, and Mark Thornton. Recorded at the Mises Institute in Auburn, Alabama, on 23 July 2021.
Marxism sees the coming of socialism as an inescapable necessity. Even if one were willing to grant the correctness of this opinion, one still would by no means be bound to embrace socialism. It may be that despite everything we cannot escape socialism, yet whoever considers it an evil must not wish it onward for that reason and seek to hasten its arrival; on the contrary, he would have the moral duty to do everything to postpone it as long as possible. No person can escape death; yet the recognition of this necessity certainly does not force us to bring about death as quickly as possible. Marxists would have to become socialists just as little as we must become suicides if they were convinced that socialism would be bound to bring about no improvement but rather a worsening of our social conditions.Cf. Hilferding, Das Finanzkapital (Vienna:] 91 0), p. X.
Socialists and liberals agree in seeing the ultimate goal of economic policy as attainment of a state of society assuring the greatest happiness for the greatest number. Welfare for all, the greatest possible welfare for the greatest possible number—that is the goal of both liberalism and of socialism, even though this may now and then be not only misunderstood but even disputed. Both reject all ascetic ideals that want to restrain people to frugality and preach renunciation and flight from life; both strive for social wealth. Only over the way of reaching this ultimate goal of economic policy do their views disagree. An economic order resting on private ownership of the means of production and according the greatest possible scope to the activity and free initiative of the individual assures to the liberal the attainment of the goal aspired to. The socialist, on the other hand, seeks to attain it by socialization of the means of production.
The older socialism and communism strove for equality of property and of income distribution. Inequality was said to be unjust; it contradicted divine laws and had to be abolished. To that liberals reply that fettering the free activity of the individual would harm the general interest. In the socialist society the distinction between rich and poor would fall away; no one would any longer possess more than another, but every individual would be poorer than even the poorest today, since the communistic system would work to impede production and progress. It may indeed be true that the liberal economic order permits great differences in income, but that in no way involves exploitation of the poor by richer people. What the rich have they have not taken away from the poor; their surplus could not be more or less redistributed to the poor in the socialist society, since in that society it would not be produced at all. The surplus produced in the liberal economic order beyond what could also be produced by a communistic economic order is not even entirely distributed to the possessors; a part of it even accrues to the propertyless, so that everyone, even the poorest, has an interest in the establishment and maintenance of a liberal economic order. Fighting erroneous socialist doctrines is therefore not a special interest of a single class but the cause of all; everyone would suffer under the limitation of production and of progress entailed by socialism. That one has more to lose, another less, is incidental in relation to the fact that all would be harmed and that the misery awaiting them is equally great.
That is the argument in favor of private ownership of the means of production that every socialism that does not set up ascetic ideals would have to refute. Marx did indeed perceive the necessity of this refutation. When he sees the driving factor of the social revolution in the fact that the relations of ownership change from forms of development of the productive forces into fetters on them,Cf. Marx, Zur Kritik der politischen Ökonomie, edited by Kautsky (Stuttgart: 1897), P. xi. when he once in passing tries to offer a proof—which failed—that the capitalist manner of production impedes the development of productivity in a particular case,Cf. Marx, Das Kapital, vol. 3, first part, third edition (Hamburg: 1911), pp. 242 ff. he does incidentally recognize the importance of this problem. But neither he nor his followers could attribute to it the significance it deserves for deciding the question of socialism or liberalism. They are hampered in doing so even by the entire orientation of their thinking around the materialist interpretation of history. Their determinism just cannot understand how one can be for or against socialism, since the communist society does form the inescapable necessity of the future. It is moreover settled for Marx, as a Hegelian, that this development toward socialism is also rational in the Hegelian sense and represents progress toward a higher stage. The idea that socialism could mean a catastrophe for civilization would necessarily have seemed completely incomprehensible to him.
Marxian socialism therefore had no incentive to consider the question whether or not socialism as an economic form was superior to liberalism. To it, it seemed settled that socialism alone signified welfare for all, while liberalism enriched a few but abandoned the great masses to misery. With the appearance of Marxism, therefore, controversy over the advantages of the two economic orders died away. Marxists do not enter into such discussions. Ex professo [avowedly] they have not even tried to refute the liberal arguments in favor of private ownership of the means of production, not to mention actually refuting them.
In the view of individualists, private ownership of the means of production fulfills its social function by conveying the means of production into the hands of those who best understand how to use them. Every owner must use his means of production in such a way that they yield the greatest output, that is, the highest utility for society. If he does not do this, then this must lead to his economic failure, and the means of production shift over to the disposal of those who better understand how to use them. In that way the inappropriate or negligent application of means of production is avoided and their most effective utilization assured. For means of production that are not under the private ownership of individuals but rather are under social ownership, this is not true in the same way. What is missing here is the incentive of the owner's self-interest. The utilization of equipment is therefore not as complete as in the private sector; with the same input the same output cannot therefore be achieved. The result of social production must therefore remain behind that of private production. Evidence of that has been supplied by public enterprises of the state and municipalities (so individualists further argue). It is demonstrated and well known that less is accomplished in these than in the private sector. The output of enterprises that had been quite profitable under private ownership sank at once after coming under state or municipal ownership. The public firm can nowhere maintain itself in free competition with the private firm; it is possible today only where it has a monopoly that excludes competition. Even that alone is evidence of its lesser economic productivity.
Only a few socialists of Marxist orientation have recognized the significance of this counterargument; otherwise they would have had to admit that this is a point on which everything depends. If the socialist mode of production will be able to achieve no additional output in comparison with private enterprise, if, on the contrary, it will produce less than the latter, then no improvement but rather a worsening of the lot of the worker is to be expected from it. All argumentation of the socialists would therefore have to concentrate on showing that socialism will succeed in raising production beyond the amount possible in the individualistic economic order.
Most Social Democratic writers are quite silent on this point; others touch on it only incidentally. Thus, Kautsky names two methods that the future state will use for raising production. The first is the concentration of all production in the most efficient firms and the shutting down of all other, less high-ranking, firms.Cf. Kautsky, Die soziale Revolution, third edition (Berlin: 1911), II, pp. 21 ff. That this is a means of raising production cannot be disputed. But this method is in best operation precisely under the rule of free competition. Free competition pitilessly culls out all less-productive enterprises and firms. Precisely that it does so is again and again used as a reproach against it by the affected parties; precisely for that reason do the weaker enterprises demand state subsidies and special consideration in sales to public agencies, in short, limitation of free competition in every possible way. That the trusts organized on a private-enterprise basis work in the highest degree with these methods for achieving higher productivity must be admitted even by Kautsky, since he actually cites them as models for the social revolution. It is more than doubtful whether the socialist state will also feel the same urgency to carry out such improvements in production. Will it not continue a firm that is less profitable in order to avoid local disadvantages from its abandonment? The private entrepreneur ruthlessly abandons enterprises that no longer pay; he thereby makes it necessary for the workers to move, perhaps also to change their occupations. That is doubtless harmful above all for the persons affected, but an advantage for the whole, since it makes possible cheaper and better supply of the markets. Will the socialist state also do that? Will it not, precisely on the contrary, out of political considerations, try to avoid local discontent? In the Austrian state railroads, all reforms of this kind were wrecked because people sought to avoid the damage to particular localities that would have resulted from abandonment of superfluous administrative offices, workshops, and heating plants. Even the Army administration ran into parliamentary difficulties when, for military reasons, it wanted to withdraw the garrison from a locality.
The second method of raising production that Kautsky mentions, "savings of very many kinds," he also, by his own admission, finds already realized by the trusts of today. He names, above all, savings in materials and equipment, transport costs, and advertising and publicity expenses.Die soziale Revolution, p. 26. Now as far as savings of material and transport are concerned, experience shows that nowhere are operations carried on with so little thrift in this respect and nowhere with such waste of labor and materials of all kinds as in public service and public enterprises. Private enterprise, on the contrary, seeks, even in the owner's own interest alone, to work as thriftily as possible.
The socialist state will, of course, save all advertising expenses and all costs for traveling salesmen and for agents. Yet it is more than doubtful whether it will not employ many more persons in the service of the social apparatus of distribution. We have already had the experience in the war that the socialist apparatus of distribution can be quite ponderous and costly. Or are the costs of the bread, flour, meat, sugar, and other tickets really smaller than the costs of advertisements? Is the large staff that is necessary for the issue and administration of these rationing devices cheaper than the expenditure on traveling salesmen and agents?
Socialism will abolish small retail shops. But it will have to replace them with goods-delivery stations, which will not be cheaper. Even consumer cooperatives, after all, have no fewer employees than retail trade organized in a modern way employs; and precisely because of their higher expenses, they often could not stand the competition with merchants if they were not given tax advantages.
We see on what weak ground Kautsky's argumentation stands here. When he now asserts that "by application of these two methods a proletarian regime can raise production at once to so high a level that it becomes possible to raise wages considerably and at the same time reduce hours of work," well, this is an assertion for which no proof has so far been provided.One has heard often enough in recent years of frozen potatoes, rotten fruit, and spoiled vegetables. Did not things like that happen earlier? Of course, but to a much smaller extent. The dealer whose fruit spoiled suffered losses of wealth that made him more careful in the future; if he did not pay better attention, then this was finally bound to lead to his economic disappearance. He left the management of production and was shifted to a position in economic life where he was no longer able to do harm. It is otherwise in dealings with state-traded articles. Here no self-interest stands behind the goods; here officials manage whose responsibility is so divided that no one particularly concerns himself about a small misfortune.
The social functions of private ownership of the means of production are not yet exhausted in assuring the highest attainable productivity of labor. Economic progress rests on the continuing accumulation of capital. That was never disputed either by liberals or by socialists. The socialists who have concerned themselves somewhat more closely with the problem of the organization of the socialist society also do not neglect, then, always to mention that in the socialist state the accumulation of capital, which today is undertaken by private parties, will be society's responsibility.
In the individualistic society the individual accumulates, not society. Capital accumulation takes place by saving; the saver has the incentive of receiving income from the saved capital as the reward of saving. In the communist society, society as such will receive the income that today flows to the capitalists alone; it will then distribute this income equally to all members or otherwise use it for the good of the whole. Will that alone be a sufficient incentive for saving? To be able to answer this question, one must imagine that the society of the socialist state will be faced every day with the choice whether it should devote itself more to the production of consumer goods or more to that of capital goods, whether it should choose productive processes that do indeed take a shorter time but correspondingly yield less output or choose ones that take more time but then also bring greater output. The liberal thinks that the socialist society will always decide for the shorter production period, that it will prefer to produce consumer goods instead of capital goods, that it will consume the means of production that it will have taken over as heir of the liberal society or at best maintain them but in no case increase them. That, however, would mean that socialism will bring stagnation, if not the decline of our whole economic civilization, and misery and need for all. That the state and the cities have already pursued investment policy on a large scale is no disproof of this assertion, since they pursued this activity entirely with the means of the liberal system. The means were raised by loans, that is, they were provided by private parties who expected from them an increase in their capital incomes. If in the future, however, the socialist society should face the question whether it will feed, clothe, and house its members better or whether it will save on all these things in order to build railroads and canals, to open mines, to undertake agricultural improvements for the coming generations, then it will decide for the former, even on psychological and political grounds alone.
A third objection to socialism is the famous argument of Malthus. Population is said to have a tendency to grow faster than the means of subsistence. In the social order resting on private ownership, a limitation of the increase in population is posed by the fact that each person is able to raise only a limited number of children. In the socialist society this impediment to population increase will fall away, since no longer the individual but rather the society will have to take care of raising the new generation. Then, however, such a growth of population would soon occur that need and misery for all would be bound to appear.While the socialists have scarcely deigned to reply to the two first arguments mentioned, they have concerned themselves more exhaustively with the Malthusian law, without, to be sure, in the view of the liberals, refuting the conclusions that follow from it.
Those are the objections to the socialist society with which everyone would have to come to grips before he took the side of socialism.
It is no refutation at all of the objections raised against socialism that the socialists seek to stigmatize everyone who is not of their opinion with the label "bourgeois economist" as representative of a class whose special interests run counter to the general interest. That the interests of the possessors run counter to those of the whole would indeed first have to be proved; that is precisely what the entire controversy revolves around.
The liberal doctrine starts with the fact that the economic order resting on private ownership of the means of production removes the opposition between private and social interest because each individual's pursuit of his rightly understood self-interest assures the highest attainable degree of general welfare. Socialism wants to establish a social order in which the self-interest of the individual, selfishness, is excluded, a society in which everyone has to serve the common good directly. It would now be the task of the socialists to show in what manner this goal could be reached. Even the socialist cannot call into question the existence of a primary and direct opposition between the special interests of the individual and those of the whole, and he must also admit that a labor order can be based just as little on the categorical imperative alone as on the compulsory force of penal law. Up to now, however, no socialist has ever made even the mere attempt to show how this gap between special interest and general welfare could be bridged over. The opponents of socialism, however, along with Schäffle, consider precisely that question to be "the decisive but up to now entirely undecided point on which in the long run everything would depend, on which victory or defeat of socialism, reform or destruction of civilization by it, would be dependent from the economic side."Cf. Schäffle, Die Quintessenz des Sozialismus, 18th edition (Gotha: 1919), p. 30.
Marxian socialism calls the older socialism utopian because it tries to construct the elements of a new society out of one's head and because it seeks ways and means of implementing the contrived social plan. In contrast, Marxism is supposed to be scientific communism. It discovers the elements of the new society in the laws of development of capitalist society, but it constructs no future state. It recognizes that the proletariat, because of its conditions of life, can do nothing else than finally overcome every class opposition and thereby realize socialism; however, it does not seek philanthropists, as the utopians do, who would be ready to make the world happy by the introduction of socialism. If one wants to see the distinction between science and utopia in that, then Marxian socialism rightly claims its name. One could, however, make the distinction in another sense also. If one calls utopian all those social theories which, in outlining the future social system, start with the view that after introduction of the new social order people will be guided by essentially different motives than in our present conditions,Cf. Anton Menger, Das Recht auf den vollen Arbeitsertrag, fourth edition (Stuttgart: 1910), pp. 105 ff. then the socialist ideal of Marxism is also a utopia. In another sense than is usual, of course, one can distinguish between scientific and philanthropic socialism. Those socialists who are concerned in their prograins to start with economic lines of thinking and take the necessity of production into account can be called scientific socialists, in contrast with those who know how to bring forth only ethical and moral discussions and set up only a program for distribution but not for production also. Marx clearly noted the defects of merely philanthropic socialism when, after moving to London, he proceeded to study the economic theorists. The result of this study was the doctrine presented in Das Kapital. Later Marxists, however, have badly neglected this side of Marxism. They are much more politicians and philosophers than economists. One of the chief defects of the economic side of the Marxian system is its connection with classical economics, which corresponded to the state of economic science at that time. Today socialism would have to seek a scientific support in modern economics, in the theory of marginal utility. Cf. Joseph Schumpeter, "Das Grundprinzip der Verteilungslehre," Archiv für Sozialwissenschaft und Sozialpolitik, vol. 42, 1916/1917, P. 88. Its continued existence presupposes men who are in no position to pursue any special interest against the general interest.How easily the Marxists disregard this argument can be seen in Kautsky: "If socialism is a social necessity, then if it came into conflict with human nature, it would be the latter that would get the worse of the matter and not socialism." Preface to Atlanticus [Ballod], Produktion und Konsum im Sozialstatt (Stuttgart: 1898), p. xiv. Again and again, when this objection is made to him, the socialist refers to the fact that both today and in every earlier stage of society very much work, and often precisely the most highly qualified work, was indeed performed for its own sake and for the community and not for the direct advantage of the worker. He points to the indefatigable effort of the researcher, to the sacrifice of the physician, to the conduct of the warrior in the field. In recent years one could hear again and again that the great deeds performed by soldiers in the field were to be explained only by pure devotion to the cause and by a high sense of sacrifice, or at worst, perhaps, by striving for distinction, but never by striving for private gain. This argumentation overlooks the fundamental distinction that exists, however, between economic work of the usual kind and those special performances. The artist and the researcher find their satisfaction in the pleasure that the work in itself affords them and in the recognition that they hope to reap at some time, even if perhaps only from posterity, even in the case when material success should be lacking. The physician in the area of pestilence and the soldier in the field repress not only their economic interests but also their drive for self-preservation; even that alone shows that there can be no question of a regular state of affairs but only of a transitory, exceptional state from which no far-reaching conclusions can be drawn.
The treatment that socialism allots to the problem of self-interest points clearly to its origin. Socialism comes from the circles of intellectuals; at its cradle stand poets and thinkers, writers and men of letters. It does not deny its derivation from those strata that even on professional grounds alone have to concern themselves with ideals. It is an ideal of noneconomic people. Therefore, it is not much more striking that writers and men of letters of every kind were always represented among its adherents in large numbers and that it could always count on fundamental agreement among officials.
The view characteristic of officials comes clearly to light in the treatment of the problem of socialization. From the bureaucratic point of view, it involves only questions of management and administrative technique that can easily be solved if only one allows the officials more freedom of action. Then socialization could be carried out without danger of "eliminating free initiative and individual readiness to bear responsibility on which the successes of private business management rest."Cf. Bericht der Sozialisierungskommission über die Sozialisierung der Kohle [Report of the Socialization Commission on the Socialization of Coal), Frankfurter Zeitung, 12 March 1919. Actually, free initiative of individuals cannot exist in the socialized economy. It is a fateful error to believe it possible, by some sort of organizational measures, to leave scope for free initiative even in the socialized enterprise. Its absence does not hinge on defects of organization; it is grounded in the essence of the socialized enterprise. Free initiative means taking risks in order to win; it means putting up stakes in a game that can bring gain or loss. All economic activity is composed of such risky undertakings. Every act of production, every purchase by the trader and by the producer, every delay in selling, is such a risky undertaking. Still more so is undertaking every sizable investment or change in the enterprise, not to mention the investment of new capital. Capitalists and entrepreneurs must take chances; they cannot do otherwise, since they have no possibility of maintaining their property without such risk-bearing.
Anyone who has means of production at his disposal without being their owner has neither the risk of loss nor the chance of gain, as an owner does. The official or functionary need not fear loss, and for that reason he cannot be allowed to act freely and unrestrictedly like the owner. He must be restricted in some manner. If he could manage without restrictions, then he simply would be the owner. It is playing with words to want to impose readiness to bear individual responsibility on the nonowner. The owner does not have readiness to bear responsibility; he just does bear responsibility because he feels the consequences of his actions. The functionary may have ever so much readiness to bear responsibility; yet he never can bear responsibility other than morally. Yet the more moral responsibility one imposes on him, the more one cramps his initiative. The problem of socialization cannot be solved by civil-service instructions and reforms of organization.
Ludwig von Mises wrote Nation, State and Economy in the same year, 1919, as John Maynard Keynes wrote The Economic Consequences of the Peace, a better known diagnosis of and prescription for the postwar economic situation. Mises, writing a few months earlier, presumably had less detailed knowledge of the Versailles Treaty and so was less concerned with its specific provisions. Keynes went into more detail than Mises in estimating such things as the wealth of the belligerents, the amount of destruction suffered, and the capacity of the Germans to pay reparations. His focus was narrower, than that of Mises, who regarded his own analysis as one particular instance of applying lessons derived from both history and economic theory.
The two books have much in common. Both compare prewar and postwar economic conditions. Both authors recognize that each country's prosperity supports rather than undercuts that of others. Both appreciate how much the standard of living of Europe and particularly of Germany had depended on world trade and regret its interruption. Both, rightly or wrongly, perceived something of an overpopulation problem in Europe and in Germany in particular and made some not too optimistic remarks about the possibilities of emigration as a remedy. Mises even waxed wistful over loss of opportunities that Germany might have had in the nineteenth century peacefully to acquire overseas territories suitable for settlement.
Both authors more or less took it for granted that the German ruling class and segments of public opinion had been largely responsible for the war. Mises deployed history, politics, sociology, psychology, and other disciplines in exploring the intellectual and ideological background of German militarism. Keynes also engaged in psychology. His dissection of the character and personality of Woodrow Wilson is justly renowned, and he made biting comments on the immorality of Lloyd George's "Hang the Kaiser" election campaign of December 1918.
Both Mises and Keynes emphasized how currency deterioration causes social as well as economic disorder. Keynes endorsed Lenin's supposed observation about the best way to destroy the capitalist system. "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose." Keynes warned against misdirecting blame onto "profiteers," and Mises, too, understood the constructive function of profit, even in wartime. Mises explained how inflation undercuts the vital functions performed by accounting. Keynes and Mises were exhibiting prescience, writing four years before the hyperinflationary collapse of the German mark would dramatize the points they were already making.
Keynes's book included no signs of anticapitalism or of support for comprehensive government economic intervention. Mises was emphatic on these issues. He exposed some of the inefficiencies of socialism, although he had not yet formulated his later demonstration of the impossibility of accurate economic calculation under socialism.
Both Keynes and Mises come across in their respective books as analytical in their diagnoses and humanitarian in their recommendations. Both were pessimistic about economic conditions on the European continent, at least in the short run. Both opposed a vindictive peace; Keynes's warnings about reparations are well known. It is too bad that Keynes's fame did not carry over more effectively into actual influence and that Mises's book was not more accessible to the English-speaking world at the time. If only the two men could have joined forces!
Mises's book illustrates the differences between the political and economic philosophies of conservatism and of liberalism (liberalism in the European and etymologically correct sense of the word). Mises was emphatically not a conservative. His book rails repeatedly against political and economic privilege. He championed political democracy as well as a freemarket economy. He admired democratic revolutions against hereditary and authoritarian regimes; he sympathized with movements for national liberation and unity. As he explained, liberal nationalism—in sharp contrast with militaristic and imperialistic nationalism—can be an admirable attitude and a bulwark of peace. Different peoples should be able to respect and—to interpret a bit—even share in each one's pride in its own culture and history. (I think I can understand what Mises had in mind by recalling my feelings while traveling in Italy in 1961 at the time of celebrations and exhibitions commemorating the one hundredth anniversary of the founding of the Kingdom of Italy. As my traveling companion remarked, he almost felt like an Italian patriot.)
Mises's devotion to political democracy was tinged with a touching naiveté. Passages in his book suggest that he could hardly conceive of how the people, given the opportunity to rule through freely elected representatives, would fail to choose those politicians and policies that would serve their genuine common interest. This optimism is not to his discredit. It underlines the genuineness of his liberalism. It reminds us that he was writing more than sixty years ago, before the subsequent accumulation of sobering experience with democratic government. He was writing before the development of pubic-choice theory, that is, the application of economic analysis and methodological individualism to understanding government and government failure, analogous to the better publicized market failure (fragmented and inaccurate cost/benefit comparisons, externalities, and all that). But Mises certainly was not naive in relation to the experience and political analysis available in 1919. On the contrary, some of the most insightful parts of his book analyze the obstacles to the development of democracy in Germany and Austria. Mises saw the significance of the nationality and language situations in those two polyglot empires. He did not single-handedly develop an economic and psychological analysis of government, but he made an impressive beginning on that task in this and later books.
Mises could expect his German-speaking readers of over sixty years ago to recall the salient facts of German and Austrian history. Such an expectation may not hold for English-speaking readers of the 1980s. For this reason, a sketch follows of the historical background that Mises took for granted. In particular, it identifies events and persons that Mises alludes to.
German-speaking territories were ruled for centuries by dozens and even hundreds of hereditary or ecclesiastical monarchs—kings, dukes, counts, princes, archbishops, and the like. Mises speaks of "the pitiable multiplicity of several dozen patrimonial principalities, with their enclaves, their hereditary affiliations, and their family laws" and of "the farcical rule of the miniature thrones of the Reuss and Schwarzburg princes," Even after formation of the German Empire in 1871, its component states numbered four kingdoms, four grand duchies, fourteen lesser duchies and principalities, and three Hanseatic cities, as well as the conquered territory of Alsace-Lorraine.
Until beyond the middle of the nineteenth century, Germany was understood to include the German-speaking sections of Austria, which was usually the dominant German state. In the words of the Deutschlandlied, or national anthem (written in 1841 by the exiled liberal August Heinrich Hoffman von Fallersleben), Germany ranged from the Maas River in the West to the Memel River in the East and from the Etsch (Adige) River in the South to the Belt (Baltic Sea passages) in the North.
The domain of German rulers was not limited, however, to German-speaking territories. Poles and other Slavic peoples lived in the eastern sections of Prussia, especially after the conquests by Frederick the Great to which Mises refers. Brandenburg, where Potsdam and Berlin are located, was the nucleus of what became the Kingdom of Prussia in 1701. The Hohenzollern family held the title of Margrave of Brandenburg from 1415 on and continued as the Prussian royal family until 1918. Frederick William, the "Great Elector" (the meaning of "elector" is explained below), ruled from 1640 to 1688. He presided over the rebuilding and expansion of his state after the Thirty Years' War and obtained full sovereignty over Prussia. His son, Frederick I, who ruled from 1688 to 1713, was crowned the first King of (technically, "in") Prussia. Frederick William I, king from 1713 to 1740, was largely the founder of the Prussian army. His son Frederick II became known to history as Frederick the Great. He wrested Silesia from Austria in 1745 and joined with Russia and Austria in the first partition of Poland in 1772. His successor, Frederick William II, joined in the second and third partitions of 1793 and 1795, which wiped Poland off the map.
The Austrian Empire included not only speakers of German but also Hungarians, Rumanians, Czechs, Slovenes, Poles, Ruthenians, Italians, and others. According to a 1910 census, the population of the Austrian part of the Austro-Hungarian Monarchy consisted of 35 percent Germans, 23 percent Czechs, 17 percent Poles, 19 percent other Slavs, 2 ¾ percent Italians, and scattered others.
The Holy Roman Empire of the German Nation, to use its full name, existed until 1806. It coincided roughly, but only roughly, with German-speaking territory. It sometimes included parts of northern Italy but left out the eastern parts of Prussia. It was organized (or revived) under Otto I, whom the Pope crowned Emperor in 962. (He was succeeded by Otto II and Otto III; Mises refers to the age of the Ottonians.) The Empire was a loose confederation of princely and ecclesiastical sovereignties and free cities. Seven, eight, or nine of their rulers were Electors, who chose a new Emperor when a vacancy occurred. From 1273, except for a few intervals (notably 1308 to 1438), the Holy Roman Emperors belonged to the Habsburg family, whose domains included many lands outside the boundaries of the Empire. The dynastic expansion of the Habsburgs explains Mises's reference to the "married-together state." The male line of the family died out in 1740, when Charles VI was succeeded in his domains by his daughter Maria Theresa, an event that touched off the War of the Austrian Succession. Maria Theresa's husband was the former Duke of Lorraine and Holy Roman Emperor as Francis I from 1745 to 1765, which explains why the dynasty became known as the house of Habsburg-Lorraine.
Mises mentions several other events and personalities in the history of the Holy Roman Empire. Until his death in 1637, Ferdinand II reigned from 1617 as King of Bohemia, from 1618 as King of Hungary, and from 1619 as Emperor. His fanatical Catholicism alienated the Protestant Bohemian nobles, who rebelled in 1618 (the picturesquely named Defenestration of Prague occurred at this time), beginning the Thirty Years' War. The war, which wrought havoc on Germany, hinged not only on religious differences but also on the ambition of the Habsburgs to gain control of the entire country. The Imperial forces won the war's first major battle, fought on the White Mountain, near Prague, in 1620, ending Bohemian independence for three centuries. The Protestant side was aided at times by the Danes, the Swedes, and even the French under Louis XIII and Louis XIV. The Treaty of Westphalia, in 1648, awarded certain German provinces on the Baltic Sea to Sweden and southern Alsace to France, while the Emperor's authority over Germany became purely nominal. Acceptance of the religious split of Germany was an important step toward religious toleration. Leopold I, whom Mises mentions, was Holy Roman Emperor from 1657 to 1705. The greater part of his reign was occupied by wars with Louis XIV of France and with the Turks. Leopold II, Emperor from 1790 until his death in 1792 and the last crowned King of Bohemia, succeeded his brother Joseph II (also a son of Maria Theresa). He instigated the Declaration of Pillnitz, which helped precipitate the French Revolutionary Wars a few weeks after his death.
The Napoleonic Wars brought lasting changes to the map and the political systems of Europe. The Enactment of Delegates of the Holy Roman Empire (Reichsdeputationshauptschluss) was adopted in 1803 under pressure of Napoleon. Mises mentions this Enactment as an illustration of the old idea that lands were the properties of their sovereigns and so could be bought and sold, traded, reshaped, divided, and consolidated without regard to the wishes of their inhabitants, who were mere appurtenances of the land. The Enactment greatly reduced the number of sovereignties in the Empire, in part by ending the temporal rule of dignitaries of the Catholic Church and putting their lands under the rule of neighboring princes. In 1806, again under pressure of Napoleon, who had detached the western parts of Germany?only temporarily, as things turned out?and organized them into a Confederation of the Rhine, the old Empire was liquidated. Francis II gave up his title of Holy Roman Emperor but retained the title of Emperor of Austria as Francis I.
Mises mentions two men who strove for a unified Italian state at the end of the Napoleonic Wars. Joachim Murat, a Marshall of France whom Napoleon had made King of Naples in 1808, tried in 1815 to make himself king of all Italy; but he was captured and shot. Florestano Pepe, one of Murat's generals, fought against the Austrians in 1815. (Mises's allusion is presumably to Florestano Pepe rather than to his brother Guglielmo, another Neapolitan general, who organized the Carbonari and who led an unsuccessful proconstitutional revolt in 1821.)
After the Napoleonic Wars, the reigning dynasties of Europe tried to restore the old regime. The Holy Alliance, to which Mises repeatedly refers with scorn, is a phrase frequently but imprecisely used to label the reactionary policies of Russia, Prussia, and Austria in particular. Strictly speaking, the Holy Alliance was an innocuous declaration of Christian principles of statesmanship drawn up by Czar Alexander I in 1815 and signed by almost all European sovereigns. The repressive policies are more properly associated with the Congress system and the Quadruple Alliance of 1815, Mises mentions, by the way, the Polish kingdom of Alexander I. The Congress of Vienna (1814-1815) created the kingdom in personal union with Russia but with a constitution of its own (which was suspended after the Polish insurrection of 1830-1831).
With the Holy Roman Empire defunct, a decision of the Congress of Vienna loosely joined some 38 (soon 39) German sovereignties together again as the German Confederation. The federal diet, which met in Frankfurt under the presidency of Austria, had little power because unanimity or a two-thirds majority was required for most decisions.
In 1834, after achieving a free-trade area within its own territories, Prussia took the lead in establishing the Zollverein among most German states, not including Austria, through the merger of two regional customs unions. The new union is considered a step toward political unification. In 1861 it was reorganized with a constitution and parliament of its own. Mises mentions one of its intellectual fathers, the economist Friedrich List. List had been forced to emigrate to the United States in 1825 for advocating administrative reforms in Württemberg but had returned to Germany in 1832 as U.S. consul at Leipzig. He favored internal free trade, together with strictly temporary tariff protection to encourage the development of infant industries.
Mises makes many admiring and wistful references to the European revolutions of 1848. The revolutions were mostly the work of the middle-class intellectuals, who were bringing mainly French ideas to bear against political repression. The February revolution in Paris, resulting in the overthrow of King Louis Philippe and establishment of the Second Republic, was emulated elsewhere. In the numerous sovereignties into which Italy was still split, a movement for liberal constitutions was followed by an unsuccessful patriotic war to eject the Austrians.
Revolutionary riots came to Austria and Germany in March 1848, which explains why Mises refers to the March revolution and compares conditions afterwards with conditions as they were "before March" (to translate the German literally). In Vienna, Prince Clemens von Metternich, minister of foreign affairs and chief minister since 1809, had to resign and flee the country. The first Pan-Slav Congress met in Prague in June 1848 under the presidency of Frantisek Palacky, the Bohemian historian and nationalist. (Mises cites Palacky's much-quoted remark to the effect that if the Austrian multinational state had not existed, it would have been necessary to invent it.) Field Marshal Prince Alfred Windischgrätz bombarded the revolutionaries in Prague into submission in June 1848 and later turned to Vienna, where a further wave of radical unrest had broken out in October. He helped restore Habsburg power, with Prince Felix Schwarzenberg as the new chief minister from November 1848. Schwarzenberg engineered the abdication of Emperor Ferdinand I in favor of his 18-year-old nephew Francis Joseph, who would reign until his death in 1916.
Mises alludes not only to Schwarzenberg but also to Count Eduard von Clam-Gallas, who played a decisive role in suppressing the Italian and Hungarian revolutions of 1848-1849. (Actually, Mises mentions the Clam-Martinics, who were the Bohemian wing of the same wealthy noble family.) The Hungarian independence movement succeeded at first but was finally put down by Schwarzenberg and the Habsburgs with the aid of some of their Slavic subjects and the forces of the Russian Czar Nicholas I. After their defeat by the Russians in August 1849, the Hungarians suffered vengeance at the hands of the Austrian General Julius Freiherr von Haynau.
In Germany the revolutionaries sought both representative government in the various states and unification of the country. The King of Prussia and lesser German rulers at first granted democratic concessions but later withdrew them on observing the success of counterrevolution in Austria. The Crown Prince of Prussia, who had fled the country only shortly before, as Mises notes, was able to mount a counteroffensive. Yet some prospects seemed hopeful for a while. Aspiring for a united Germany, a self-constituted "preliminary parliament" convoked a German National Assembly, also known as the Frankfurt Parliament, which met in St. Paul's Church from 18 May 1848 to 21 April 1849. Its delegates were chosen by direct male suffrage throughout Germany and Austria. It was predominantly a middle-class body inspired by liberal and democratic ideas. This is what Mises had in mind when repeatedly referring to the ideals of St. Paul's Church, (He occasionally refers in the same sense to the "Ideas of 1789," thinking of course of the aspirations for freedom and political equality expressed at the beginning of the French Revolution and not to the Terror into which the revolution later degenerated.)
One party among the Frankfurt delegates favored bringing Austria and Bohemia into the projected united Germany, although doing so would have disrupted the Habsburg Monarchy; another party thought it wiser to leave Austrian territory out. (With his reference not limited to this particular occasion, Mises does mention the tension between the great-German and small-German approaches to national unity.) The issue became academic when the Austrian government showed hostility to any splitting of its territory and when the Austrian constitution of 4 March 1849 reasserted the unity of the Habsburg domains. After lengthy debates, the Frankfurt delegates adopted a federal constitution and elected the King of Prussia, Frederick William IV, as Emperor. At the end of April, the King refused the offer on the grounds that accepting a crown from an elected assembly would be inconsistent with his divine right. The assembly then came apart. Meanwhile, with the suppression of revolutions and the consolidation of authoritarian rule in the German princely states, democratic leaders found it prudent to remain politically silent, as Mises observes, or even to emigrate.
The activities of the Frankfurt Parliament brought suspension of the diet of the German Confederation in 1848-1850. After rejecting the proffered imperial crown, the King of Prussia still hoped to unify Germany in his own way and with the consent of his fellow princes. An inner confederation, the Prussian Union, would join with the Habsburg Monarchy in a broader confederation. Most of the smaller German states initially accepted the plan, and first a national assembly and later a parliament met at Erfurt in 1849 and 1850 to put a constitution into effect. With the distractions in Hungary now overcome, however, the Austrian government was able to press its opposition. At Schwarzenberg's invitation, representatives of the petty states and Austria met at Frankfurt in May 1850 and reconstituted the diet of the old German Confederation. In November 1850, by the Punctation of Olmütz (known by Prussian historians as the Humiliation of Olmütz), the Prussians abandoned their Prussian Union scheme and recognized the reestablished diet of the Confederation.
Austria and the rest of Germany managed to stay out of the Crimean War of 1853-1856, in which Turkey, Great Britain, France, and Sardinia-Piedmont defeated Russia. Austrian threats of joining the war did help prod Russia to evacuate the occupied Danubian principalities in 1854, however, and later to agree to the proposed peace terms; prolonged mobilization drained Austrian finances. In 1859 Austria suffered defeat in a war with France and Sardinia-Piedmont, losing Lombardy but retaining Venetia in the peace settlement.
In 1863 Austria again demonstrated dominance among the German states in that Emperor Francis Joseph served as president of a congress of German princes in Frankfurt. However, Otto von Bismarck, who had become Prussian prime minister in 1862, was able to persuade his king not to attend. Prussia's absence helped keep the congress from accomplishing much.
In the summer of 1864, in a brief war touched off by the question of who was to inherit the rule of the duchies of Schleswig and Holstein, Prussia and Austria together defeated Denmark and acquired joint control over the two duchies. Bismarck skillfully escalated tensions over their administration and ultimate disposition into a war between Prussia and Austria in the summer of 1866. Austria had all the rest of Germany on its side except Mecklenburg and a few of the smaller north German states. Italy allied itself with Prussia. Austria defeated Italy on land and sea; but the decisive battle of the Seven Weeks' War was fought near Königgrätz (and Sadowa), about 65 miles east of Prague, on July 3. The timely arrival of troops commanded by the Crown Prince of Prussia (later, for 99 days in 1888, the Emperor Frederick III) helped clinch the victory of Field Marshal Count Helmuth Karl Bernhard von Moltke (who was later to be victorious in the war with France also) and seal the defeat of Austrian General Ludwig von Benedek.Benedek had had much experience on the Italian front but had been assigned to the northern front, supposedly to leave the easier Italian command to members of the Habsburg dynasty. Moltke and Benedek are named here because Mises mentions them as examples of victorious and defeated generals, respectively. He also mentions Karl Mack von Leiberich, an Austrian general who surrendered to Napoleon at Ulm in 1805, and Franz Gyulai, an Austrian general defeated in the war of 1859.
Mises's many references to Königgrätz, then, allude to the changes brought about by the brief war of 1866, which was ended by the preliminary peace of Nikolsburg and the definitive treaty of Prague. The King of Hanover was dethroned and his state absorbed into Prussia. (It is interesting to speculate on how differently the course of history might have turned out if only Queen Victoria of England had been a man. Her accession in 1837 separated the previously united crowns of England and Hanover, where the Salic Law barred females from the throne.) Austria lost Venetia to Italy but no territory to Prussia. Its expulsion from the German Confederation, however, ended Austria's dominance in German affairs. Austrians did not, though, immediately stop thinking of themselves as Germans. Mises illustrates their sentiment by quoting from the dramatist Franz Grillparzer (1791-1872).
The old German Confederation gave way to the North German Confederation, composed of Prussia and the other states north of the Main River, The component states retained their own administrations but placed their military forces and foreign policy under the federal government, dominated by Bismarck. Prussia also negotiated alliances with the south German states.
The defeated Austrians turned to tidying up their domestic affairs. They reached a compromise (Ausgleich) with the Hungarians, granting Hungary quasi-independence with its own parliament and government. Emperor Francis Joseph submitted to coronation as King of Hungary in Budapest on June 8, 1867 (only eleven days, by coincidence, before his brother Maximilian, the defeated and captured Emperor of Mexico, was executed at Querétaro).
The Franco-Prussian War of 1870-1871 resulted in the cession of Alsace-Lorraine to Germany. France also had to pay an indemnity of 5,000,000,000 francs, providing an unfortunate precedent for allied demands on Germany after its defeat in 1918.
The German Empire was proclaimed in a ceremony at Versailles, near Paris, in January 1871. Bismarck had persuaded the reluctant King Ludwig II of Bavaria (later called the "mad king") to invite King William I of Prussia to assume the hereditary title of German Emperor. The Empire absorbed the institutions of the North German Confederation of 1867, including the Federal Council and elected Reichstag; a modified constitution admitted the southern states of Bavaria, Württemberg, and Baden.
Meanwhile, Italy also achieved unification. Other Italian states joined with Sardinia-Piedmont in 1861 to proclaim its King, Victor Emmanuel II, King of Italy. In 1870, while the French, who had been protecting the Pope, were at war with Germany, the Italians seized the opportunity to conquer the Papal States and transfer the capital of Italy to Rome. Mises mentions three heroes of the movement for Italian liberation and unification: Giuseppe Mazzini, Giuseppe Garibaldi, and Count Camillo Benso di Cavour. He also mentions three Italian poets and patriots of the first half of the nineteenth century: Giacomo Leopardi, Giuseppe Giusti, and Silvio Pellico.
Not all Italian-speaking territory yet formed part of the Kingdom of Italy; some remained under Austro-Hungarian rule. This territory was called Italia irredenta, and irredentism was the movement calling for its liberation and absorption into Italy. World War I largely achieved the objectives of the movement. Mises mentions Gabriele D'Annunzio, a poet, novelist, and dramatist who helped persuade Italy to join the allies in that war, who lost an eye in aerial combat, and who later (after Mises was writing) led an unofficial occupation of Flume (now Rijeka, Yugoslavia) that eventuated in its incorporation into Italy.
Mises sometimes uses the word "irredentism" in its broader sense of a movement for any country's absorbing territories still outside its boundaries inhabited by people speaking its national language. Irredentism in this broader sense refers, in particular, to advocacy of incorporation of German-speaking Austria into the German Empire.
Representatives of the great European powers convened in Berlin in 1878 to impose on Russia a revision of the harsh treaty that it had imposed on Turkey after defeating it in a war. The Congress of Berlin also, incidentally, authorized Austria-Hungary to occupy and administer the Turkish provinces of Bosnia and Herzegovina, now in Yugoslavia. The occupation was not entirely trouble-free; Mises mentions rebellions in Herzegovina and around the Gulf of Kotor. Austria-Hungary finally annexed the occupied provinces in 1908.
Another important development in international politics was the negotiation of an alliance between Germany and Austria-Hungary in 1879. Apparently Bismarck's decision not to impose an excessively harsh peace on Austria in 1866 was paying off. This alliance, like the Russian-French alliance and others, set the stage for a chain reaction whereby the countries not directly involved in the original dispute between Austria and Serbia in 1914 got drawn into World War I.
The Wilhelministic Era, which Mises refers to, was the reign of William II as German Emperor, particularly from the dismissal of Bismarck as chancellor in 1890 until World War I.
The defeat of the Central Powers in that war split Austria-Hungary up into several states. Currency inflations gained momentum. In Germany the Spartacists, whom Mises mentions and who reorganized themselves into the German Communist Party in December 1918, seemed for a time to have prospects of gaining power in at least the major cities.
We now turn to a few explanations and identifications that did not fit into the preceding chronological survey. Cabinet ministers in both Germany and Austria were responsible to the Emperor rather than to parliament. Although a government could not be thrown out of office by a vote of no confidence, parliamentary majorities were necessary to enact specific pieces of legislation; and the government occasionally resorted to political maneuvers and tricks to achieve the necessary majorities. Mises refers scornfully to these circumstances. In Austria, in particular, the parliamentary situation and the alignment of parties was complicated by the mixture of nationalities and by such issues as what languages should be used in particular schools. Mises refers, for example, to Badeni's electoral reform of 1896. (Count Kazimierz Felix Badeni, a Polish aristocrat, became prime minister in 1895. The finance minister and foreign minister in his cabinet also came from the Polish part of the Empire. Badeni was dismissed in 1897 through the pressure of German-speaking factions, who considered his policies on use of language in the civil service too favorable to the Czechs.) Mises also notes allusions made at the time to the government's courting of the ironically nicknamed "Imperial and Royal Social Democrats" (the term "Imperial and Royal," commonly abbreviated in German as "K.k.," referred to the Austrian Empire and Kingdom of Hungary and meant something like "governmental" or "official").
The nationality situation is also in the background of Mises's reference to the Linz Program of 1882. The extreme German nationalists proposed the restoration of German dominance in Austrian affairs by detaching Galicia, Bukovina, and Dalmatia from the Monarchy, weakening the ties with Hungary to a purely personal union under the same monarch, and establishing a customs union and other close ties with the German Reich. They apparently did not realize that Bismarck had little reason to provide help, since the existing domestic situation in Austria-Hungary was consonant with his approach to international affairs. The leader of the extreme German-Austrian nationalists was Georg Ritter von Schönerer, who later made anti-Semitism a part of his program.
Employing synecdoche, Mises sometimes opposes Potsdam to Weimar. Potsdam was the home of the Prussian monarchy, and the word symbolizes the authoritarian state and militarism. Weimar, the literary and cultural center, stands for the aspect of Germany evoked by calling it the "nation of poets and thinkers." (The "classical period" of German literature, to which Mises also refers, corresponds roughly to the time of Goethe.)
The Gracchi, referred to in a Latin saying that Mises quotes, were the brothers Tiberius and Gaius Gracchus, agrarian, social, and political reformers of the second century B.C. Both perished in separate public disturbances, one of them after having sought an unconstitutional reelection as tribune of the people.
It is quite unnecessary to identify every event, person, or school of thought that Mises refers to—Alexander the Great and so on. Still, there is no harm in adding that the Manchester School was a group of English economists of the first half of the nineteenth century, led by Richard Cobden and John Bright, who campaigned for a market economy and a free-trade policy. François Quesnay, 1694-1774, was a French physician and economist who stressed the central role of agriculture and who prepared the Tableau Economique, a kind of rudimentary input-output table.
Benedikt Franz Leo Waldeck, 1802-1870, was Mises's example of the possibility of being both a Prussian nationalist and a sincere liberal democrat. Waldeck, a member of the highest Prussian court, had been a radical deputy in the Prussian constituent assembly in 1848 and leader of a committee that drafted a constitution. Later, as an opposition member of the Prussian chamber of deputies, he continued resisting authoritarian trends in government.
This introduction might fittingly end by especially recommending the discussion with which Mises ends his book?his discussion of the respective roles of value judgments and positive analysis in the choice between socialism and liberal capitalism. Mises proceeds not only from a liberal democratic outlook but also, and especially, from a rationalist and utilitarian philosophy.
Thanks are due to the Thomas Jefferson Center Foundation and the James Madison Center of the American Enterprise Institute for contributing much of the secretarial help required in preparing the translation. Thanks for their good work also go to Mrs. Anne Hobbs, Mrs. Carolyn Southall, and Miss Linda Wilson.
Leland B. YeagerLudwig von Mises Professor of Economic EmeritusAuburn University
- The Nation as a Speech CommunityThe concepts nation and nationality are relatively new in the sense in which we understand them. Of course, the word nation is very old; it derives from Latin and spread early into all modern languages. But another meaning was associated with it. Only since the second half of the eighteenth century did it gradually take on the significance that it has for us today, and not until the nineteenth century did this usage of the word become general.Cf. Meinecke, Weltbürgertum und Nationalstaat, third edition (Munich: 1915),pp. 22 ff.; Kjellén, Der Staat als Lebensform (Leipzig: 1917), pp. 102 ff. Its political significance developed step by step with the concept; nationality became a central point of political thought. The word and concept nation belong completely to the modern sphere of ideas of political and philosophical individualism; they win importance for real life only in modern democracy.
If we wish to gain insight into the essence of nationality, we must proceed not from the nation but from the individual. We must ask ourselves what the national aspect of the individual person is and what determines his belonging to a particular nation.
We then recognize immediately that this national aspect can be neither where he lives nor his attachment to a state. Not everyone who lives in Germany or holds German citizenship is a German merely for that reason. There are Germans who neither live in Germany nor hold German citizenship. Living in the same places and having the same attachment to a state do play their role in the development of nationality, but they do not pertain to its essence. It is no different with having the same ancestry. The genealogical conception of nationality is no more useful than the geographic or the state conception. Nation and race do not coincide; there is no nation of pure blood.Cf. Kjellén, loc. cit., pp. 105 ff., and the works cited there. All peoples have arisen from a mixture of races. Ancestry is not decisive for belonging to a nation. Not everyone descended from German ancestors is a German merely for that reason; how many Englishmen, Americans, Magyars, Czechs, and Russians would otherwise have to be called Germans? There are Germans whose ancestors include not one German. Among members of the higher strata of the population and among famous men and women whose family trees are commonly traced, foreign ancestors can be demonstrated more often than among members of the lower strata of the people, whose origins are lost in darkness; yet the latter, too, are more seldom of pure blood than one tends to assume.
There are writers who have worked in good faith to investigate the significance of ancestry and race for history and politics; what success they attained will not be discussed here. Again, many writers demand that political significance be attached to community of race and that race policy be pursued. People can be of different opinions about the justness of this demand; to examine it is not our concern. It may also remain an open question whether that demand has already been heeded today and whether and how race policy really is pursued. Yet we must insist that just as the concepts nation and race do not coincide, so national policy and race policy are two different things. Also, the concept of race, in the sense in which the advocates of race policy use it, is new, even considerably newer than that of nation. It was introduced into politics in deliberate opposition to the concept of nation. The individualistic idea of the national community was to be displaced by the collectivist idea of the racial community. Success has so far eluded these efforts. The slight significance accorded to the race factor in the cultural and political movements of the present day contrasts sharply with the great importance that national aspects have. Lapouge, one of the founders of the anthroposociological school, expressed the opinion a generation ago that in the twentieth century people would be slaughtered by the millions because of one or two degrees more or less in the cephalic index.Cf. Manouvrier, ""L'indice céphalique et la pseudo-sociologie," Revue, Mensuelle de l'École Anthropologie de Paris, vol. 9, 1899, p. 283. We have indeed experienced the slaughter of people by the millions, but no one can assert that dolichocephaly and brachycephaly were the rallying cries of the parties in this war. We are, of course, only at the end of the second decade of the century for which Lapouge expressed his prophecy. It may be that he will yet prove right; we cannot follow him into the field of prophecy, and we do not wish to dispute over things that still rest darkly concealed in the womb of the future. In present-day politics the race factor plays no role; that alone is important for us.
The dilettantism that pervades the writings of our race theorists should not, of course, mislead us into skipping lightly over the race problem itself. Surely there is hardly any other problem whose clarification could contribute more to deepening our historical understanding. It may be that the way to ultimate knowledge in the field of historical ebb and flow leads through anthropology and race theory. What has so far been discovered in these sciences is quite scanty, of course, and is overgrown with a thicket of error, fantasy, and mysticism. But there exists true science in this field also, and here also there are great problems. It may be that we shall never solve them, but that should not keep us from investigating further and should not make us deny the significance of the race factor in history.
If one does not see racial affinity as the essence of nationality, that does not mean that one wants to deny the influence of racial affinity on all politics and on national politics in particular. In real life many different forces work in different directions; if we want to recognize them, then we must try to distinguish them in our minds as far as possible. That does not mean, though, that in observing one force, we should quite forget that still others are working along side it or against it.
We recognize that one of these forces is the speech community; this is indeed beyond dispute. If we now say that the essence of nationality lies in language, this is no mere terminological point about which there could be no further dispute. First, let it be stated that in saying so, we are in conformity with the general use of language. To the language we apply first, and to it alone in the original sense, the designation that then becomes the designation of the nation. We speak of the German language, and everything else that bears the label "German" gets it from the German language: when we speak of German writing, of German literature, of German men and women, the relation to the language is obvious. Moreover, it does not matter whether the designation of the language is older than that of the people or is derived from the latter; once it became the designation of the language, it is what became decisive for the further development of the use of this expression. And if we finally speak of German rivers and of German cities, of German history and of German war, we have no trouble understanding that in the last analysis this expression also traces back to the original naming of the language as German. The concept of the nation is, as already said, a political concept. If we want to know its content, we must fix our eyes on the politics in which it plays a role. Now we see that all national struggles are language struggles, that they are waged about language. What is specifically "national" lies in language.Cf. Scherer, Vorträge und Aufsätze zur Geschichte des geistigen Lebens in Deutschland und Österreich (Berlin: 1874), pp. 45 ff. That the criterion of nation lies in language was the view of Arndt and Jacob Grimm. For Grimm, a people is "the sum total of persons who speak the same language" (Kleinere Schriften, vol. 7 [Berlin: 1884], p. 557). A survey of the history of doctrine about the concept of nation is given in Otto Bauer, Die Nationalitätenfrage und die Sozialdemokratie (Vienna: 1907), pp. 1 ff., and Spann, Kurzgefasstes System der Gesellschaftslehre (Berlin: 1914), pp. 195 ff.
Community of language is at first the consequence of an ethnic or social community; independently of its origin, however, it itself now becomes a new bond that creates definite social relations. In learning the language, the child absorbs a way of thinking and of expressing his thoughts that is predetermined by the language and so he receives a stamp that he can scarcely remove from his life. The language opens up the way for a person of exchanging thoughts with all those who use it; he can influence them and receive influence from them. Community of language binds and difference of language separates persons and peoples. If someone finds the explanation of the nation as a speech community perhaps too paltry, let him just consider what immense significance language has for thinking and for the expression of thought, for social relations, and for all activities of life.
If, despite recognition of these connections people often resist seeing the essence of the nation in the speech community, this hinges on certain difficulties that the demarcation of individual nations by this criterion entails.Moreover, let it be expressly noted that with every other explanation of the essence of the nation, difficulties turn up in much higher degree and cannot be overcome. Nations and languages are not unchangeable categories but, rather, provisional results of a process in constant flux; they change from day to day, and so we see before us a wealth of intermediate forms whose classification requires some pondering.
A German is one who thinks and speaks German. Just as there are different degrees of mastery of the language, so there are also different degrees of being German. Educated persons have penetrated into the spirit and use of the language in a manner quite different from that of the uneducated. Ability in concept formation and mastery of words are the criterion of education: the school rightly emphasizes acquiring the ability to grasp fully what is spoken and written and to express oneself intelligibly in speech and writing. Only those are full members of the German nation who have fully mastered the German language. Uneducated persons are German only insofar as the understanding of German speech has been made accessible to them. A peasant in a village cut off from the world who knows only his home dialect and cannot make himself understood by other Germans and cannot read the written language does not count at all as a member of the GermanThat the concept of national community is a matter of degree is also recognized by Spahn (loc. cit., p. 207); that it includes only educated persons is explained by Bauer (loc. cit., pp. 70 ff). nation. If all other Germans were to die out and only people who knew only their own dialect survived, then one would have to say that the German nation had been wiped out. Even those peasants are not without a tinge of nationality, only they belong not to the German nation but rather to a tiny nation consisting of those who speak the same dialect.
The individual belongs, as a rule, to only one nation. Yet it does now and then happen that a person belongs to two nations. That is not the case merely when he speaks two languages but rather only when he has mastered two languages in such a way that he thinks and speaks in each of the two and has fully assimilated the special way of thinking that characterizes each of them. Yet there are more such persons than people believe. In territories of mixed population and in centers of international trade and commerce, one frequently meets them among merchants, officials, etc. And they are often persons without the highest education. Among men and women with more education, bilinguists are rarer, since the highest perfection in the mastery of language, which characterizes the truly educated person, is as a rule attained in only one language. The educated person may have mastered more languages, and all of them far better than the bilinguist has; nevertheless, he is to be counted in only one nation if he thinks only in one language and processes everything he hears and sees in foreign languages through a way of thinking that has been shaped by the structure and the concept formation of his own language. Yet even among the "millionaires of education"Cf. Anton Menger, Neue Staatslehre, second ed. (Jena: 1904), p. 213. there are bilinguists, men and women who have fully assimilated the education of two cultural circles. They were and are found somewhat more frequently than elsewhere in places where an old, fully developed language with an old culture and a still slightly developed language of a people only just completing the process of acquiring culture confront each other. There it is physically and psychically easier to achieve mastery of two languages and two cultural circles. Thus, there were far more bilinguists in Bohemia among the generation which immediately preceded the one now living than at present. In a certain sense one can also count as bilinguists all those who, besides the standard language, have full mastery of a dialect also.
Everyone belongs as a rule to at least one nation. Only children and deaf-mutes are nationless; the former first acquire an intellectual home through entry into a speech community, the latter through development of their thinking capacity into achievement of the capability of mutual understanding with the members of a nation. The process that operates here is basically the same as that by which adults already belonging to one nation switch over to another.It used to happen that children of German parents who had to be brought up at the expense of the municipality (so-called boarded children) were put by the municipality of Vienna into the care of Czech foster parents in the countryside; these children then grew up as Czechs. On the other hand, children of non-German parents were Germanized by German foster parents. One aristocratic Polish lady used to relieve the city of Vienna of the care of children of Polish parents in order to have the children grow up as Poles. No one can doubt that all these children became good Czechs, Germans, or Poles without regard to what nation their parents had belonged to.
The language researcher finds relationships among languages; he recognizes language families and language races; he speaks of sister languages and daughter languages. Some people have wanted to extend this concept directly to nations also; others, again, have wanted to make the ethnological relationship into a national one. Both ideas are totally inadmissible. If one wants to speak of national relationship, one may do so only with reference to the possibility of mutual understanding between the members of the nations. In this sense dialects are related to each other and to one or even to several standard languages. Even between standard languages, for example, between individual Slavic languages, such a relation holds. Its significance for national development exhausts itself in the fact that it facilitates a transition from one nationality to another.
On the other hand, it is politically quite unimportant that the grammatical relationship between languages facilitates learning them. No cultural and no political affinity emerges from it; no political structures can be erected on the basis of it. The notion of the relationship of peoples originates not from the national-policy/individualistic sphere of ideas but rather from the race-policy/collectivistic sphere; it was developed in conscious opposition to the freedom-oriented notion of modern autonomy. Pan-Latinism, Pan-Slavism, and Pan-Germanism are chimeras which, in confrontation with the national strivings of individual peoples, have always come out on the short end. They sound very good in the fraternizing festivities of peoples who for the moment are following parallel political goals; they fail as soon as they are supposed to be more. They never have possessed power to form states. There is no state that has been based on them.
If people have long resisted seeing the characteristic feature of the nation in language, one of the decisive circumstances was that they could not reconcile this theory with the reality that allegedly displays cases in which one nation speaks several languages and other cases in which several nations use one language. The assertion that it is possible for the members of one nation to speak several languages is supported with reference to the conditions of the "Czechoslovak" and "Yugoslav" nations. Czechs and Slovaks acted in this war as a unified nation. The particularist strivings of small Slovak groups have at least not manifested themselves outwardly and have not been able to achieve any political successes. It now seems that a Czechoslovak state will be formed to which all Czechs and Slovaks will belong. However, Czechs and Slovaks do not, for that reason, yet form one nation. The dialects from which the Slovak language was formed are extraordinarily close to the dialects of the Czech language, and it is not difficult for a rural Slovak who knows only his own dialect to communicate with Czechs, especially Moravians, when the latter speak in their dialect. If the Slovaks, back at the time before they began developing an independent standard language, that is, around the turn from the eighteenth to the nineteenth century, had come into closer political connection with the Czechs, then the development of a Slovak standard language would doubtless no more have occurred than the development of an independent Swabian standard language in Swabia. Political motives were decisive for the effort made in Slovakia to create an independent language. This Slovak standard language, which was formed quite according to the model of Czech and was closely related to it in every respect, could not develop, however, likewise because of political circumstances. Under the rule of the Magyar state, excluded from school, office, and court, it led a miserable existence in popular almanacs and opposition leaflets. Again, it was the slight development of the Slovak language that caused efforts to adopt the Czech standard language, which had been under way in Slovakia from the very beginning, to gain more and more ground. Today two movements oppose each other in Slovakia: one that wants to root all Czechism out of the Slovak language and develop the language pure and independent and a second that wishes its assimilation to Czech. If the latter movement should prevail, then the Slovaks would become Czechs and the Czechoslovak state would evolve into a purely Czech national state. If, however, the former movement should prevail, then the Czech state would gradually be compelled, if it did not want to appear an oppressor, to grant the Slovaks autonomy and finally, perhaps, complete independence. There is no Czechoslovak nation composed of Czech speakers and Slovak speakers. What we see before us is a particular Slavic nation's struggle for life. How it will turn out will depend on political, social, and cultural circumstances. From a purely linguistic point of view, either of the two developments is possible.
The case is no different with the relation of the Slovenes to the Yugoslav nation. The Slovene language, also, has been struggling since its origin between independence and approximation to or complete blending with Croatian. The Illyrian movement wanted to include the Slovene language also in the sphere of its strivings for unity. If Slovene should be able to maintain its independence even in the future, then the Yugoslav state would have to grant the Slovenes autonomy.
The South Slavs also present one of the most frequently cited examples of two nations speaking the same language. Croats and Serbs use the same language. The national difference between them, it is asserted, lies exclusively in religion. Here is said to be a case that cannot be explained by the theory that perceives the distinctive attribute of a nation in its language.
In the Serbo-Croatian people the sharpest religious contrasts confront each other. One part of the people belongs to the Orthodox Church and another part to the Catholic Church, and even today the Mohammedans form a not inconsiderable part. In addition to these religious contrasts, there are old political enmities that still stem in part from times whose political conditions have today long ago been superseded. The dialects of all these religiously and politically splintered peoples are, however, extraordinarily closely related. These dialects were so closely related to each other that the efforts to form a standard language proceeding from different sides always led to the same result; all efforts always resulted in the same standard language. Vuk Stefanovic Karadzic wanted to create a Serbian language, Ljudevit Gaj a unified South Slavic; Pan-Serbism and Illyrianism bluntly confronted each other. But since they had the same dialectical material to deal with, the results of their work were identical. The languages that they created differed so little from each other that they finally blended together into a unified language. If the Serbs did not use the Cyrillic alphabet and the Croats the Latin alphabet exclusively, then there would be no external sign for attributing a written work to one nation or the other. The difference of alphabets cannot split a unified nation in the long run; the Germans also use different forms of writing without this having acquired any national significance. The political development of the last years before the war and during the war itself has shown that the religious difference between Croats and Serbs upon which the Austrian policy of Archduke Francis Ferdinand and his followers had built castles in the air has long since lost its earlier significance. There seems to be no doubt that in the political life of the Serbs and Croats also, the national factor of a common language will override all impeding influences and that the religious difference will play no greater role in the Serbo-Croatian nation than it does in the German people.
Two other examples commonly named to show that speech community and nation do not coincide are the Anglo-Saxon and Danish-Norwegian cases. The English language, it is asserted, is used by two nations, the English and the Americans; and this alone shows that it is inadmissible to seek the criterion of nationality in language alone. In truth, the English and Americans are a single nation. The inclination to count them as two nations stems from the fact that people have become accustomed to interpret the nationality principle as necessarily including the demand for unifying all parts of a nation into a single state. It will be shown in the next section that this is not true at all and that, therefore, the criterion of the nation should in no way be sought in efforts to form a unified state. That Englishmen and Americans belong to different states, that the policies of these states have not always been in consonance, and that the differences between them have occasionally even led to war—all that is still no proof that Englishmen and Americans are not one nation. No one could doubt that England is bound together with its dominions and with the United States by a national bond that will show its binding force in days of great political crisis. The World War brought proof that disagreements between the individual parts of the Anglo-Saxon nation can appear only when the whole does not seem threatened by other nations.
It seems even more difficult at first sight to harmonize the problem of the Irish with the linguistic theory of the nation. The Irish once formed an independent nation; they used a separate Celtic language. At the beginning of the nineteenth century, 80 percent of the population of Ireland still spoke Celtic, and more than 50 percent understood no English at all. Since then the Irish language has lost much ground. Only somewhat more than 600,000 persons still use it, and only seldom are people still to be found in Ireland who understand no English. Of course, there are also efforts in Ireland today to awaken the Irish language to new life and to make its use general. That fact is, however, that very many of those who are on the side of the political Irish movement are English by nationality. The opposition between Englishmen and Irishmen is of a social and religious and not exclusively of a national nature; and so it can happen that inhabitants of Ireland who by nationality are no Irishmen also belong to the movement in great number. If the Irish should succeed in achieving the autonomy they strive for, then it is not ruled out that a large part of today's English population of Ireland would assimilate itself to the Irish nation.
The much-cited Danish-Norwegian example also cannot undercut the assertion that nationality lies in language. During the centuries-long political union between Norway and Denmark, the old Norwegian standard language was completely driven out by the Danish standard language; it still managed a miserable existence only in the numerous dialects of the rural population. After the separation of Norway from Denmark (1814), efforts were made to create a national language of its own. But the efforts of the party striving to create a new Norwegian standard language on the basis of the old Norwegian language definitely failed. Success went to those who seek only to enrich Danish by introduction of expressions from the vocabulary of the Norwegian dialects but otherwise are in favor of retaining the Danish language. The works of the great Norwegian writers Ibsen and Bjørnson are written in this language.Ibsen made fun of the efforts of the adherents of the separate "Norwegian" language in the person of Huhu in Peer Gynt (fourth act, madhouse scene). Danes and Norwegians still today, then, form a single nation, even though they belong politically to two states.
- Dialect and Standard LanguageIn primitive times every migration causes not only geographical but also intellectual separation of clans and tribes. Economic exchanges do not yet exist; there is no contact that could work against differentiation and the rise of new customs. The dialect of each tribe becomes more and more different from the one that its ancestors spoke when they were still living together. The splintering of dialects goes on without interruption. The descendants no longer understand one other.
A need for unification in language then arises from two sides. The beginnings of trade make understanding necessary between members of different tribes. But this need is satisfied when individual middlemen in trade achieve the necessary command of language. In early times, when the exchange of goods between distant regions had only a relatively slight significance, scarcely more than individual expressions and word families must have come into more general use in this way. Political changes had to be much more significant for the unification of dialects. Conquerors appeared and created states and political unions of all kinds. The political leaders of broad territories came into closer personal relations; members of all social strata of numerous tribes were united in military service. Partly independently of the political and military organization and partly in closest connection with it, religious institutions arise and spread from one tribe to another. Hand in hand with political and religious strivings for unity go linguistic strivings. Soon the dialect of the ruling or the priestly tribe gains predominance over the dialects of the subjects and laity; soon, out of the different dialects of fellow members of state and religion, a unified mixed dialect is formed.
Introduction of the use of writing becomes the strongest basis for the unification of language. Religious doctrines, songs, laws, and records preserved in writing give preponderance to the dialect in which they have been expressed. Now the further splintering of the language is impeded; now there is an ideal speech that seems worth striving to attain and to imitate. The mystical nimbus that surrounds the letters of the alphabet in primitive times and that even today—at least in regard to their printed form—has not yet quite disappeared raises the prestige of the dialect in which the writing is done. Out of the chaos of dialects there arises the general language, the language of rulers and laws, the language of priests and singers, the literary language. It becomes the language of the higher-placed and more educated persons; it becomes the language of state and culture;One must distinguish between written language and cultural or standard language. When dialects possess a written literature, it will no longer do to deny them the designation of written languages. All those languages should then be called standard languages that make the claim to express all human thoughts orally and in writing and thus also to be scientific and technical languages. The boundaries between the two naturally cannot always be sharply drawn. it appears finally as the sole correct and noble language; the dialects from which it has arisen, however, are thenceforth regarded as inferior. People consider them corruption's of the written language; people begin to despise them as the speech of the common man.
In the formation of unified languages, political and cultural influences are always working together from the very beginning. The natural element in the dialect of the people is that it draws its strength from the life of those who speak it. On the other hand, the standard and unified language is a product of studyrooms and chancelleries. Of course, it too stems in the last analysis from the spoken word of the common man and from the creations of gifted poets and writers. But it is always shot through with more or less pedantry and artificiality also. The child learns the dialect from his mother; it alone can be his mother tongue; the standard language is taught by the school.
In the struggle that now arises between standard language and dialect, the latter has the advantage that it already takes possession of the person in his most receptive years. But the former also does not stand helpless. That it is the general language, that it leads beyond regional disunity to understanding with broader circles, makes it indispensable to state and church. It is the bearer of the written heritage and the intermediary of culture. Thus it can triumph over the dialect. If, however, it is too distant from the latter, if it is or over time becomes so estranged from the latter that it is still intelligible only to persons who learn it with effort, then it must succumb; then a new standard language arises from the dialect. Thus Latin was displaced by Italian, Church Slavonic by Russian; thus in modern Greek the common speech will perhaps triumph over the katharevousa of classicism.
The luster with which the school and the grammarians are accustomed to surround the standard language, the respect they pay to its rules, and the contempt they show for anyone who sins against these rules cause the relation between the standard language and the dialect to appear in a false light. The dialect is not corrupted standard language; it is primeval language; only out of the dialects was the standard language formed, whether a single dialect or else a mixed form artificially formed out of different dialects was raised to the status of standard language. The question therefore cannot arise at all whether a particular dialect belongs to this or that standard language. The relation between standard language and dialect is not always that of unequivocal association or indeed of superiority and inferiority, and the circumstances of linguistic history and grammar are not alone decisive in that respect. Political, economic, and general cultural developments of the past and present determine to which standard language the speakers of a particular dialect incline; and it can happen that in this way a unified dialect attaches itself partly to one and partly to another standard language.
The process by which the speakers of a particular dialect make the transition to using a particular standard language thereafter, either exclusively or along with the dialect, is a special case of national assimilation. It is especially characterized by being a transition to a grammatically closely related standard language, with this way being as a rule the only conceivable one in a given case. The Bavarian peasant's son has in general no other way open to culture than through the German standard language, even though it may also happen in rare particular cases that, without this detour, he becomes French or Czech directly. Yet for the Low German there are already two possibilities: assimilation to the German or to the Dutch standard language. Which of the two courses he takes is decided neither by linguistic nor genealogical considerations but by political, economic, and social ones. Today there is no longer any purely Plattdeutsch village; at least bilingualism prevails everywhere. If a Plattdeutsch district were to be separated from Germany today and be joined to the Netherlands, with the German school and the German official and judicial language replaced by Dutch ones, then the people affected would see all that as a national rape. Yet one hundred or two hundred years ago, such a separation of a bit of German territory could have been carried out without difficulty, and the descendants of the people who were separated at that time would be just as good Hollanders today as they in fact are good Germans today.
In Eastern Europe, where school and office still do not have anywhere near as much significance as in the West, something of the kind is still possible today. The linguistic researcher will be able to determine of most of the Slavic dialects spoken in upper Hungary whether they are closer to Slovak than to Ukrainian and perhaps also to decide in many cases in Macedonia whether a particular dialect is closer to Serbian or to Bulgarian. Yet that still does not answer the question whether the people who speak this dialect are Slovaks or Ukrainians, Serbs or Bulgarians. For this depends not only on linguistic conditions but also on political, ecclesiastical, and social ones. A village with a dialect undoubtedly more closely related to Serbian can more or less adopt the Bulgarian standard language relatively quickly if it acquires a Bulgarian church and a Bulgarian school.
Only thus can one gain an understanding of the exceedingly difficult Ukrainian problem. The question whether the Ukrainians are an independent nation or only Russians who speak a particular dialect is senseless in this form. If the Ukraine had not lost its political independence in the seventeenth century to the Great Russian state of the Czars, then a separate Ukrainian standard language would probably have developed. If all Ukrainians, including those in Galicia, Bukovina, and upper Hungary, had come under the rule of the Czars as late as the first half of the nineteenth century, then this might not have hindered the development of a separate Ukrainian literature; but this literature would probably have assumed a position in relation to Great Russian no different from that of Plattdeutsch writings in relation to German. It would have remained dialect poetry without particular cultural and political pretensions. However, the circumstance that several million Ukrainians were under Austrian rule and were also religiously independent of Russia created the preconditions for the formation of a separate Ruthenian standard language. No doubt the Austrian government and the Catholic Church preferred that the Austrian Rusins develop a separate language instead of adopting Russian. In this sense there is a spark of truth in the assertion of the Poles that the Ruthenians are an Austrian invention. The Poles are wrong only in saying that without this official support of the early beginnings of the Ruthenian aspirations there would have been no Rusin movement at all in East Galicia. The national rising of the East Galicians could have been suppressed just as little as the awakening of other nations without history. If state and church had not sought to guide it into other channels, then it would probably have developed from the beginning with a stronger Great Russian orientation.
The Ukrainian movement in Galicia, then, significantly furthered, at least, the separatist strivings of the Ukrainians in South Russia and perhaps even breathed life into them. The most recent political and social upheavals have furthered South Russian Ukrainianism so much that it is not entirely impossible that it can no longer be overcome by Great Russianism. But that is no ethnographic or linguistic problem. Not the degree of relationship of languages and races will decide whether the Ukrainian or the Russian language will win out but rather political, economic, religious, and general cultural circumstances. It is easily possible for that reason that the final outcome will be different in the former Austrian and Hungarian parts of the Ukraine than in the part that has long been Russian.
Conditions are similar in Slovakia. The independence of the Slovakian language from Czech is also a product of an in a certain sense accidental development. If there had been no religious differences between the Moravians and Slovaks and if Slovakia had been politically linked with Bohemia and Moravia no later than the eighteenth century, then a separate Slovak written and standard language would hardly have evolved. On the other hand if the Hungarian government had given less emphasis to Magyarization of the Slovaks and had allowed their language more scope in school and administration, then it would probably have developed more strongly and would today possess more power of resistance against Czech.Still more examples could be cited, including, for example, the Slovene language also. Particular interest attaches to those cases in which something similar was attempted on a smaller scale. Thus—according to information for which I am indebted to the Vienna Slavicist Dr. Norbert Jokl—the Hungarian government tried in the county of Ung to make the Slovak and Ruthenian local dialects used there independent; it had newspapers appear in these dialects in which, for the Ruthenian dialect, Latin letters and a Magyarizing orthography were used. Again, in the county of Zala the effort was made to make a Slovene dialect independent, which was facilitated by the fact that the population, in contrast to the Austrian Slovenes, was Protestant. Schoolbooks were published in this language. In Papa there was a special faculty for training teachers of this language.
To the language researcher it may in general seem not impossible to draw language boundaries by classifying individual dialects with particular standard languages. Yet his decision does not prejudice the historical course of events. Political and cultural events are decisive. Linguistics cannot explain why Czechs and Slovaks became two separate nations, and it would have no explanation if the two in the future should perhaps blend into one nation.
- National ChangesFor a long time nations have been regarded as unchanging categories, and it has not been noticed that peoples and languages are subject to very great changes in the course of history. The German nation of the tenth century is a different one from the German nation of the twentieth century. That is even outwardly evident in the fact that the Germans of today speak a different language from that of the contemporaries of the Ottonians.
For an individual, belonging to a nation is no unchangeable characteristic. One can come closer to one's nation or become alienated from it; one can even leave it entirely and exchange it for another.
National assimilation, which must of course be distinguished from the blending and turnover of races, with which it undergoes certain interactions, is a phenomenon whose historical significance cannot be assessed too highly. It is one manifestation of those forces whose operation shapes the history of peoples and states. We see it at work everywhere. If we could fully understand it in its conditions and in its essence, then we would have taken a good step further on the path that leads to understanding of historical development. In striking contrast to this importance of the problem is the disregard with which historical science and sociology have so far passed it by.
Language serves for intercourse with one's fellow men. Whoever wants to speak with his fellow men and to understand what they say must use their language. Everyone must therefore strive to understand and speak the language of his environment. For that reason individuals and minorities adopt the language of the majority. It is always a precondition for that, however, that contacts occur between the majority and the minority; if this is not the case, then no national assimilation ensues either. Assimilation proceeds the faster the closer are the contacts of the minority with the majority and the weaker the contacts within the minority itself and the weaker its contacts with fellow nationals living at a distance. From that it immediately follows that the social positions of the different nationalities must be of special significance in this regard, for personal contacts are more or less bound up with class membership. Thus, particular social strata in an environment of a foreign nation can not only maintain their own customs and own languages for centuries but also assimilate others to them. A German nobleman who immigrated to Eastern Galicia around 1850 did not become a Ruthenian but a Pole; a Frenchman who settled in Prague around 1800 became not a Czech but a German. However, the Ruthenian peasant in Eastern Galicia who by upward social mobility joined the ruling class also became a Pole, and the Czech peasant's son who rose into the bourgeoisie became a German.Cf. Otto Bauer, "Die Bedingungen der Nationalen Assimilation," Der Kampf, vol. V, pp. 246 ff.
In a society organized by classes or castes, different nations can live side by side in the same territory for centuries without losing their national distinctness. History provides enough examples of that. In the Baltic lands of Livonia, Estonia, and Courland, in Carniola and in South Styria, the German nobility maintained itself for many generations amidst the environment of a different people; so did the German bourgeoisie in the Bohemian, Hungarian, and Polish cities. Another example is the Gypsies. If social contacts between the nations are lacking, if between them no connubium and only to a restricted extent commercium exists, if changing one's class or caste is possible only in rare exceptional cases, then the conditions for national assimilation are rarely present. Thus, self-contained peasant settlements inside a country inhabited by a population with another language could maintain themselves as long as the agricultural strata were bound to the soil. As, however, the liberal economic order set aside all bonds, removed the special privileges of classes, and gave the workers freedom of movement, the rigid national stratification was loosened. Upward social mobility and migrations made national minorities disappear rapidly, or at least pushed them into defensive positions tenable only with difficulty.
The tearing down of barriers that guarded against shifting from one social class to another, freedom of movement of the person, everything that has made modern man free, has very much facilitated the advance of standard languages against dialects. "Where the so greatly improved means of transport and communication have shaken people up today and mingled them together in an undreamed-of manner, this signals the end of local dialects, of local manners, traditions and usage's; the railroad whistle has sung their funeral dirge. In a few years they will disappear; in a few years it will be too late to collect them and perhaps still protect them," an English philologist already remarked decades ago.Cf. Socin, Schriftsprache und Dialekte im Deutschen nach Zeugnissen alter und neuer Zeit (Heilbronn; 1888), p. 501. Today one can no longer live even as a peasant or worker in Germany without at least understanding the standard High German language and being able, if necessary, to use it. The school is making its contribution to hastening this process.
Quite distinct from natural assimilation through personal contact with people speaking other languages is artificial assimilation—denationalization by state or other compulsion. As a social process, assimilation hinges on certain preconditions; it can only occur when its preconditions exist. Compulsory methods then remain powerless; they can never succeed when the preconditions are not at hand or are not created. Administrative compulsion can sometimes bring about these conditions and so indirectly bring about assimilation; it cannot bring about national transformation directly. If individuals are put into an environment where they are cut off from contact with their fellow nationals and made exclusively dependent on contacts with foreigners, then the way is prepared for their assimilation. But if one can use only compulsory means that do not influence the colloquial language, then attempts at national oppression have scarcely any prospect of success.
Before the opening of the age of modern democracy, when national questions did not yet have the political significance that they have today, for this reason alone there could be no question of national oppression. If the Catholic Church and the Habsburg state suppressed Czech literature in the seventeenth century in Bohemia, they were motivated by religious and political but not yet by national-policy considerations; they persecuted heretics and rebels, not the Czech nation. Only very recent times have seen attempts at national oppression on a large scale. Russia, Prussia, and Hungary, above all, have been the classical countries of compulsory denationalization. How much success Russianization, Germanization, and Magyarization have achieved is well known. After these experiences, the prognosis that one can make about possible future efforts at Polonization or Czechification is not a favorable one.
The economic aspects of the World War are unique in history in kind and in degree; nothing similar ever existed before nor ever will exist again. This combination of developments was in general conditioned both by the contemporary stage of development of the division of labor and state of war technique, but in particular by both the grouping of the belligerent powers and the particular features of their territories as far as geography and technique of production were concerned. Only the conjunction of a large number of preconditions could lead to the situation that was quite unsuitably summarized in Germany and Austria under the catchword "war economy." No opinion need be expressed whether this war will be the last one or whether still others will follow. But a war which puts one side in an economic position similar to that in which the Central Powers found themselves in this war will never be waged again. The reason is not only that the configuration of economic history of 1914 cannot return but also that no people can ever again experience the political and psychological preconditions that made a war of several years' duration under such circumstances still seem promising to the German people.
The economic side of the World War can scarcely be worse misunderstood than in saying that in any case "the understanding of most of these phenomena will not be furthered by a good knowledge of the conditions of the peacetime economies of 1913 but rather by adducing those of the peacetime economies of the fourteenth to eighteenth centuries or the war economy of Napoleonic times."Cf. Otto Neurath, "Aufgabe, Methode und Leistungsähigheit der Kriegswirtschaftslehre," Archiv für Sozialwissenschaft und Sozialpolitik, vol. 44, 1917/1918, p. 765; cf., on the contrary, the discussion of Eulenburg, "Die wissenschaftliche Behandlung der Kriegswirtschaft," ibid., pp. 775-785. We can best see how much such an interpretation focuses on superficialities and how little it enables us to grasp the essence of the phenomena if we imagine, say, that the World War had been waged ceteris paribus at the stage of the international division of labor reached 100 years before. It could not have become a war of starving out then; yet that was precisely its essence. Another grouping of the belligerent powers would also have resulted in quite a different picture.
The economic aspects of the World War can only be understood if one first keeps in view their dependence on the contemporary development of world economic relations of the individual national economies, in the first place of Germany's and Austria-Hungary's and then of England's also.
Economic history is the development of the division of labor. It starts with the self-contained household economy of the family, which is self-sufficient, which itself produces everything that it uses or consumes. The individual households are not economically differentiated. Each one serves only itself. No economic contact, no exchange of economic goods, occurs.
Recognition that work performed under the division of labor is more productive than work performed without the division of labor puts an end to the isolation of the individual economies. The trade principle, exchange, links the individual proprietors together. From a concern of individuals, the economy becomes a social matter. The division of labor advances step by step. First limited to only a narrow sphere, it extends itself more and more. The age of liberalism brought the greatest advances of this sort. In the first half of the nineteenth century the largest part of the population of the European countryside, in general, still lived in economic self-sufficiency. The peasant consumed only foodstuffs that he himself had grown; he wore clothes of wool or linen for which he himself had produced the raw material, which was then spun, woven, and sewn in his household. He had built a house and farm buildings and maintained them himself, perhaps with the help of neighbors, whom he repaid with similar services. In the out-of-the-way valleys of the Carpathians, in Albania, and in Macedonia, cut off from the world, similar conditions still existed at the outbreak of the World War. How little this economic structure corresponds, however, to what exists today in the rest of Europe is too well known to require more detailed description.
The locational development of the division of labor leads toward a full world economy, that is, toward a situation in which each productive activity moves to those places that are most favorable for productivity; and in doing so, comparisons are made with all the production possibilities of the earth's surface. Such relocations of production go on continually, as, for example, when sheep-raising declines in Central Europe and expands in Australia or when the linen production of Europe is displaced by the cotton production of America, Asia, and Africa.
No less important than the spatial division of labor is the personal kind. It is in part conditioned by the spatial division of labor. When branches of production are differentiated by locality, then personal differentiation of producers must also occur. If we wear Australian wool on our bodies and consume Siberian butter, then it is naturally not possible that the producer of the wool and of the butter are one and the same person, as once was the case. Indeed, the personal division of labor also develops independently of the spatial, as every walk through our cities or even only through the halls of a factory teaches us.
The dependence of the conduct of war on the stage of development of the spatial division of labor reached at the time does not in itself, even today, make every war impossible. Individual states can find themselves at war without their world economic relations being essentially affected thereby. A German-French war would have been bound to lead or could have led to an economic collapse of Germany just as little in 1914 as in 1870-71. But today it must seem utterly impossible for one or several states cut off from world trade to wage war against an opponent enjoying free trade with the outside world.
This development of spatial division of labor is also what makes local uprisings appear quite hopeless from the start. As late as the year 1882, the people around the Gulf of Kotor and the Herzegovinians could successfully rebel against the Austrian government for weeks and months without suffering shortages in their economic system, composed of autarkic households. In Westphalia or Silesia, an uprising that stretched only over so small a territory could already at that time have been suppressed in a few days by blocking shipments into it. Centuries ago, cities could wage war against the countryside; for a long time now that has no longer been possible. The development of the spatial division of labor, its progress toward a world economy, works more effectively for peace than all the efforts of the pacifists. Mere recognition of the worldwide economic linkage of material interests would have shown the German militarists the danger, indeed impossibility, of their efforts. They were so much caught up in their power-policy ideas, however, that they were never able to pronounce the peaceful term "world economy" otherwise than in warlike lines of thought. Global policy was for them synonymous with war policy, naval construction, and hatred of England.Especially characteristic of this tendency are the speeches and essays published by Schmoller, Sering, and Wagner under the auspices of the "Free Association for Naval Treaties" under the title Handels und Machtpolitik (Stuttgart; 1900), 2 volumes.
That economic dependence on world trade must be of decisive significance for the outcome of a campaign could naturally not also escape those who had occupied themselves for decades with preparation for war in the German Reich. If they still did not realize that Germany, even if only because of its economic position, could not successfully wage a great war with several great powers, well, two factors were decisive for that, one political and one military. Helfferich summarized the former in the following words, "The very position of Germany's borders as good as rules out the possibility of lengthy stoppage of grain imports. We have so many neighbors—first the high seas, then Holland, Belgium, France, Switzerland, Austria Russia—that it seems quite inconceivable that the many routes of grain import by water and by land could all be blocked to us at once. The whole world would have to be in alliance against us; however, to consider such a possibility seriously, even for a minute, means having a boundless mistrust in our foreign policy."Cf. Helfferich, Handelspolitik (Leipzig; 1901), p. 197; similarly Dietzel, "Weltwirtschaft und Volkswirtschaft,"Jahrbuch der Gehe-Stiftung, vol. 5 (Dresden: 1900), pp. 46 f.; Riesser, Finanzielle Kriegsbereitschaft und Kriegfuhrung (Jena; 1909), pp. 73 f. Bernhardi speaks of the necessity of taking measures to prepare ways during a German-English war "by which we can obtain the most necessary imports of foods and raw materials and at the same time export the surplus of our industrial products at least partially" (Deutschland und der nächste Krieg [Stuttgart: 19121, pp. 179 f.). He proposes making provisions for "a kind of commercial mobilization." What illusions about the political situation he thereby indulged in can best be seen from his thinking that in a fight against England (and France allied with it), we would "not stand spiritually alone, but rather all on the wide earthly sphere who think and feel freedom-oriented and self-confident will be united with us" (ibid., p. 187). Militarily, however, recalling the experiences of the European wars of 1859, 1866, and 1870-71, people believed that they had to reckon with a war lasting only a few months, even weeks. All German war plans were based on the idea of success in completely defeating France within a few weeks. Anyone who might have considered that the war would last long enough for the English and even the Americans to appear on the European continent with armies of millions would have been laughed down in Berlin. That the war would become a war of emplacements was not understood at all; despite the experiences of the Russo-Japanese war, people believed that they could end the European war in a short time by rapid offensive strikes.Modern war theory started with the view that attack is the superior method of waging war. It corresponds to the spirit of conquest-hungry militarism when Bernhardi argues for this: "Only attack achieves positive results; mere defense always delivers only negative ones." (Cf. Bernhardi, Vom heutigen Klieg [Berlin: 1912], vol. 2, p. 223.) The argumentation for the attack theory was not merely political, however, but was also based on military science. Attack appears as the superior form of fighting because the attacker has free choice of the direction, of the goal, and of the place of the operations, because he, as the active party, determines the conditions under which the fight is carried out, in short, because he dictates to the party under attack the rules of action. Since, however, the defense is tactically stronger in the front than the offense, the attacker must strive to get around the flank of the defender. That was old war theory, newly proved by the victories of Frederick II, Napoleon I, and Moltke and by the defeats of Mack, Gyulai, and Benedek. It determined the behavior of the French at the beginning of the war (Mulhouse). It was what impelled the German army administration to embark on the march through neutral Belgium in order to hit the French on the flank because they were unattackable in the front. His remembering the many Austrian commanders for whom the defensive had become misfortune drove Conrad in 1914 to open the campaign with goalless and purposeless offensives in which the flower of the Austrian army was uselessly sacrificed. But the time of battles of the old style, which permitted getting around the opponent's flank, was past on the great European theaters of war, since the massiveness of the armies and the tactics that had been reshaped by modern weapons and means of communication offered the possibility of arranging the armies in such a way that a flank attack was no longer possible. Flanks that rest on the sea or on neutral territory cannot be gotten around. Only frontal attack still remains, but it fails against an equally well armed opponent. The great breakthrough offensives in this war succeeded only against badly armed opponents, as especially the Russians were in 1915 and in many respects also the Germans in 1918. Against inferior troops a frontal attack could of rourse succeed even against equally good, even superior, weapons and armaments of the defender (twelfth battle of the Isonzo). Otherwise, the old tactics could be applied only in the battles of mobile warfare (Tannenberg and the Masurian Lakes in 1914 and individual battles in Galicia). To have misunderstood this has been the tragic fate of German militarism. The whole German policy was built on the theorem of the military superiority of attack; in war of emplacements the policy broke down with the theorem. The military calculations of the General Staff were just as false as its economic and political ones.
The assertion is not true, therefore, that the German Empire had neglected to make the necessary economic preparations for war. It simply had counted on a war of only short duration; for a short war, however, no economic provisions had to be made beyond those of finance and credit policy. Before the outbreak of the war the idea would no doubt have been called absurd that Germany could ever be forced to fight almost the whole rest of the world for many years in alliance only with Austria-Hungary (or more exactly in alliance with the German-Austrians and the Magyars, for the Slavs and Rumanians of the Monarchy stood with their hearts and many of them also with weapons on the side of the enemy), Turkey, and Bulgaria. And in any case one would have had to recognize, after calm reflection, that such a war neither could have been waged nor should have been waged and that if an unspeakably bad policy had let it break out, then one should have tried to conclude peace as quickly as possible, even at the price of great sacrifices. For, indeed, there never could be any doubt that the end could be only a fearful defeat that would deliver the German people defenseless to the harshest terms of its opponents. Under such circumstances a quick peace would at least have spared goods and blood.
That should have been recognized at once even in the first weeks of the war and the only possible implications then drawn. From the first days of the war—at the latest, however, after the defeats on the Marne and in Galicia in September 1914—there was only one rational goal for German policy: peace, even if at the price of heavy sacrifices. Let us quite disregard the fact that until the summer of 1918 it was repeatedly possible to obtain peace under halfway acceptable conditions, that the Germans of Alsace, the South Tyrol, the Sudetenland, and the eastern provinces of Prussia could probably have been protected from foreign rule in that way; even then, if continuation of the war might have afforded a slightly more favorable peace, the incomparably great sacrifices that continuation of the war required should not have been made. That this did not happen, that the hopeless, suicidal fight was continued for years—political considerations and grave errors in the military assessment of events were primarily responsible for that. It was an incomprehensible delusion to speak of the possibility of a victorious peace when German failure had already been settled from the time of the battle of the Marne. But the Junker party preferred to let the German people be entirely ruined rather than give up its rule even one day earlier. But delusions about economic policy also contributed much.
Right at the beginning of the war a catchword turned up whose unfortunate consequences cannot be completely overlooked even today: the verbal fetish "war-economy." With this term all considerations were beaten down that could have led to a conclusion advising against continuing the war. With this one term all economic thought was put aside; ideas carried over from the "peacetime economy" were said not to hold for the "war economy," which obeyed other laws. Armed with this catchword, a few bureaucrats and officers who had gained full power by exceptional decrees substituted "war socialism" for what state socialism and militarism had still left of the free economy. And when the hungry people began to grumble, they were calmed again by reference to the "war economy." If an English cabinet minister had voiced the watchword "business as usual" at the beginning of the war, which however, could not be continued in England as the war went on, well, people in Germany and Austria took pride in traveling paths as new as possible. They "organized" and did not notice that what they were doing was organizing defeat.
The greatest economic achievement that the German people accomplished during the war, the conversion of industry to war needs, was not the work of state intervention; it was the result of the free economy. If, also, what was accomplished in the Reich in this respect was much more significant in absolute quantity than what was done in Austria, it should not be overlooked that the task which Austrian industry had to solve was still greater in relation to its powers. Austrian industry not only had to deliver what the war required beyond peacetime provisions; it also had to catch up on what had been neglected in peacetime. The guns with which the Austro-Hungarian field artillery went to war were inferior; the heavy and light field howitzers and the mountain cannons were already out of date at the time of their introduction and scarcely satisfied the most modest demands. These guns came from state factories; and now private industry, which in peacetime had been excluded from supplying field and mountain guns and could supply such material only to China and Turkey, not only had to produce the material for expanding the artillery; in addition, it also still had to replace the unusable models of the old batteries with better ones. Things were not much different with the clothing and shoeing of the Austro-Hungarian troops. The so-called bluish-gray—more correctly, light blue—fabrics proved to be unusable in the field and had to be replaced as rapidly as possible by gray ones. The supplying of the army with boots, which in peacetime had been done while the mechanized shoe industry that worked for the market was excluded, had to be turned over to the factories previously shunned by the quartermasters.
The great technical superiority that the armies of the Central Powers had achieved in the spring and summer of 1915 in the eastern theater of the war and that formed the chief basis of the victorious campaign from Tarnów and Gorlice to deep into Volhynia was likewise the work of free industry, as were the astonishing achievements of German and also of Austrian labor in the delivery of war material of all kinds for the western and the Italian theaters of war. The army administrations of Germany and Austro-Hungary knew very well why they did not give in to the pressure for state ownership of the war-supplying enterprises. They put aside their outspoken preference for state enterprises, which would have better suited their world view, oriented toward power policy and state omnipotence, because they knew quite well that the great industrial tasks to be accomplished in this area could be accomplished only by entrepreneurs operating on their own responsibility and with their own resources. War socialism knew very well why it had not been entrusted with the armaments enterprises right in the first years of the war.
The clearer it had to become in the course of the war that the Central Powers were bound to be finally defeated in the war of starving out, the more energetically were references made from various sides to the necessity of preparing better for the next war. The economy would have to be reshaped in such a way that Germany would be capable of withstanding even a war of several years. It would have to be able to produce inside the country everything required for feeding its population and for equipping and arming its armies and fleets in order to be no longer dependent on foreign countries in this respect.
No long discussions are needed to show that this program cannot be carried out. It cannot be carried out because the German Reich is too densely populated for all foodstuffs needed by its population to be produced at home without use of foreign raw materials and because a number of raw materials needed for production of modern war material just do not exist in Germany. The theorists of the war economy commit a fallacy when they try to prove the possibility of an autarkic German economy by reference to the usability of substitute materials. One supposedly must not always use foreign products; there are domestic products scarcely inferior to foreign ones in quality and cheapness. For the German spirit, which has already famously distinguished itself in applied science, a great task arises here which it will solve splendidly. The efforts previously made in this field have led to favorable results. We are said already to be richer now than we were before, since we have learned how to exploit better than before materials that earlier were neglected or were used for less important purposes or not fully used.
The error in this line of thinking is obvious. It may well be true that applied science is far from yet having spoken the last word, that we may still count on improvements in technology that will be no less significant than the invention of the steam engine and of the electric motor. And it may happen that one or the other of these inventions will find the most favorable preconditions for its application precisely on German soil, that it will perhaps consist precisely in making useful a material that is abundantly available in Germany. But then the significance of this invention would lie precisely in shifting the locational circumstances of a branch of production, in making the productive conditions of a country that were previously to be regarded as less favorable more favorable under the given circumstances. Such shifts have often occurred in history and will occur again and again. We will hope that they occur in the future in such a way that Germany will become, to a higher degree than at present, a Country of more favorable conditions of production. If that should happen, then many burdens will be lifted from the German people.
Yet these changes in the relative pattern of conditions of production must be sharply distinguished from introducing the use of substitute materials and producing goods under worse conditions of production. One can of course usse linen instead of cotton and wooden soles instead of leather soles. However, in the former case one has replaced a cheaper by a dearer material, that is, by one in whose production more costs must be incurred, and in the latter case a better by a less usable material. That means, however, that the meeting of needs becomes worse. That we use paper sacks instead of jute sacks and iron tires on vehicles instead of rubber tires, that we drink "war" coffee instead of real coffee, shows that we become poorer, not richer. And if we now carefully put to use garbage that we had earlier thrown away, then this makes us richer just as little as if we obtained copper by melting works of art.Cf. Dietzel, Die Nationalisierung der Kriegsmilliarden (Tübingen: 1919), pp. 31 ff. To be sure, living well is not the highest good; and there may be reasons for peoples as well as individuals to prefer a life of poverty to a life of luxury. But then let that be said openly without taking refuge in artificial theorems that try to make black out of white and white out of black; then let no one seek to obscure the clear case by allegedly economic arguments.Not only economists have been active in this direction; still more has been done by technicians, but most by physicians. Biologists who, before the war, declared the nutrition of the German industrial worker to be inadequate suddenly discovered during the war that food poor in protein is especially wholesome, that fat consumption in excess of the quantity permitted by the authorities is damaging to health, and that a limitation of the consumption of carbohydrates has little significance.
It should not be disputed that war needs can beget and, in fact, have begotten many useful inventions. How much they represent a lasting enrichment of the German economy can be known only later.
Only those proponents of the idea of autarky who subordinate all other goals to the military one are thinking consistently. He who sees all values as realized only in the state and thinks of the state above all as a military organization always ready for war must demand of the economic policy of the future that it strive, pushing all other considerations aside, to organize the domestic economy for self-sufficiency in case of war. Regardless of the higher costs that thereby arise, production must be guided into the channels designated as most suitable by the economic general staff. If the standard of living of the population thereby suffers, well, in view of the high objective to be attained, that does not count at all. Not the standard of living is the greatest happiness of people, but fulfillment of duty.
But there is a grave error in this line of thinking also. Admittedly it is possible, if one disregards costs, to produce within the country everything necessary for waging war. But in war it is important not only that weapons and war material just be on hand but also that they be available in sufficient quantity and in best quality. A people that must produce them under more unfavorable condition of production, that is, with higher costs, will go into the field worse provisioned, equipped, and armed than its opponents. Of course, the inferiority of material supplies can to a certain extent be offset by the personal excellence of the combatants. But we have learned anew in this war that there is a limit beyond which all bravery and all sacrifice are of no use.
From recognition that efforts for autarky could not be carried through, there arose the plan for a future state stockpiling system. In preparation for the possible return of a war of starvation, the state must build up stockpiles of all important raw materials that cannot be produced at home. In that connection a large stock of grain was also thought of, and even stocks of fodder.Cf. Hermann Levy, Vorratswirtschaft und Volkwirtschaft (Berlin: Verlag von Julius,Springer), 1915, pp. 9 ff.; Naumann, Mitteleuropa; pp. 149 f; Diehl, Deutschland als geschlossener Handelstaat im Weltkrieg (Stuttgart: 1916), pp. 28 f.
From the economic standpoint, the realization of these proposals does not seem inconceivable. From the political standpoint, though, it is quite hopeless. It is scarcely to be assumed that other nations would calmly look on at the piling up of such war stocks in Germany and not, for their part, resort to countermeasures. To foil the whole plan, they indeed need only watch over the exports of the materials in question and each time permit the export only of such quantities as do not exceed the current demand.
What has quite incorrectly been called war economy is the economic preconditions for waging war. All waging of war is dependent on the state of the division of labor rached at the time. Autarkic economies can go to war against each other; the individual parts of a labor and trade community can do so, however only insofar as they are in a position to go back to autarky. For that reason, with the progress of the division of labor we see the number of wars and battles diminishing ever more and more. The spirit of industrialism, which is indefatigably active in the development of trade relations, undermines the warlike spirit. The great steps forward that the world economy made in the age of liberalism considerably narrowed the scope remaining for military actions. When those strata of the German people who had the deepest insight into the world economic interdependence of the individual national economies doubted whether it was still at all possible that a war could develop and, if that should happen at all, expected at most a war that would end quickly, they thereby showed better understanding of the realities of life than those who indulged in the delusion that even in the age of world trade one could practice the political and military principles of the Thirty Years' War.
When one examines the catchword about war economy for its content, it turns out that it contains nothing other than the demand to turn economic development back to a stage more favorable for waging war than the 1914 stage was. It is a question only of how far one should go in doing that. Should one go back only as far as to make warfare between great states possible, or should one try to make warfare possible between individual parts of a country and between city and countryside also? Should only Germany be put in a position to wage war against the entire remaining world, or should it also be made possible for Berlin to wage war against the rest of Germany?
Whoever on ethical grounds wants to maintain war permanently for its own sake as a feature of relations among peoples must clearly realize that this can happen only at the cost of the general welfare, since the economic development of the world would have to be turned back at least to the state of the year 1830 to realize this martial ideal even only to some extent.
There were three ways available to cover the costs that the State Treasury incurred in the war.
The first way was confiscating the material goods needed for waging war and drafting the personal services needed for waging war without compensation or for inadequate compensation. This method seemed the simplest, and the most consistent representatives of militarism and socialism resolutely advocated employing it. It was used extensively in drafting persons into actually waging war. The universal military-service obligation was newly introduced in many states during the war and in others was substantially extended. That the soldier received only a trifling compensation for his services in relation to the wages of free labor, while the worker in the munitions industry was highly paid and while the possessors of expropriated or confiscated material means of war received an at least partially corresponding compensation, has rightly been called a striking fact. The explanation for this anomaly may be found in the fact that only a few people enlist today even for the highest wages and that in any case prospects of putting together any army of millions on the basis of enlistments would not be very good. In relation to the immense sacrifices that the state demands of the individual through the blood tax, it seems rather incidental whether it compensates the soldier more or less abundantly for the loss of time that he suffers from his military-service obligation. In the industrial society there is no appropriate compensation for war services; In such a society they have no price at all; they can be demanded only compulsorily, and then it is surely of slight significance whether they are paid for more generously or at the laughably low rates at which a man was compensated in Germany. In Austria the soldier at the front received a wage of 16 heller and a field supplement of 20 heller, 36 heller a day in all!And, moreover, the troops that had to fight through the fearful battles in the Carpathians and in the swamps of the Sarmatian plain, in the high mountains of the Alps, and in the Karst were poorly supported and inadequately clothed and armed! That reserve officers, even in the continental states, and that the English and American troops received a higher compensation is explained by the fact that a peacetime wage rate had been established for officer service in the continental states and for all military service in England and America which had to be taken as a point of departure in the war. But however high or however low the compensation of the warrior may be, it is never to be regarded as a full compensation for the compulsorily recruited man. The sacrifice that is demanded of the soldier serving by compulsion can be compensated only with intangible values, never with material ones.From the political point of view it was a grave mistake to follow completely different principles in the compensation of the officer and the enlisted man and to pay the soldier at the front worse than the worker behind the lines. That contributed much to demoralizing the army!
In other respects the uncompensated expropriation of war material was scarcely considered. By its very nature alone it could occur only with regard to goods on hand, in individual economic units in sufficient quality at the beginning of the war, but not also where producing new goods was concerned.
The second way available to the state for acquiring resources was introducing new taxes and raising already existing taxes. This method too was used everywhere as much as possible during the war. The demand was made from many sides that the state should try, even during the war, to cover the total war costs by taxes; in that connection reference was made to England, which was said to have followed this policy in earlier wars. It is true that England covered the costs of smaller wars that were only insignificant in relation to its national wealth in greatest part by taxes during the war itself. In the great wars that England waged, however, this was not true, neither in the Napoleonic Wars nor in the World War. If one had wanted immediately to raise such immense sums as this war required entirely by taxation without incurring debt, then, in assessing and collecting taxes, one would have had to put aside regard for justice and uniformity in the distribution of tax burdens and take from where it was possible to take at the, moment. One would have had to take everything from the owners of movable capital (not only from large owners but also from small ones, e.g., savings-bank depositors) and on the other hand leave the owners of real property more or less free.
If, however, the high war taxes were assessed uniformly (for they would have had to be very high if they were fully to cover each year the war costs incurred in the same year), then those who had no cash for paying taxes would have had to acquire the means for paying by going into debt. Landowners and owners of industrial enterprises would then have been compelled to incur debt or even to sell part of their possessions. In the first case, therefore, not the state itself but rather many private parties would have had to incur debts and thereby obligate themselves to interest payments to the owners of capital. However, private credit is in general dearer than public credit. Those land and house owners would therefore have had to pay more interest on their private debts than they had to pay indirectly in interest on the state debt. If, however, they had found themselves forced to sell a smaller or larger part of their property in order to pay taxes, then this sudden offer of a large part of real property for sale would have severely depressed prices, so that the earlier owners would have suffered a loss; and the capitalists who at this moment had had cash at their disposal would have gained a profit by buying cheaply. That the state did not fully cover the costs of the war by taxes but rather in largest part by incurring state debt, whose interest was paid from the proceeds of taxes, therefore does not signify, as is often assumed, a favoring of the capitalists.Cf. Dietzel, Kriegssteuer oder Kriegsanleihe? (Tübingen: 1912), pp.13 ff.
One now and then hears the interpretation expressed that financing war by state loans signifies shifting the war costs from the present onto following generations. Many add that this shifting is also just, since, after all, the war was being waged not only in the interest of the present generation but also in the interest of our children and grandchildren. This interpretation is completely wrong. War can be waged only with present goods. One can fight only with weapons that are already on hand; one can take everything needed for war only from wealth already on hand. From the economic point of view, the present generation wages war, and it must also bear all material costs of war. Future generations are also affected only insofar as they are our heirs and we leave less to them than we would have been able to leave without the war's intervening. Whether the state now finances the war by debts or otherwise ran change nothing about this fact. That the greatest part of the war costs was financed by state loans in no way signifies a shifting of war burdens onto the future but only a particular principle of distributing the war costs. If, e.g., the state had to take half of his wealth from each citizen to be able to pay for the war financially, then it is fundamentally a matter of indifference whether it does so in such a way that it imposes a onetime tax on him of half of his wealth or takes from him every year as a tax the amount that corresponds to interest payments on half of his wealth. It is fundamentally a matter of indifference to the citizen whether he has to pay 50,000 crowns as tax one time or pay the interest on 50,000 crowns year in, year out. This becomes of greater significance, however, for all those citizens who would not be able to pay the 50,000 crowns without incurring debt, those who would first have to borrow the share of tax falling on them. For they would have to pay more interest on these loans that they take out as private parties than the state, which enjoys the cheapest credit, pays to its creditors. If we set this difference between the dearer private credit and the cheaper state credit at only one percentage point, this means, in our example, a yearly saving of 500 crowns for the taxpayer. If year after year he has to pay his contribution to interest on his share of the state debt he saves 500 crowns in comparison with the amount that he would have had to pay every year as interest on a private loan that would have enabled him to pay the temporary high war taxes.
The more socialist thinking gained strength in the course of the war, the more were people bent on covering the war costs by special taxes on property.
The idea of subjecting additional income and the growth of property obtained during the war to special progressive taxation need not, fundamentally, be socialistic. In and of itself the principle of taxation according to ability to pay is not socialistic. It cannot be denied that those who achieved a higher income in the war than in peacetime or had increased their property were ceteris paribus more able to pay than those who did not succeed in increasing their income or their property. Moreover, one can quite rule out the question of how far these nominal increases in wealth and income were to be regarded as real increases in income and wealth and whether it was not a question here merely of nominal increases in amounts expressed in money in consequence of the decline in the value of money. Someone who had an income of 10,000 crowns before the war and increased it during the war to 20,000 crowns doubtless found himself in a more favorable position than someone who had remained with his prewar income of 10,000 crowns. In this disregard of the value of money, which only goes without saying in view of the general tenor of German and Austrian legislation, there did lie, to be sure, a deliberate disadvantaging of movable capital and a deliberate preference for landowners, especially farmers.
The socialistic tendencies of war-profit taxation came to light above all in their motives. War-profit taxes are supported by, the view that all entrepreneurial profit represents robbery from the community as a whole and that by rights it should be entirely taken away. This tendency comes to light in the scale of the rates, which more and more approach complete confiscation of the entire increase in property or income and doubtless finally will reach even this goal set for them. For one should indeed suffer no illusion about the fact that the unfavorable opinion of entrepreneurial income manifested in these war taxes is not attributable to wartime conditions alone and that the line of argument used for the war taxes—that in this time of national distress every increase in wealth and every increase in income is indeed unethical—can also be maintained in the period after the war with the same justification, even if with differences in detail.
Socialistic tendencies are also quite clear in the idea of a one-time capital levy. The popularity that the slogan about a one-time capital levy enjoys, a popularity so great that it makes any serious discussion of its appropriateness quite impossible, can be explained only by the entire population's aversion to private property. Socialists and liberals will answer quite differently the question whether a one-time property tax is preferable to a current one. One can refer to the fact that the current, yearly recurring, property tax offers the advantage in comparison with the one-time property tax that it does not remove capital goods from the disposal of the individual (quite apart from the fact that it is fairer and more uniform, since it permits errors made in one year's assessment to be corrected the next year and that it is independent of the accident of possession and evaluation of property at a particular moment because it deals with property year in and year out according to the current amount of wealth that it constitutes). When someone operates an enterprise with a capital of his own of 100,000 marks, then it is not at all a matter of indifference to him whether he has to pay an amount of 50,000 marks at one time as a property tax or pay each year only the amount corresponding to the interest that the state has to pay on a debt of 50,000 marks. For it is to be expected that with this capital beyond the amount that the state would have to demand from him for paying interest on the 50,000 marks, he could earn a profit that he could then keep. This is not what is decisive for the liberal's position, however, but rather the social consideration that by the one-time capital levy the state would transfer capital out of the hands of entrepreneurs into the hands of capitalists and lenders. If the entrepreneur is to carry on his business after the capital levy on the same scale as before it, then he must acquire the missing amount by obtaining credit, and as a private party he will have to pay more interest than the state would have had to pay. The consequence of the capital levy will therefore be a greater indebtedness of the enterprising strata of the population to the non-enterprising capitalists, who, as a result of the reduction of the war debt, will have exchanged part of their claims on the state for claims on private parties.
The socialists, of course, go still further. They want to use the capital levy not only for lightening the burden of war debts—many of them want to get rid of war debts in a simple manner by state bankruptcy—but they demand the capital levy in order to give the state shares of ownership in economic enterprises of all kinds, in industrial corporations, in mining, and in agricultural estates. They campaign for it with the slogan about the state's and society's sharing in the profit of private enterprises.Cf. above all Goldscheid, Staatssozialismus oder Staatskapitalismus, fifth edition (Vienna: 1917); idem., Sozialisierung der Wirtschaft oder Staatsbankerott (Vienna: 1919). As if the state were not sharing in the profits of all enterprises through tax legislation anyway, so that it does not first need a civil-law title to draw profit from the enterprises. Today the state shares in the profits of enterprises without being obliged to cooperate at all in the management of the production process and without being exposed to harm in any way by possible losses of the enterprise. If, however, the state owns shares in all enterprises, it will also share in losses; moreover, it will even be forced to concern itself with the administration of individual businesses, just that, however, is what the socialists want.
The authoritarian-militaristic spirit of the Prussian authoritarian state finds its counterpart and completion in the ideas of German Social Democracy and of German socialism in general. To hasty observation the authoritarian state and Social Democracy appear as irreconcilable opposites between which there is no mediation. It is true that they confronted each other for more than fifty years in blunt hostility. Their relation was not that of political opposition, as occurs between different parties in other nations also; it was complete estrangement and mortal enmity. Between Junkers and bureaucrats on the one hand and Social Democrats on the other hand, even every personal, purely human contact was ruled out; scarcely ever did one side or the other make an attempt to understand its opponent or have a discussion with him.
The irreconcilable hatred of the monarchy and of the Junker class did not concern, however, the social-economic program of the Social Democratic Party. The program of the German Social Democratic Party contains two elements of different origins tied together only loosely. It includes on the one hand all those political demands that liberalism, especially its left wing, represents and also has partly implemented already in most civilized states. This part of the Social Democratic Party program is built on the great political idea of the national state, which wants to dissolve the princely and authoritarian state and turn the subject into a citizen of the state. That the Social Democratic Party has pursued this goal, that it took the banner of democracy from the enfeebled hands of dying German liberalism and alone held it high in the darkest decades of German politics despite all persecutions—that is its great pride and fame, to which it owes the sympathy that the world accords it and that first brought it many of its best men and the masses of the oppressed and of "bourgeois fellow-travelers." The very fact, however, that it was republican and democratic drew onto it the inextinguishable hatred of the Junkers and bureaucrats; that alone brought it into conflict with authorities and courts and made it into an outlawed sect of enemies of the state, despised by all "right-thinking people."
The other component of the program of German Social Democracy was Marxian socialism. The attraction that the slogan about the capitalistic exploitation of the workers and that the promising utopia of a future state exerted on the great masses was the basis of an imposing party and labor-union organization. Many, however, were won over to socialism only through democracy. As the German bourgeoisie, after the annihilating defeats that German liberalism had suffered, submitted unconditionally to the authoritarian state of Bismarck, as, in line with the German protective-tariff policy, the German entrepreneurial class identified itself with the Prussian state, so that militarism and industrialism became politically related concepts for Germany, then the socialist side of the party program absorbed new strength from democratic aspirations. Many refrained from criticizing socialism in order not to harm the cause of democracy. Many became socialists because they were democrats and believed that democracy and socialism were inseparably connected.
In truth, though, close relations exist precisely between socialism In regard to economic policy, socialism and communism are identical; both strive for socialization of the means of production, in contrast with liberalism, which wants on principle to let private ownership even of the means of production continue. The distinction that has recently come into use between socialism and communism is irrelevant with regard to economic policy unless one also foists on the communists the plan of wanting to discontinue private ownership of consumption goods. On centralist and syndicalist socialism (actually, only centralist socialism is true socialism), see below, pp, 195 ff. and the autocratic-authoritarian form of state that correspond to the essence of both.On the intimate relation between militarism and socialism, cf. Herbert Spencer, loc. cit., vol. 3, p. 712. The imperialistic tendencies of socialism are treated by Seillière, Die Philosophie des Imperialismus, second edition of the German version (Berlin: 1911), vol. 2, pp. 171 ff., vol. 3, pp. 59 ff. Sometimes socialism does not even outwardly deny its intimate relation with militarism. That comes to light especially clearly in those socialistic programs that want to arrange the future state on the model of an army, Examples: wanting to solve the social question by setting up a "food army" or a "worker army" (cf Popper-Lynkeus, Die allegemeine Nährpflicht (Dresden: 1912], pp. 373 ff.; further, Ballod, Der Zukunftsstaat, second edition, [Stuttgart: 1919], pp. 32 ff.). The Communist Manifesto already demands the "establishment of industrial armies." It should be noted that imperialism and socialism go hand in hand in literature and politics. Reference was already made earlier (pp. 94 ff.) to Engels and Rodbertus; one could name Many others, e.g., Carlyle (cf Kemper, "Carlyle als Imperialist," Zeitschrift für Politik, XI, 115 ff.). Australia, which, as the only one among the Anglo-Saxon states, has turned away from liberalism and come closer to socialism than any other country, is the imperialistic state par excellence in its immigration legislation. For that reason the authoritarian state also did not fight socialist efforts at all as harshly as it confronted all democratic impulses. On the contrary, the Prussian-German authoritarian state evolved strongly toward the side of "social kingship" and would have turned still more toward socialism if the great workers' party of Germany had been ready even before August 1914 to give up its democratic program in exchange for the gradual realization of its socialistic goals.
The sociopolitical doctrine of Prussian militarism can best be recognized in the literary products of the Prussian school of economic policy. Here we find complete harmony established between the ideal of the authoritarian state and that of a far-reaching socialization of large industrial enterprise. Many German social thinkers reject Marxism—not, however, because they reject its goals but because they cannot share its theoretical interpretation of social and economic developments. Marxism, whatever one may say against it, nevertheless has one thing in common with all scientific economics: it recognizes a conformity to law in the historical process and presupposes the causal interconnection of all that happens. German statism could not follow it in this respect because it sees everywhere only marks of the activity of great kings and powerful states. The heroic and teleological interpretation of history seems more obvious to statism than the causal; it knows no economic law; it denies the possibility of economic theory.This spirit of hostility to theoretical investigation has also infected the German Social Democrats. It is characteristic that just as theoretical economics could flourish on German-speaking territory only in Austria, so also the best representatives of German Marxism, Kautsky, Otto Bauer, Hilferding, and Max Adler, come from Austria. In that respect Marxism is superior to German social-policy doctrine, which has no theoretical basis at all and never has sought to create one. All social problems appear to this school as tasks of state administration and politics, and there is no problem on whose solution it does not venture with a light heart. Always, however, it is the same prescription that it issues: commands and prohibitions as lesser means, state ownership as the great, never-failing means.
Under such circumstances Social Democracy had an easy position. Marxian economic theory, which in Western Europe and America was able to win only a small following and was not able to assert itself alongside the accomplishments of modern economic theory, did not have to suffer much under the criticism of the empirical-realistic and historical school of German economics. The critical work to be done against Marxian economic theory was carried out by the Austrian school, ostracized in Germany, and above all by Böhm-Bawerk.It is naturally not intended here to undertake a critical assessment of Marxism. The discussion in this section is intended only to explain the imperialistic tendencies of socialism. Also, enough writings are available anyway to whoever is interested in these problems (e.g., Simkhowitsch, Marxismus versus Sozialismus, translated by Jappe Jena; 1913]). Marxism could easily dispose of the Prussian school; it was dangerous to it not as an opponent but as a friend. Social Democracy had to take care to show that social reform such as German social policy strove for could not replace the social revolution and that state ownership in the Prussian sense was not identical with socialization. This demonstration could not succeed, but its failure did not damage Social Democracy. For it was, after all, the party eternally condemned to fruitless opposition, which was always able to make capital for its party position precisely out of the defects of the social-reform and socialization measures.
That Social Democracy became the most powerful party in the German Reich it owes primarily to the democratic part of its program, taken over as the heir of liberalism. That, however, socialism as such also enjoys the greatest sympathy among the German people, so that only isolated voices speak out seriously and in principle against socialization and that even so-called bourgeois parties want to socialize the branches of production that are "ripe" for socialization—that is the result of the propaganda work that statism has performed. Socialist ideas constitute no victory over the Prussian authoritarian state but are its consistent development; their popularity in Germany has been furthered no less by the academic socialism of privy councilors than by the propaganda work of Social Democratic agitators.
Among the German people today, thanks to the views advocated for fifty years by the Prussian school of economic policy, there is no longer even any understanding of what the contrast between liberalism in economic policy and socialism really consists of. That the distinction between the two orientations lies not in the goal but in the means is not clear to many. Even to the antisocialist German, socialism appears as the sole just form of economic organization, assuring the people the most abundant satisfaction of their needs; and if he himself opposes it, he does so in the consciousness of resisting what is best for the common interest, doing so for his own benefit because he feels himself threatened in his rights or privileges. The bureaucrats mostly take this position, which is often enough found, however, among entrepreneurs also. It has long been forgotten in Germany that liberalism also, just as socialism does, recommends its economic system out of concern not for the interests of individuals but for those of all, the great masses. That "the greatest happiness of the greatest number" should he the goal of policy was first maintained by a radical free-trader, Jeremy Bentham. Bentham also carried on his famous struggle against usury laws, for example, not out of concern for the interests of the moneylenders but out of concern for the interests of all.Cf. Bentham, Defence of Usury, second edition (London: 1790), pp. 108 f. The point of departure of all liberalism lies in the thesis of the harmony of rightly understood interests of individuals, of classes, and of peoples. It rejects the basic idea of Mercantilism that the advantage of the one is the disadvantage of the other. That is a principle that may hold true for war and plunder; for economics and trade it does not hold. Therefore liberalism sees no basis for opposition between classes; therefore it is pacifist in relations between peoples. Not because it considers itself called upon to represent the special interests of the possessing classes does it advocate maintenance of private ownership of the means of production, but rather because it sees the economic order resting on private ownership as the system of production and distribution that assures the best and highest material satisfaction for all sections of the people. And just as it calls for free trade at home not out of regard for particular classes but out of regard for the welfare of all, so it demands free trade in international relations not for the sake of foreigners but for the sake of one's own people.
Interventionist economic policy takes another standpoint. It sees irreconcilable antagonisms in relations among states. Marxism, however, has proclaimed the doctrine of class struggle; on the irreconcilable opposition of classes it erects its doctrine and its tactics.
In Germany liberalism was never understood; it never found a base here. Only thus can it be explained that even the opponents of socialism more or less accepted socialist doctrines. That appears most clearly in the position of the opponents of socialism on the problem of the class struggle. Marxian socialism preaches the struggle of the proletariat against the bourgeoisie. Elsewhere this battle cry is opposed by that of the solidarity of interests. Not so in Germany. Here the proletarians are confronted by the bourgeoisie as a class. The united bourgeois parties confront the proletarian party. They do not see that in this way they recognize the argumentation of the Marxists as correct and thereby make their struggle hopeless. He who can adduce in favor of private ownership of the means of production nothing other than that its abolition would harm the rights of the possessors limits the supporters of the antisocialist parties to the nonproletarians. In an industrial state the "proletarians" naturally have numerical superiority over the other classes. If party formation is determined by class membership, then it is clear that the proletarian party must gain victory over the others.
The question whether or not our economic development is already "ripe" for socialism originates in the Marxian idea of the development of the productive forces. Socialism can be realized only when its time has come. A form of society cannot perish before it has developed all the productive forces that it is capable of developing; only then is it replaced by another, higher, form. Before capitalism has lived out its course, socialism cannot take over its inheritance.
Marxism likes to compare the social revolution with birth. Premature births are failures; they lead to the death of the new creature.Cf. Kautsky, Die Soziale Revolution, loc. cit., I, pp. 13 ff. From this point of view Marxists inquire whether the attempts of the Bolsheviks in Russia to establish a socialist commonwealth are not premature. It must be difficult indeed for the Marxist, who regards a definite degree of development of the capitalistic mode of production and of heavy industry as a necessary condition for the appearance of socialism, to understand why socialism has achieved victory precisely in the Russia of small peasants and not in highly industrialized Western Europe or in the United States.
It is different when the question is raised whether or not this or that branch of production is ripe for socialization. This question is as a rule posed in such a way that the very posing of the question basically admits that socialized enterprises in general yield smaller outputs than those operating under private ownership and that, therefore, only particular branches of production should be socialized in which no excessive disadvantages are to be expected from this lesser productivity. Thus it is explained that mines, above all coal mines, are already ripe for socialization. Obviously people thus proceed from the view that it is easier to operate a mine than, say, a factory producing for the fashion market; people evidently believe that mining only involves exploiting the gifts of nature, which even the ponderous socialist enterprise can manage. And, again, when others regard the large industrial enterprise as above all ripe for socialization, they are proceeding from the idea that in the large enterprise, which already is working with a certain bureaucratic apparatus anyway, the organizational preconditions for socialization are given. Such ideas involve a serious fallacy. To prove the necessity of the socialization of particular enterprises, it is not enough to show that socialization does little harm in them because they still would not fail then even if they did work more poorly than would be the case under the administration of private enterprise. Whoever does not believe that socialization brings a rise of productivity would, to be consistent, have to consider any socialization as mistaken.
We can also find a hidden admission of the lesser productivity of the economy in a socialist social order in the idea on which many writers base the proposition that the war has set us back in development and has, therefore, further postponed the time of ripeness for socialism. Thus, Kautsky says: "Socialism, that is, general welfare within modern civilization, becomes possible only through the great development of productive forces that capitalism brings, through the enormous riches that it creates and that are concentrated in the hands of the capitalist class. A state that has squandered these riches through a senseless policy, perhaps an unsuccessful war, offers from the outset no favorable point of departure for the quickest diffusion of welfare in all classes."Cf. Kautsky, Die Diktatur des Proletariats, second edition, (Vienna: 1918), p. 40. Whoever—like Kautsky—expects a multiplication of productivity from socialistic production would, however, really have to see one more reason for hastening socialization precisely in the fact that we have become poorer because of the war.
The liberals are much more consistent in this. They are not waiting for another mode of production, perhaps the socialist one, to make the world ripe for liberalism; they see the time for liberalism as always and everywhere given, since, in general and without exception, they assert the superiority of the mode of production resting on private ownership of the means of production and on the free competition of producers.
The way that the socialization of enterprises would have to take place is clearly and distinctly indicated by the public ownership measures of the states and municipalities. One could even say that the administrative art of German states and cities is no more familiar than this practice, which has been followed for many years. With regard to administrative technique, socialization is nothing new, and the socialist governments that are now at work everywhere would have to do nothing beyond continuing what their predecessors in state and communal socialism have already done before.
Of course, neither the new power-holders nor their constituents want to hear anything about that. The masses, which today stormily demand the most rapid accomplishment of socialism, imagine it as something quite different from the extension of state and municipal enterprise. Indeed, they have heard from their leaders again and again that these public enterprises have nothing in common with socialism. What socialization should be, however, if not state and municipal ownership, no one can say.According to Engels (Herrn Eugen Dührings Umwälzung der Wissenschaft, seventh edition [Stuttgart: 11910], p. 299 n.), referring to "the case in which the means of production or of transport and communications have really outgrown the control by corporations and in which state ownership has thus become economically imperative," state ownership means economic progress and "the attainment of a new stage in the taking possession of all productive forces by society itself, even when the state of today carries it out." What Social Democracy previously cultivated is now bitterly taking revenge on it, namely, its always engaging for decades only in demagogic everyday politics and not in principled politics for the final triumph. In fact, Social Democracy has long since given up centralist socialism; in daily politics it has ever more and more become union- oriented, syndicalistic, and, in the Marxian sense, "petty bourgeois." Now syndicalism raises its demands, which stand in irreconcilable contradiction to the program of centralist socialism.
Both orientations have one point in common: they want to make the worker the owner of the means of production again. Centralist socialism wants to achieve this by making the whole working class of the entire world or at least of an entire country the owner of the means of production; syndicalism wants to make the work forces of individual enterprises or individual branches of production the owners of the means of production that they use. The ideal of centralist socialism is at least discussible; that of syndicalism is so absurd that one need waste few words on it.
One of the great ideas of liberalism is that it lets the consumer interest count alone and disregards the producer interest. No production is worth maintaining if it is not suited to bring about the cheapest and best supply. No producer is recognized as having a right to oppose any change in the conditions of production because it runs counter to his interest as a producer. The highest goal of all economic activity is the achievement of the best and most abundant satisfaction of wants at the smallest cost.
This position follows with compelling logic from the consideration that all production is carried on only for the sake of consumption, that it is never a goal but always only a means. The reproach made against liberalism that it thereby takes account only of the consumer viewpoint and disdains labor is so stupid that it scarcely needs refutation. Preferring the producer interest over the consumer interest, which is characteristic of antiliberalism, means nothing other than striving artificially to maintain conditions of production that have been rendered inefficient by continuing progress. Such a system may seem discussible when the special interests of small groups are protected against the great mass of others, since the privileged party then gains more from his privilege as a producer than he loses on the other hand as a consumer; it becomes absurd when it is raised to a general principle, since then every individual loses infinitely more as a consumer than he may be able to gain as a producer. The victory of the producer interest over the consumer interest means turning away from rational economic organization and impeding all economic progress.
Centralist socialism knows this very well. It joins liberalism in fighting all traditional producer privileges. It proceeds from the view that there would he no producer interest at all in the socialist commonwealth, since each one would recognize there that the consumer interest alone is worth considering. Whether or not this assumption is justified will not be discussed here; it is immediately evident that if it should not hold true, socialism could not be what it pretends to be.
Syndicalism deliberately places the producer interest of the workers in the foreground. In making worker groups owners of the means of production (not in so many words but in substance), it does not abolish private property. It also does not assure equality. It does remove the existing inequality of distribution but introduces a new one, for the value of the capital invested in individual enterprises or sectors of production does not correspond at all to the number of workers employed in them. The income of each single worker will be all the greater, the smaller the number of fellow workers employed in his enterprise or sector of production and the greater the value of the material means of production employed in it. The syndicalistically organized state would be no socialist state but a state of worker capitalism, since the individual worker groups would be owners of the capital. Syndicalism would make all repatterning of production impossible; it leaves no room free for economic progress. In its entire intellectual character it suits the age of peasants and craftsmen, in which economic relations are rather stationary.
The centralist socialism of Karl Marx, which once had triumphed over Proudhon and Lassalle, has, in the course of development of recent decades, been pushed back step by step by syndicalism. The struggle between the two views, which outwardly occurred in the form of a struggle between the political-party organization and the labor-union organization and behind the scenes took on the shape of a struggle of leaders risen from the working class against intellectual leaders, has ended with a complete victory of syndicalism. The theories and writings of the party chiefs still outwardly wear the garment of centralist socialism, but the practice of the party has gradually become syndicalist, and in the consciousness of the masses the syndicalist ideology lives exclusively. The theoreticians of centralist socialism have not had the courage—out of tactical concerns, because they wanted to avoid an open breach between the two positions, as in France—to take a decisive stand against the syndicalist policy; if they had mustered the courage for that, they would doubtless have been defeated in this struggle. In many respects they have directly furthered the development of the syndicalist line of thinking, since they fought the development toward centralist socialism that was taking place under the leadership of statist socialism. They had to do this, on the one hand to mark a sharp distinction between their position and that of the authoritarian state, and on the other hand because the economic failures being caused by state and municipal ownership were, after all, becoming so broadly and generally visible that they could become dangerous to the ardent enthusiasm with which the masses were following the obscure ideal of socialism. If one kept pointing out again and again that state railroads and city lighting works were in no way a first step toward realizing the state of the future, one could not educate the population in favor of centralist socialism.
As workers had become unemployed through introduction of improved methods of work, it was syndicalism that sought to destroy the new machines. Sabotage is syndicalistic; in the final analysis, however, every strike is also syndicalistic; the demand for introduction of the social protective tariff is syndicalistic. In a word, all those means of the class struggle that the Social Democratic Party did not want to give up because it feared losing influence on the working masses only stimulated the syndicalistic—Marx would have said "petty-bourgeois"—instincts of the masses. If centralist socialism has any adherents at all today, this is not the accomplishment of Social Democratic agitation but of statism. State and municipal socialism provided publicity for centralist socialism by putting socialism into practice; academic socialism provided literary propaganda for it.
What is going on before our eyes today is of course neither centralist socialism nor syndicalism; it is not organization of production at all and also not organization of distribution, but rather distribution and consumption of consumer goods already on hand and annihilation and destruction of means of production already on hand. Whatever is still being produced is being produced by the remnants of the free economy that are still allowed to exist; wherever this socialism of today has already penetrated, there is no longer any question of production. The forms in which this process is occurring are manifold. Strikes shut enterprises down, and where work is still being done, the ca' canny system itself sees to it that the output is only slight. By high taxes and by compulsion to pay high wages to the workers even when there is no work for them, the entrepreneur is forced to consume his capital. Working in the same direction is inflationism, which, as has been shown, conceals and thereby fosters capital consumption. Acts of sabotage by the workers and inept interventions by the authorities destroy the material apparatus of production and complete the work that war and revolutionary struggles began.
In the midst of all this destruction only agriculture remains, above all small farms. It too has suffered severely under the circumstances, and here too much of the working capital has already been consumed, and ever more of it is being consumed. The large units will probably be socialized or even broken up into small farms. In any case, their productive power will thereby suffer, even apart from the impairment of their capital. Still, the devastation of agriculture remains relatively slight in comparison with the ever-worsening dissolution of the apparatus of industrial production.
The dying out of the spirit of social cooperation, which constitutes the essence of the social revolutionary process that is occurring before our eyes, must entail different consequences in industry, in transport, and in trade—in short, in the city—than in agriculture. A railroad, a factory, a mine simply cannot be operated without that spirit, on which the division of labor and the coordination of labor rest. It is otherwise in agriculture. If the peasant withdraws from exchange and shifts his production back to the autarky of the self-sufficient household economy, he does live worse than he once lived, but he can keep on living anyway. Thus we see the peasantry becoming ever more and more self-sufficient. The peasant is again beginning to produce everything that he wishes to consume in his household and, on the other hand, to cut back his production for the needs of the city-dweller.That holds true of German-Austria especially. In the Reich the conditions are still different for the time being.
What that means for the future of the city population is clear. The industry of Germany and German-Austria has largely lost its foreign market; now it is losing the domestic market also. When work in the workshops is again resumed, the peasants will face the question whether it is not more advantageous for them to obtain industrial products cheaper and better from abroad. The German peasant will again be a free-trader, as he had been up to 40 years ago.
It is scarcely thinkable that this process should go on in Germany without the greatest disruptions. For it does signify no less than the decay of German urban civilization, the slow starvation of millions of German city-dwellers.
If revolutionary syndicalism and destructionism should not remain limited to Germany but instead should spread over all Europe and even to America also, then we would face a catastrophe comparable only with the collapse of the ancient world. Ancient civilization also was built on a far-reaching division of labor and coordination of labor; in it too the—even if limitedWe too have never really had "free competition."—operation of the liberal principle had brought about a great flourishing of material and intellectual culture. All that disappeared as the immaterial bond that held this whole system together, the spirit of social cooperation, disappeared. In the dying Roman Empire also the cities were depopulated; the man who owned no land sank into misery; whoever could somehow do so moved to the countryside to escape starvation.Numerous documents in late Roman legal sources. Cf., e.g., 1. un. C. Si curialis relicta civitate rus habitare maluerit, X, 37. Then, too, there occurred, accompanied outwardly by the most severe disturbances of the monetary system, the process of reversion of the monetary economy to a barter economy, the exchange economy to the economy without exchange. The modern process would differ from the decline of ancient civilization only in that what once occurred over centuries would now complete itself in an incomparably more rapid tempo.
Rationalist utilitarianism rules out neither socialism nor imperialism on principle. Accepting it provides only a standpoint from which one can compare and evaluate the advantages and disadvantages of the various possibilities of social order; one could conceivably become a socialist or even an imperialist from the utilitarian standpoint. But whoever has once adopted this standpoint is compelled to present his program rationally. All resentment, every policy prompted by sentiment, and all mysticism is thereby rejected, regardless of whether it appears in the garb of racial belief or of any other gospel of salvation. The fundamentals of policy can be disputed, pro and con, on rational grounds. If agreement cannot be reached both over the ultimate goals and also, although more seldom, over the choice of means by which they shall be pursued, since their evaluation depends on subjective feelings, one must still succeed in this manner in sharply narrowing the scope of the dispute. The hopes of many rationalists go still further, of course. They think that every dispute can be resolved by intellectual means, since all disagreements arise only from errors and from inadequacy of knowledge. Yet in assuming this they already presuppose the thesis of the harmony of the rightly understood interests of individuals, and this is indeed disputed precisely by imperialists and socialists.
The entire nineteenth century is characterized by the struggle against rationalism, whose dominion seemed undisputed at its beginning. Even its assumption of a fundamental similarity in the way of thinking of all people is attacked. The German must think otherwise than the Briton, the dolichocephalic person otherwise than the brachycephalic; "proletarian" logic is contrasted with "bourgeois" logic. Reason is denied the property of being able to decide all political questions; feeling and instinct must show men the path that they have to tread.
Rational policy and rational economic management have outwardly enriched beyond measure the lives of the individual and of nations. That could be overlooked, since attention was always paid only to the poverty of those still living outside the boundaries of the territories already won by the free economy and because the lot of the modern worker was always compared with that of the rich man of today, instead of the lots of both being compared with those of their ancestors. It is true that modern man is never content with his economic position, that he would like to have things still better. Yet precisely this incessant striving for more wealth is the driving force of our development; one cannot eliminate it without destroying the basis of our economic civilization. The contentment of the serf, who was happy when he did not suffer actual hunger and when his lord did not thrash him too badly, is no ideal state of affairs whose passing one could lament.
It is also true, however, that the rise of outward welfare corresponds to no increase of inner riches. The modern city dweller is richer than the citizen of Periclean Athens and than the knightly troubadour of Provence, but his inner life exhausts itself in mechanical functions at work and in superficial dissipations of his leisure hours. From the pine torch to the incandescent lamp is a great step forward, from the folk song to the popular song a sad step backward. Nothing is more comforting than that people are beginning to become conscious of this lack. In that alone lies hope for a culture of the future that will put everything earlier in the shade.
Yet the reaction against inner impoverishment should not impugn the rationalization of outward life. The romantic longing for wild adventures, for quarreling and freedom from external restraint, is itself only a sign of inner emptiness; it clings to the superficial and does not strive for depth. Relief is not to be hoped for from a farrago of external experience. The individual must seek by himself the way to find within himself the satisfaction that he expects in vain from outside. If we chose to deliver up politics and the economy to imperialism, to resentment, and to mystical feelings, then we would indeed become outwardly poorer but not inwardly richer.
Warlike activity assures a man of that deep satisfaction aroused by the highest straining of all forces in resistance to external dangers. That is no mere atavistic reawakening of impulses and instincts that have become pointless in changed circumstances. The inner feeling of happiness aroused not by victory and revenge but rather by struggle and danger originates in the vivid perception that exigency compels the person to the highest deployment of forces of which he is capable and that it makes everything that lies within him become effective. . . .der Krieg lässtt die Kraft erscheinen, Alles erhebt er zum Ungemeinen, Selber dem Feigen erzeugt er den Mut. (Die Braut von Messina) [. . . war makes strength appear, It raises everything to the extraordinary, Even in the coward it creates courage. (The Bride of Messina)] It is characteristic of very great persons to move forward to highest accomplishment out of an inner drive; others require an external impulse to overcome deep-rooted inertia and to develop their own selves. The common man will never share the happiness that the creative person feels in devotion to his work unless extraordinary circumstances confront him, too, with tasks that demand and reward the commitment of the whole person. Here lies the source of all heroism. Not because the individual feels death and wounds as sweet but rather because, in the enrapturing experience of the deed, he puts them out of his mind does he assail the enemy. Bravery is an emanation of health and strength and is the rearing up of human nature against external adversity. Attack is the most primary initiative. In his feelings man is always an imperialists.This does not refer to the glorification of war by weak-willed esthetes who admire in warlike activity the strength that they lack. This writing-table and coffeehouse imperialism has no significance. With its paper effusions, it is only a fellow-traveler. Games and sport represent an attempt to react from natural, emotional imperialism. It is no accident that England, the home of modern utilitarianism, is also the fatherland of modern sport and that precisely the German—and among them, again, the strata most averse to the utilitarian philosophy, university youth—have shut themselves off the longest from the spread of sports activity.
But reason forbids giving free rein to feelings. To want to beat the world to ruins to let a romantic longing exhaust itself contradicts the simplest deliberation so much that no word need be wasted on it.
The rational policy that is commonly called the ideas of 1789 has been reproached for being unpatriotic—in Germany, un-German. It takes no regard of the special interests of the fatherland; beyond mankind and the individual, it forgets the nation. This reproach is understandable only if one accepts the view that there is an unbridgeable cleavage between the interest of the people as a whole on the one side and that of individuals and of all mankind on the other side. If one starts with the harmony of rightly understood interests, then one cannot comprehend this objection at all. The individualist will never be able to grasp how a nation can become great and rich and powerful at the expense of its members and how the welfare of mankind can obstruct that of individual peoples. In the hour of Germany's deepest degradation, may one raise the question whether the German nation would not have fared better by holding firm to the peaceful policy of much-reviled liberalism rather than to the war policy of the Hohenzollerns?
The utilitarian policy has further been reproached for aiming only at the satisfaction of material interests and neglecting the higher goals of human striving. The utilitarian supposedly thinks of coffee and cotton and on that account forgets the true values of life. Under the reign of such a policy all would have to be caught up in precipitous striving for the lower earthly pleasures, and the world would sink into crass materialism. Nothing is more absurd than this criticism. It is true that utilitarianism and liberalism postulate the attainment of the greatest possible productivity of labor as the first and most important goal of policy. But they in no way do this out of misunderstanding of the fact that human existence does not exhaust itself in material pleasures. They strive for welfare and for wealth not because they see the highest value in them but because they know that all higher and inner culture presupposes outward welfare. If they deny to the state the mission of furthering the realization of the values of life, they do so not out of want of esteem for true values but rather in the recognition that these values, as the most characteristic expression of inner life, are inaccessible to every influence by external forces. Not out of irreligiosity do they demand religious freedom but out of deepest intimacy of religious feeling, which wants to make inner experience free from every raw influence of outward power. They demand freedom of thought because they rank thought much too high to hand it over to the domination of magistrates and councils. They demand freedom of speech and of the press because they expect the triumph of truth only from the struggle of opposing opinions. They reject every authority because they believe in man.
Utilitarian policy is indeed policy for this earth. But that is inherent in all policy. The person who has a low opinion of the mind is not the one who wants to make it free from all external regulation but rather the one who wants to control it by penal laws and machine guns. The reproach of a materialistic way of thinking applies not to individualistic utilitarianism but to collectivistic imperialism.
With the World War mankind got into a crisis with which nothing that happened before in history can be compared. There were great wars before; flourishing states were annihilated, whole peoples exterminated. All that can in no way be compared with what is now occurring before our eyes. In the world crisis whose beginning we are experiencing, all peoples of the world are involved. None can stand aside; none can say that its cause too will not be decided along with the others. If in ancient times the destructive will of the more powerful met its limits in the inadequacy of the means of destruction and in the possibility available to the conquered of escaping persecution by moving away, then progress in the techniques of war and transportation and communication makes it impossible today for the defeated to evade the execution of the victor's sentence of annihilation.
War has become more fearful and destructive than ever before because it is now waged with all the means of the highly developed technique that the free economy has created. Bourgeois civilization has built railroads and electric power plants, has invented explosives and airplanes, in order to create wealth. Imperialism has placed the tools of peace in the service of destruction. With modern means it would be easy to wipe out humanity at one blow. In horrible madness Caligula wished that the entire Roman people had one head so that he could strike it off. The civilization of the twentieth century has made it possible for the raving madness of the modern imperialists to realize similar bloody dreams. By pressing a button one can expose thousands to destruction. It was the fate of civilization that it was unable to keep the external means that it had created out of the hands of those who had remained estranged from its spirit. Modern tyrants have things much easier than their predecessors. He who rules the means of exchange of ideas and of goods in the economy based on the division of labor has his rule more firmly grounded than ever an imperator before. The rotary press is easy to put into fetters, and whoever controls it need not fear the competition of the merely spoken or written word. Things were much more difficult for the Inquisition. No Phillip II could paralyze freedom of thought more severely than a modern censor. How much more efficient than the guillotine of Robespierre are the machine guns of Trotsky! Never was the individual more tyrannized, than since the outbreak of the World War and especially of the world revolution. One cannot escape the police and administrative technique of the present day.
Only one external limit is posed to this rage for destruction. In destroying the free cooperation of men, imperialism undercuts the material basis of its power. Economic civilization has forged the weapons for it. In using the weapons to blow up the forge and kill the smith, it makes itself defenseless in the future. The apparatus of the economy based on division of labor cannot be reproduced, let alone extended, if freedom and property have disappeared. It will die out, and the economy will sink back into primitive forms. Only then will mankind be able to breathe more freely. If the spirit of reflectiveness does not return sooner, imperialism and Bolshevism will be overcome at the latest when the means of power that they have wrested from liberalism will have been used up.
The unfortunate outcome of the war brings hundreds of thousands, even millions, of Germans under foreign rule and imposes tribute payments of unheard-of size on the rest of Germany. A legal order is being established in the world that permanently excludes the German people from possession of those parts of the earth that have the more favorable conditions of production. In the future, no German will be allowed to acquire ownership of land resources and means of production abroad; and millions of Germans, narrowly pushed together, will have to feed themselves badly on the niggardly soil of Germany, while, overseas, millions of square kilometers of the best land lie idle. Need and misery for the German people will emerge from this peace. The population will decline; and the German people, which before the war counted among the most numerous peoples of the earth, will in the future have to be numerically less significant than they once were.
All thinking and effort of the German people must be directed to getting out of this position. This goal can be reached in two ways. One is that of imperialistic policy. To grow strong militarily and to resume the war as soon as the opportunity for attack presents itself—that is the only means thought of today. Whether this way will be practicable at all is questionable. The nations that today have robbed and enslaved Germany are very many. The amount of power that they have exercised is so great that they will watch anxiously to prevent any strengthening of Germany again. A new war that Germany might wage could easily become a Third Punic War and end with the complete annihilation of the German people. But even if it should lead to victory, it would bring so much economic misery upon Germany that the success would not be worth the stakes; moreover, the danger would exist that the German people, in the ecstasy of victory, would fall again into that limitless and boundless madness of victory that has already repeatedly turned to misfortune for it, since it can finally lead again only to a great debacle.
The second course that the German people can take is that of completely turning away from imperialism. To strive for reconstruction only through productive labor, to make possible the development of all powers of the individual and of the nation as a whole by full freedom at home—that is the way that leads back to life. To set nothing against the efforts of imperialistic neighbor states to oppress and de-Germanize us other than productive labor, which makes one wealthy and thereby free, is a way that leads more quickly and surely to the goal than the policy of struggle and war. The Germans who have been subjugated to the Czechoslovak, Polish, Danish, French, Belgian, Italian, Rumanian, and Yugoslav states will better preserve their national character if they strive for democracy and self-government, which finally do lead to full national independence, than if they pin their hopes on a victory of weapons.
The policy that strived for the greatness of the German nation through outward means of force has broken down. It has not only diminished the German people as a whole but also brought the individual German into misery and need. Never has the German people sunk so low as today. If it is now to rise again, then it can no longer strive to make the whole great at the expense of individuals but rather must strive for a durable foundation of the well-being of the whole on the basis of the well-being of individuals. It must switch from the collectivistic policy that it has followed so far to an individualistic one.
Whether such a policy will be at all possible in the future, in view of the imperialism that is now asserting itself everywhere in the world, is another question. But if this should not be the case, then precisely all modern civilization faces downfall.
"The most virtuous person cannot live in peace if that does not please his evil neighbor." Imperialism presses weapons into the hands of all who do not want to be subjugated. To fight imperialism, the peaceful must employ all its means. If they then triumph in the struggle, they may indeed have crushed their opponent, yet themselves have been conquered by his methods and his way of thinking. They then do not lay down their weapons again; they themselves remain imperialists.
Englishmen, Frenchmen, and Americans had already shed all cravings for conquest in the nineteenth century and had made liberalism their first principle. To be sure, even in their liberal period their policy was not entirely free of imperialist deviations, and one cannot immediately chalk up every success of the imperialistic idea among them to the account of defense. But no doubt their imperialism drew its greatest strength from the necessity of warding off German and Russian imperialism. Now they stand as victors and are not willing to content themselves with what they indicated before their victory as their war aim. They have long since forgotten the fine programs with which they went to war. Now they have power and are not willing to let it get away. Perhaps they think that they will exercise power for the general good, but that is what all those with power have believed. Power is evil in itself, regardless of who exercises it.Cf. J. Burckhardt, Weltgeschichtliche Betrachtungen (Berlin, 1905), p. 96.
But if they now do want to adopt that policy with which we have suffered shipwreck, so much the worse for them; for us that can still be no reason for abstaining from what benefits us. We demand the policy of calm, peaceful development not indeed for their sake but for our own sake. It was the greatest error of German imperialists that they accused those who had advised a policy of moderation of having unpatriotic sympathy for foreigners; the course of history has shown how much they thereby deluded themselves. Today we know best where imperialism leads.
It would be the most terrible misfortune for Germany and for all humanity if the idea of revenge should dominate the German policy of the future. To become free of the fetters that have been forced upon German development by the peace of Versailles, to free our fellow nationals from servitude and need, that alone should be the goal of the new German policy. To retaliate for wrong suffered, to take revenge and to punish, does satisfy lower instincts, but in politics the avenger harms himself no less than the enemy. The world community of labor is based on the reciprocal advantage of all participants. Whoever wants to maintain and extend it must renounce all resentment in advance. What would he gain from quenching his thirst for revenge at the cost of his own welfare?
In the League of Nations of Versailles the ideas of 1914 are in truth triumphing over those of 1789; that it is not we who have helped them to victory, but rather our enemies, and that the oppression turns back against us is important for us but less decisive from the standpoint of world history. The chief point remains that nations are being "punished" and that the forfeiture theory comes to life again. If one admits exceptions to the right of self-determination of nations to the disadvantage of "evil" nations, one has overturned the first principle of the free community of nations. That Englishmen, North Americans, French, and Belgians, those chief exporters of capital, thereby help gain recognition for the principle that owning capital abroad represents a form of rule and that its expropriation is the natural consequence of political changes shows how blind rage and the desire for momentary enrichment repress rational considerations among them today. Cool reflection would be bound to lead precisely these peoples to quite other behavior in questions of international capital movements.
The way that leads us and all humanity out of the danger that world imperialism signifies for the productive and cultural community of nations and so for the fate of civilization is rejection of the policy of feeling and instinct and return to political rationalism. If we wanted to throw ourselves into the arms of Bolshevism merely for the purpose of annoying our enemies, the robbers of our freedom and our property, or to set their house on fire too, that would not help us in the least. It should not be the goal of our policy to drag our enemies into our destruction with us. We should try not to be destroyed ourselves and try to rise again out of servitude and misery. That, however, we can attain neither by warlike actions nor by revenge and the policy of despair. For us and for humanity there is only one salvation: return to the rationalistic liberalism of the ideas of 1789.
It may be that socialism represents a better form of organization of human labor. Let whoever asserts this try to prove it rationally. If the proof should succeed, then the world, democratically united by liberalism, will not hesitate to implement the communist community. In a democratic state, who could oppose a reform that would be bound to bring the greatest gain to by far the overwhelming majority? Political rationalism does not reject socialism on principle. But it does reject in advance the socialism that hinges not on cool understanding but rather on unclear feelings, that works not with logic but rather with the mysticism of a gospel of salvation, the socialism that does not proceed from the free will of the majority of the people but rather from the terrorism of wild fanatics.
Only from lack of historical sense could one raise the question whether and how the World War could have been avoided. The very fact that the war took place shows that the forces working to cause it were stronger than those working to prevent it. It is easy to show, after the fact, how affairs could or should have been better managed. It is clear that the German people underwent experiences during the war that would have restrained them from war if they had already undergone those experiences. But nations, like individuals, become wise only through experience, and only through experience of their own. Now, to be sure, it is easy to see that the German people would be in a quite different position today if they had shaken off the yoke of princely rule in that fateful year 1848, if Weimar had triumphed over Potsdam and not Potsdam over Weimar. But every person must take his life and every nation must take its history as it comes; nothing is more useless than complaining over errors that can no longer be rectified, nothing more vain than regret. Neither as judges allotting praise and blame nor as avengers seeking out the guilty should we face the past. We seek truth, not guilt; we want to know how things came about to understand them, not to issue condemnations. Whoever approaches history the way a prosecutor approaches the documents of a criminal case—to find material for indictments—had better stay away from it. It is not the task of history to gratify the need of the masses for heroes and scapegoats.
That is the position a nation should take toward its history. It is not the task of history to project the hatred and disagreements of the present back into the past and to draw from battles fought long ago weapons for the disputes of one's own time. History should teach us to recognize causes and to understand driving forces; and when we understand everything, we will forgive everything. That is how the English and French approach their history. The Englishman, regardless of his political affiliation, can consider the history of the religious and constitutional struggles of the seventeenth century, the history of the loss of the New England states in the eighteenth century, objectively; there is no Englishman who could see in Cromwell or Washington only the embodiment of national misfortune. And no Frenchman would want to strike Louis XIV, Robespierre, or Napoleon out of the history of his people, be he Bonapartist, royalist, or republican. And for the Catholic Czech, also, it is not hard to understand Hussites and Moravian Brethren in terms of their own time. Such a conception of history leads without difficulty to understanding and appreciation of what is foreign.
Only the German is still far from a conception of history that does not see the past with the eyes of the present. Even today Martin Luther is, for some Germans, the great liberator of minds, and, for others, the embodiment of the anti-Christ. This holds above all for recent history. For the modern period, which begins with the Peace of Westphalia, Germany has two approaches to history, the Prussian-Protestant and the Austrian-Catholic, which reach a common interpretation on scarcely a single point. From 1815 on, a still broader clash of views develops, the clash between the liberal and the authoritarian ideas of the state;On this compare Hugo Preuss, Das deutsche Volk und die Politik (Jena: Eugen Diederichs, 1915), pp. 97 ff. and finally, the attempt has recently been made to oppose a "proletarian" to a "capitalist" historiography. All that shows not only a striking lack of scientific sense and historical critical faculty but also a grievous immaturity of political judgment.
Where it was not possible to achieve consensus in interpreting long-past struggles, it is much less to be expected that agreement can be reached in evaluating the most recent past. Already, here also, we see two sharply contradictory myths arising. On the one hand it is asserted that the German people, misled by defeatist propaganda, had lost the will to power; and thus, through "collapse of the home front," the inevitable final victory, which would have made the earth subject to it, was transformed into disastrous defeat. It is forgotten that despair did not grip the people until the decisive victories heralded by the General Staff failed to occur, until millions of German men bled to death in purposeless struggles against an opponent far superior in numbers and better armed, and until hunger brought death and disease to those who had stayed at home.This is not to say that the behavior of the radical wing of the Social Democratic Party in October and November of 1918 did not entail the most frightful consequences for the German people. Without the complete collapse brought on by the revolts in the hinterland and behind the lines, the armistice conditions and the peace would have turned out quite differently. But the assertion that we would have triumphed if only we had held out a short time longer is quite groundless. No less far from the truth is the other myth, which blames the war and so the defeat on capitalism, the economic system based on private ownership of the means of production. It is forgotten that liberalism was always pacifistic and anti-militaristic, that not until its overthrow, which was achieved only by the united efforts of the Prussian Junker class and the Social Democratic working class, was the way opened up for the policy of Bismarck and William II; the last trace of the liberal spirit had first to disappear from Germany and liberalism had to become regarded as a kind of dishonorable ideology before the people of poets and thinkers could become a weak-willed tool of the war party. It is forgotten that the German Social Democratic Party had unanimously supported the war policy of the government and that the defection first of individuals and then of ever-larger masses ensued only as military failures showed the inevitability of defeat ever more clearly and as famine became more strongly felt. Before the battle of the Marne and before the great defeats in the East, there was no resistance to the war policy among the German people.
Such myth-making bespeaks a lack of that political maturity that only he who must bear political responsibility achieves. The German had none to bear; he was a subject, not a citizen, of his state. To be sure, we had a state that was called the German Reich and that was praised as the fulfillment of the ideals of St. Paul's Church. Yet this Great Prussia was no more the state of the Germans than the Italian kingdom of Napoleon I had been the state of the Italians or the Polish kingdom of Alexander I the state of the Poles. This empire had not arisen from the will of the German people; against the will not only of the German people but also of the majority of the Prussian people, hanging behind its conflict-minded deputies, it had been created on the battlefield of Königgrätz. It also included Poles and Danes, but it excluded many millions of German-Austrians. It was a state of German princes but not of the German people.
Many of the best people never reconciled themselves with this state; others did so late and reluctantly. Yet it was not easy to stand aside bearing a grudge. There came brilliant days for the German people, rich in outward honors and in military victories. The Prussian-German armies triumphed over imperial and over republican France, Alsace-Lorraine became German again (or rather Prussian), the venerable imperial title was restored. The German Empire assumed a respected position among the European powers; German warships plowed the oceans; the German flag floated over—rather worthless, to be sure—African, Polynesian, and East Asian possessions. All this romantic activity was bound to captivate the minds of the masses that gape at processions and court festivities. They were content because there were things to admire and because they were satiated. At the same time German prosperity was growing as never before. These were the years when the wonderful opening up of the remotest territories through development of modern means of transportation was bringing undreamed-of riches to Germany. That had nothing to do with the political and military successes of the German state, but people hastily judge post hoc ergo propter hoc.
The men who had filled the jails before the revolution of March 1848 and who had stood on the barricades in 1848 and then had to go into exile had in the meanwhile become old and feeble; they either made their peace with the new order or kept silent. A new generation arose that saw and noted nothing but the uninterrupted growth of prosperity, of the size of population, of trade, of shipping, in short, of everything that people are accustomed to call good times. And they began to make fun of the poverty and weakness of their fathers; they now had only contempt for the ideals of the nation of poets and thinkers. In philosophy, history, and economics, new ideas appeared; the theory of power came to the fore. Philosophy became the bodyguard of throne and altar; history proclaimed the fame of the Hohenzollerns; economics praised the socially oriented kingship and the gap-free tariff schedules and took up the struggle against the "bloodless abstractions of the English Manchester School."
To the statist school of economic policy, an economy left to its own devices appears as a wild chaos into which only state intervention can bring order. The statist puts every economic phenomenon on trial, ready to reject it if it does not conform to his ethical and political feelings. It is then the job of state authority to carry out the judgment pronounced by science and to replace the botch caused by free development with what serves the general interest. That the state, all-wise and all-just, also always wishes only the common good and that it has the power to fight against all evils effectively?this is not doubted in the slightest. Although the views of individual representatives of this school may diverge in other respects, in one point they all agree, namely, in disputing the existence of economic laws and in tracing all economic events to the operation of power factors. Böhm-Bawerk masterfully evaluates this doctrine in "Macht oder ökonomisches Gesetz," Zeitschrift für Volkswirtschaft, Sozialpolitik und Verwaltung, vol. 23, pp. 205-271. The statist school of German economics has indeed reached its high point in the state theory of money of Georg Friedrich Knapp. What is notable about it is not that it has been set forth; for what it taught had already been believed for centuries by canonists, jurists, romantics, and many socialists. What was notable, rather, was the book's success. In Germany and Austria it found numerous enthusiastic adherents, and basic agreement even among those who had reservations. Abroad it was almost unanimously rejected or not noticed at all. A work recently published in the United States says regarding the Staatliche Theorie des Geldes: "This book has had wide influence on German thinking on money. It is typical of the tendency in German thought to make the State the centre of everything." (Anderson, The Value of Money [New York: 1917], p. 433 n.) Against economic power the state can set its superior political-military power. For all the difficulties that confronted the German people at home and abroad, the military solution was recommended; only ruthless use of power was considered rational policy.
These were the German political ideas that the world has called militarism. In Germany the opinion is very widespread that foreign countries understand by militarism the fact of strong military armaments; it is pointed out, therefore, that England and France, which have maintained powerful fleets and armies on water and land, have been at least as militaristic as Germany and Austria-Hungary. That rests on an error. By militarism one should understand not armaments and readiness for war but a particular type of society, namely, the one that was designated by pan-German, conservative, and social-imperialistic authors as that of the "German state" and of "German freedom" and that others have praised as the "ideas of 1914." Its antithesis is the industrial type of society, that is, the one that a certain line of opinion in Germany during the war scorned as the ideal of "shopkeepers," as the embodiment of the "ideas of 1789." Compare Herbert Spencer, Die Prinzipien der Soziologie, German translation by Vetter (Stuttgart: 1889), vol. 3, pp. 668-754. In the elaboration and contrasting of the two types there exists a considerable degree of agreement between Germans and Anglo-Saxons, but not in terminology. The assessment of the two types is naturally not agreed on. Even before and during the war there were not only militarists but also antimilitarists in Germany and not only antimililarists but also militarists in England and America.
Nevertheless, the formula that attributes the World War simply to the machinations of this militarism is wrong. For German militarism does not spring, as it were, from the violent instincts of the "Teutonic race," as the English and French war literature says; it is not the ultimate cause but the result of the circumstances in which the German people has lived and lives. Not too much insight into how things are interrelated is needed to recognize that the German people would have desired the war of 1914 just as little as the English, French, or American people did if they had been in the position of England, France, or the United States. The German people trod the path from the peaceful nationalism and cosmopolitanism of the Classical period to the militant imperialism of the Wilhelministic era under the pressure of political and economic facts that posed quite other problems for them than for the more fortunate peoples of the West. The conditions under which it has to proceed today toward reshaping its economy and its state are, again, thoroughly different from those under which its neighbors in the West and in the East live. If one wants to grasp these conditions in all their specialness, one must not shrink from looking into things that seem only remotely related.
The losses that the national economy suffers from war, apart from the disadvantages that exclusion from world trade entails, consist of the destruction of goods by military actions, of the consumption of war material of all kinds, and of the loss of productive labor that the persons drawn into military service would have rendered in their civilian activities. Further losses from loss of labor occur insofar as the number of workers is lastingly reduced by the number of the fallen and as the survivors become less fit in consequence of injuries suffered, hardships undergone, illnesses suffered, and worsened nutrition. These losses are only to the slightest degree offset by the fact that the war works as a dynamic factor and spurs the population to improve the technique of production. Even the increase in the number of workers that has taken place in the war by drawing on the otherwise unused labor of women and children and by extension of hours of work, as well as the saving achieved by limitation of consumption, still does not counterbalance them, so that the economy finally comes out of the war with a considerable loss of wealth. Economically considered, war and revolution are always bad business, unless such an improvement of the production process of the national economy results from them that the additional amount of goods produced after the war can compensate for the losses of the war. The socialist who is convinced that the socialist order of society will multiply the productivity of the economy may think little of the sacrifices that the social revolution will cost.
But even a war that is disadvantageous for the world economy can enrich individual nations or states. If the victorious state is able to lay such burdens on the vanquished that not only all of its war costs are thereby covered but a surplus is acquired also, then the war has been advantageous for it. The militaristic idea rests on the belief that such war gains are possible and can be lastingly held. A people that believes that it can gain its bread more easily by waging war than by work can hardly be convinced that it is more pleasing to God to suffer injustice than to commit injustice. The theory of militarism can be refuted; if, however, one cannot refute it, one cannot, by appeal to ethical factors, persuade the stronger party to forgo the use of its power.
The pacifistic line of argument goes too far if it simply denies that a people can gain by war. Criticism of militarism must begin by raising the question whether the victor can then definitely count on always remaining the stronger or whether he must not fear being displaced by still stronger parties. The militaristic argumentation can defend itself from objections raised against it from this point of view only if it starts with the assumption of unchangeable race characters. The members of the higher race, who behave according to pacifistic principles among themselves, hold firmly together against the lower races that they are striving to subjugate and thus assure themselves eternal predominance. But the possibility that differences will arise among the members of the higher races, leading part of their members to join with the lower races in battle against the remaining members of the higher ones, itself shows the danger of the militaristic state of affairs for all parties. If one entirely drops the assumption of the constancy of race characters and considers it conceivable that the race that had been stronger before will be surpassed by one that had been weaker, then it is evident that each party must consider that it could be faced with new battles in which it too could be defeated. Under these assumptions, the militaristic theory cannot be maintained. There no longer is any sure war gain, and the militaristic state of affairs appears as a situation of constant battles, at least, which shatter welfare so badly that finally even the victor obtains less than he would have harvested in the pacifistic situation.
In any case, not too much economic insight is needed to recognize that a war means at least direct destruction of goods, and misery. It was dear to everyone that the very outbreak of the war had to bring harmful interruptions in business life on the whole, and in Germany and Austria at the beginning of August 1914 people faced the future with fear. Astonishingly, however, things seemed to work otherwise. Instead of the expected crisis came a period of good business; instead of decline, boom. People found that war was prosperity; businessmen who, before the war, were thoroughly peace-minded and were always reproached by the friends of war for the anxiety that they were always showing at every flare-up of war rumors now began to reconcile themselves to the war. All at once there were no longer any unsalable products, enterprises that for years had run only at a loss yielded rich profits. Unemployment, which had assumed a menacing extent in the first days and weeks of the war, disappeared completely, and wages rose. The entire economy presented the picture of a gratifying boom. Soon writers appeared who sought to explain the causes of this boom.The majority of authors, in conformity with the intellectual tendency of statism, did not occupy themselves with the explanation of the causes of the good course of business but rather discussed the question whether the war "should be allowed to bring prosperity." Among those who sought to give an explanation of the economic boom in war should be mentioned above all Neurath ("Die Kriegswirtschaft," reprint from the Jahresberischt der Neuen Wiener Handelsakademie, V [16], 1910, pp. 10 ff.), since he—following in the steps of Carey, List and Henry George—had already before the war, in this as in other questions of "war economy," adopted the standpoint that gained broad diffusion in Germany during the war. The most naive representative of this view that war creates wealth is Steinmann-Bucher, Deutschlands Volksvermögen im Krieg, second edition (Stuttgart: 1916), pp. 40, 85 ff.
Every unprejudiced person can naturally have no doubt that war can really cause no economic boom, at least not directly, since an increase in wealth never does result from destruction of goods. It would scarcely have been too difficult to understand that war does bring good sales opportunities for all producers of weapons, munitions, and army equipment of every kind but that what these sellers gain is offset on the other hand by losses of other branches of production and that the real war losses of the economy are not affected thereby. War prosperity is like the prosperity that an earthquake or a plague brings. The earthquake means good business for construction workers, and cholera improves the business of physicians, pharmacists, and undertakers; but no one has for that reason yet sought to celebrate earthquakes and cholera as stimulators of the productive forces in the general interest.
Starting with the observation that war furthers the business of the armament industry, many writers have sought to trace war to the machinations of those interested in war industry. This view appears to find superficial support in the behavior of the armament industry and of heavy industry in general. The most energetic advocates of the imperialistic policy were admittedly found in Germany not in the circles of industry but in those of the intellectual occupations, above all of officials and teachers. The financial means for war propaganda were provided before and during the war, however, by the armament industry. The armament industry created militarism and imperialism, however, just as little as, say, the distilleries created alcoholism or publishing houses trashy literature. The supply of weapons did not call forth the demand, but rather the other way around. The leaders of the armament industry are not themselves bloodthirsty; they would just as gladly earn money by producing other commodities. They produce cannons and guns because demand for them exists; they would just as gladly produce peacetime articles if they could do a better business with them.It is a mania of the statists to suspect the machinations of "special interests" in all that does not please them. Thus, Italy's entry into the war was traced to the work of propaganda paid for by England and France. Annunzio is said to have been bribed, and so on. Will one perhaps assert that Leopardi and Giusti, Silvio Pellico and Garibaldi, Mazzini and Cavour had also sold themselves? Yet their spirit influenced the position of Italy in this war more than the activity of any contemporary. The failures of German foreign policy are in large part to be traced to this way of thinking, which makes it impossible to grasp the realities of the world.
Recognition of this connection of things would have been bound to become widespread soon, and people would have quickly recognized that the war boom was to the advantage of only a small part of the population but that the economy as a whole was becoming poorer day by day, if inflation had not drawn a veil around all these facts, a veil impenetrable to a way of thinking that statism had made unaccustomed to every economic consideration.
To grasp the significance of inflation, it helps to imagine it and all of its consequences taken out of the picture of the war economy. Let us imagine that the state had forsworn that aid for its finances that it resorted to by issuing paper money of every kind. It is clear that the issue of notes—if we disregard the relatively insignificant quantities of goods obtained from neutral foreign countries as a counterpart of gold withdrawn from circulation and exported—in no way increased the material and human means of waging war. By the issue of paper money not one cannon, not one grenade more was produced than could have been produced even without putting the printing press into operation. After all, war is waged not with "money" but with the goods that are acquired for money. For the production of war goods, it was a matter of indifference whether the quantity of money with which they were bought was greater or smaller.
The war considerably increased the demand for money. Many economic units were impelled to enlarge their cash balances, since the greater use, of cash payments in place of the granting of long-term credit, which had been usual earlier, the worsening of trading arrangements, and growing insecurity had changed the entire structure of the payments system. The many military offices that were newly established during the war or whose range of activity was broadened, together with the extension of the monetary circulation of the Central Powers into the occupied territories, contributed to enlarging of the economy's demand for money. This rise in the demand for money created a tendency toward a rise in its value, that is to say, toward an increase in the purchasing power of the money unit, which worked against the opposite tendency unleashed by the increased issue of banknotes.
If the volume of note issue had not gone beyond what business could have absorbed in view of the war-induced increase in the demand for money, merely checking any increase in the value of money, then not many words would have to be spent on it. In fact, though, the banknote expansion was far greater. The longer war continued, the more actively was the printing press put into the service of the financial administration. The consequences occurred that the quantity theory describes. The prices of all goods and services, and with them the prices of foreign bills of exchange, went up.
The sinking of the value of money favored all debtors and harmed all creditors. That, however, does not exhaust the social symptoms of change in the value of money. The price rise caused by an increase in the quantity of money does not appear at one stroke in the entire economy and for all goods, for the additional quantity of money distributes itself only gradually. At first it flows to particular establishments and particular branches of production and therefore first increases only the demands for particular goods, not for all; only later do other goods also rise in price. "During the issue of notes," say Auspitz and Lieben, "the additional means of circulation will be concentrated in the hands of a small fraction of the population, e.g., of the suppliers and producers of war materials. Consequently, these persons' demands for various articles will increase; and thus the prices and also the sales of the latter will rise, notably, however, also those of luxury articles. The situation of the producers of all these articles thereby improves; their demands for other goods will also increase; the rise of prices and sales will therefore progress even further and spread to an ever larger number of articles, and finally to all."Cf. Auspitz and Lieben, Untersuchungen über die Theorie des Preises (Leipzig: 1889), pp. 64 f.
If the decline in the value of money were to pervade the entire economy at one stroke and be registered against all goods to the same extent, then it would cause no redistribution of income and wealth. For in this respect there can only be a question of redistribution. The national economy as such gains nothing from it, and what the individual gains others must lose. Those who bring to market the goods and services whose prices are caught up first in the upward price movement are in the favorable position of already being able to sell at higher prices while still able to buy the goods and services that they want to acquire at the older, lower prices. On the other hand, again, those who sell goods and services that rise in price only later must already buy at higher prices while they themselves, in selling, are able to obtain only the older, lower prices. As long as the process of change in the value of money is still under way, such gains of some and losses of others will keep occurring. When the process has finally come to an end, then these gains and losses do also cease, but the gains and losses of the interim are not made up for again. The war suppliers in the broadest sense of the word (also including workers in war industries and military personnel who received increased war incomes) have therefore gained not only from enjoying good business in the ordinary sense of the word but also from the fact that the additional quantity of money flowed first to them. The price rise of the goods and services that they brought to market was a double one: it was caused first by the increased demand for their labor, but then too by the increased supply of money.
That is the essence of so-called war prosperity; it enriches some by what it takes from others. It is not rising wealth but a shifting of wealth and income.Cf. Mises, Theorie des Geldes und der Umlaufsmittel (Munich: 1912), pp. 222 ff.; second edition translated by H. E. Batson as The Theory of Money and Credit (Indianapolis: Liberty Classics, 1981), pp. 251 ff. A dear description of conditions in Austria during the Napoleonic Wars is found in Grünberg, Studien zur österreichischen Agrargeschichte (Leipzig: 1901), pp. 121 ff. also Broda, "Zur Frage der Konjunktur im und nach dem Kriege," Archiv für Sozialwissenschaft, vol. 45, pp. 40 ff.; also Rosenberg, Valutafragen (Vienna: 1917), pp. 14 ff.
The wealth of Germany and of German-Austria was above all an abundance of capital. One may estimate the riches of the soil and the natural resources of our country ever so high; yet one must still admit that there are other countries that are more richly endowed by nature, whose soil is more fruitful, whose mines are more productive, whose water power is stronger, and whose territories are more easily accessible because of location relative to the sea, mountain ranges, and river courses. The advantages of the German national economy rest not on the natural factor but on the human factor of production and on a historically given head start. These advantages showed themselves in the relatively great accumulation of capital, mainly in the improvement of lands used for agriculture and forestry and in the abundant stock of produced means of production of all kinds, of streets, railroads, and other means of transportation, of buildings and their equipment, of machines and tools, and, finally, of already produced raw materials and semifinished goods. This capital had been accumulated by the German people through long work; it was the tool that German industrial workers used for their work and from whose application they lived. From year to year this stock was increased by thrift.
The natural forces dormant in the soil are not destroyed by appropriate use in the process of production; in this sense they form an eternal factor of production. The amounts of raw materials amassed in the ground represent only a limited stock that man consumes bit by bit without being able to replace it in any way. Capital goods also have no eternal existence; as produced means of production, as semifinished goods, which they represent in a broader sense of the term, they are transformed little by little in the production process into consumption goods. With some, with so-called circulating capital, this takes place more quickly; with others, with so-called fixed capital, more slowly. But the latter also is consumed in production. Machines and tools also have no eternal existence; sooner or later they become worn out and unusable. Not only the increase but even the mere maintenance of the capital stock therefore presupposes a continual renewal of capital goods. Raw materials and semifinished goods which, changed into goods ready for use, are conveyed to consumption must be replaced by others; and machines and tools of all kinds worn out in the production process must be replaced by others to the extent that they wear out. Performing this task presupposes making a clear assessment of the extent of the wearing out and using up of productive goods. With means of production that always are to be replaced only with others of the same kind, this is not difficult. The road system of a country can be maintained by trying to hold the condition of the individual sections technically the same by ceaseless maintenance work, and it can be extended by repeatedly adding new roads or enlarging the existing ones. In a static society in which no changes in the economy take place, this method would be applicable to all means of production. In an economy subject to change, this simple method does not suffice for most means of production, for the used-up and worn-out means of production are replaced not by ones of the same kind but by others. Worn-out tools are replaced not by ones of the same kind but by better ones, if indeed the whole orientation of production is not changed and the replacement of capital goods consumed in a shrinking branch of production does not take place by installation of new capital goods in other branches of production that are being expanded or newly established. Calculation in physical units, which suffices for the primitive conditions of a stationary economy, must therefore be replaced by calculation of value in money.
Individual capital goods disappear in the production process. Capital as such, however, is maintained and expanded. That is not a natural necessity independent of the will of economizing persons, however, but rather the result of deliberate activity that arranges production and consumption so as at least to maintain the sum of value of capital and that allots to consumption only surpluses earned in addition. The precondition for that is the calculation of value, whose auxiliary means is accounting. The economic task of accounting is to test the success of production. It has to determine whether capital was increased, maintained, or diminished. The economic plan and the distribution of goods between production and consumption is then based on the results that it achieves.
Accounting is not perfect. The exactness of its numbers, which strongly impresses the uninitiated, is only apparent. The evaluation of goods and claims that it must work with is always based on estimates resting on the interpretation of more or less uncertain elements. Insofar as this uncertainty stems from the side of goods, commercial practice, approved by the norms of commercial legislation, tries to avoid it by proceeding as cautiously as possible; that is, it requires a low evaluation of assets and a high evaluation of liabilities. But the deficiencies of accounting also stem from the fact that evaluations are uncertain from the side of money, since the value of money is also subject to change. So far as commodity money, so-called full-value metallic money, is concerned, real life pays no regard to these deficiencies. Commercial practice, as well as the law, has fully adopted the naive business view that money is stable in value, that is, that the existing exchange relation between money and goods is subject to no change from the side of money.On this, cf. Mises, Theorie des Geldes und der Umlaufsmittel, pp. 237 ff. (English translation, pp. 268 ff.). Accounting assumes money to be stable in value. Only the fluctuations of credit and token-money currencies, so-called paper currencies, against commodity money were taken account of by commercial practice by setting up corresponding reserves and by write-offs. Unfortunately, German statist economics has paved the way for a change of perception on this point also. In nominalistic money theory, by extending the idea of the stability of value of metal money to all money as such, it created the preconditions for the calamitous effects of decline in the value of money that we now have to describe.
Entrepreneurs did not pay attention to the fact that the decline in the value of money now made all items in balance sheets become inaccurate. In drawing up balance sheets, they neglected to take account of the change in the value of money that had occurred since the last balance sheet. Thus it could happen that they regularly added a part of the original capital to the net revenue of the year, regarded it as profit, paid it out, and consumed it. The error which (in the balance sheet of a corporation) was made by not taking account of the depreciation of money on the liability side was only partly made up for by the fact that on the asset side also the components of wealth were not reported at a higher value. For this disregard of the rise in nominal value did not apply to circulating capital also, since for inventories that were sold, the higher valuation did appear; it was precisely this that constituted the inflationary extra profit of enterprises. The disregard of the depredation of money on the asset side remained limited to fixed investment capital and had as a consequence that in calculating depreciation, people used the smaller original amounts that corresponded to the old value of money. That enterprises often set up special reserves to prepare for reconversion to the peacetime economy could not, as a rule, make up for this.
The German economy entered the war with an abundant stock of raw materials and semifinished goods of all kinds. In peacetime, whatever of these stocks was devoted to use or consumption was regularly replaced. During the war the stocks were consumed without being able to be replaced. They disappeared out of the economy; the national wealth was reduced by their value. This could be obscured by the fact that in the wealth of the trader or producer, money claims appeared in their place—as a rule, war-loan claims. The businessman thought that he was as rich as before; generally he had sold the goods at better prices than he had hoped for in peacetime and now believed that he had become richer. At first he did not notice that his claims were being ever more devalued through the sinking of the value of money. The foreign securities that he possessed rose in price as expressed in marks or crowns. This too he counted as a gain.The nominalists and chartalists among monetary theorists naturally agreed with this layman's view: that upon the sale of foreign securities, the increased nominal value received because of the decline of the currency represented a profit; cf. Bendixen, Währungspolitik und Geldtheorie im Lichte des Weltkrieges (Munich: 1916), p. 37. That is probably the lowest level to which monetary theory could sink. If he wholly or partially consumed these apparent profits, then he diminished his capital without noticing it. It naturally would not have been possible to take account of these changes in accounting serving official purposes; this accounting had to be carried out in the legal currency. It would indeed have been possible, though, to base economic calculation on the recalculation of balance sheets and of profit-and-loss calculation in gold money.
The inflation thus drew a veil over capital consumption. The individual believed that he had become richer or had at least not lost, while in truth his wealth was dwindling. The state taxed these losses of individual economic units as "war profits" and spent the amounts collected for unproductive purposes. The public did not become tired, however, of concerning itself about the large war profits, which, in good part, were no profits at all.
All fell into ecstasy. Whoever took in more money than earlier—and that was true of most entrepreneurs and wage earners and, finally, with the further progress of the depreciation of money, of all persons except capitalists receiving fixed incomes—was happy about his apparent profits. While the entire economy was consuming its capital and while even stocks of goods ready for consumption held in individual households were dwindling, all were happy about prosperity. And to cap it all, economists began to undertake profound investigations into its causes.
Rational economy first became possible when mankind became accustomed to the use of money, for economic calculation cannot dispense with reducing all values to one common denominator. In all great wars monetary calculation was disrupted by inflation. Earlier it was the debasement of coin; today it is paper-money inflation. The economic behavior of the belligerents was thereby led astray; the true consequences of the war were removed from their view. One can say without exaggeration that inflation is an indispensable intellectual means of militarism. Without it, the repercussions of war on welfare would become obvious much more quickly and penetratingly; war-weariness would set in much earlier.
Today is too soon to survey the entire extent of the material damage that the war has brought to the German people. Such an attempt is bound in advance to start from the conditions of the economy before the war. Even for that reason alone it must remain incomplete. For the dynamic effects of the World War on the economic life of the world cannot thus be considered at all, since we lack all possibility of surveying the entire magnitude of the loss that the disorganization of the liberal economic order, the so-called capitalistic system of national economy, entails. Nowhere do opinions diverge so much as on this point. While some express the view that the destruction of the capitalistic apparatus of production opens the way for an undreamed-of development of civilization, others fear from it a relapse into barbarism.
But even if we disregard all that, we should, in judging the economic consequences of the World War for the German people, in no way limit ourselves to taking account only of war damages and war losses that have already actually appeared. These losses of wealth, which in and for themselves are immense, are outweighed by disadvantages of a dynamic nature. The German people will remain economically confined to their inadequate territory of settlement in Europe. Millions of Germans who previously earned their bread abroad are being compulsorily repatriated. Moreover, the German people have lost their considerable capital investment abroad. Beyond that, the basis of the German economy, the processing of foreign raw materials for foreign consumption, has been shattered. The German people are thereby being made into a poor people for a long time.
The position of the German-Austrians is turning out still more unfavorable in general than the position of the German people. The war costs of the Habsburg Empire have been borne almost completely by the German-Austrians. The Austrian half of the Empire has contributed in a far greater degree than the Hungarian half of the Empire to the outlays of the Monarchy. The contributions that were incumbent on the Austrian half of the Empire were made, furthermore, almost exclusively by the Germans. The Austrian tax system laid the direct taxes almost exclusively on the industrial and commercial entrepreneurs and left agriculture almost free. This mode of taxation in reality meant nothing other than the overburdening of the Germans with taxes and the exemption of the non-Germans. Still more to be considered is that the war loans were subscribed to almost entirely by the German population of Austria and that now, after the dissolution of the state, the non-Germans are refusing any contribution toward interest payments and amortization of the war loans. Moreover, the large German holding of money claims on the non-Germans has been greatly reduced by the depreciation of money. The very considerable ownership by German-Austrians of industrial and trade enterprises and also of agricultural properties in non-German territories, however, is being expropriated partly by nationalization and socialization measures, partly by the provisions of the peace treaty.
The question whether so-called war socialism is true socialism has been discussed repeatedly and with great passion. Some have answered yes just as firmly as others have answered no. In that connection the striking phenomenon could be observed that as the war continued and as it became even more obvious that it would end with failure of the German cause, the tendency to characterize war socialism as true socialism diminished also.
To be able to handle the problem correctly, one must first of all keep in mind that socialism means the transfer of the means of production out of the private ownership of individuals into the ownership of society. That alone and nothing else is socialism. All the rest is unimportant. It is a matter of complete indifference for deciding our question, for example, who holds power in a socialized community, whether a hereditary emperor, a Caesar, or the democratically organized whole of the people. It does not belong to the essence of a socialized community that it is under the leadership of soviets of workers and soldiers. Other authorities also can implement socialism, perhaps the church or the military state. It is to be noted, furthermore, that an election of the general directorship of the socialist economy in Germany, carried out on the basis of full universality and equality of the right to vote, would have produced a far stronger majority for Hindenburg and Ludendorff in the first years of the war than Lenin and Trotsky could ever have achieved in Russia.
Also nonessential is how the outputs of the socialized economy are used. It is of no consequence for our problem whether this output primarily serves cultural purposes or the waging of war. In the minds of the German people or at least of its preponderant majority, victory in the war was seen beyond doubt as the most urgent goal of the moment. Whether one approves of that or not is of no consequence.Max Adler (Zwei Jahre . . . ! Weltkriegsbetrachtungen eines Sozialisten [Nürnberg: 1916], p. 64) disputes the idea that war socialism is true socialism: "Socialism strives for the organization of the national economy for the sufficient and uniform satisfaction of the needs of all; it is the organization of sufficiency, even of superfluity; 'war socialism,' on the other hand, is the organization of scarcity and of need." Here the means is confused with the end. In the view of socialist theoreticians, socialism should he the means for achieving the highest productivity of the economy attainable under the given conditions. Whether superfluity or shortage reigns then is not essential. The criterion of socialism is, after all, not that it strives for the general welfare but rather that it strives for welfare by way of production based on the socialization of the means of production. Socialism distinguishes itself from liberalism only in the method that it chooses; the goal that they strive for is common to both. Cf. below, pp. 181 ff.
It is equally of no consequence that war socialism was carried out without formal reorganization of ownership relations. What counts is not the letter of the law but the substantive content of the legal norm.
If we keep all this in mind, then it is not hard to recognize that the measures of war socialism amounted to putting the economy on a socialistic basis. The right of ownership remained formally unimpaired. By the letter of the law the owner still continued to be the owner of the means of production. Yet the power of disposal over the enterprise was taken away from him. It was no longer up to him to determine what should be produced, to acquire raw materials, to recruit workers, and finally to sell the product. The goal of production was prescribed to him, the raw materials were delivered to him at definite prices, the workers were assigned to him and had to be paid by him at rates on whose determination he had no direct influence. The product, furthermore, was taken from him at a definite price, if he was not actually carrying out all the production as a mere manager. This organization was not uniformly and simultaneously implemented in all branches of industry—in many not at all. Also, its net had big enough meshes to let much get through. Such an extreme reform, which completely turns the conditions of production around, just cannot be carried out at one blow. But the goal being aimed at and being approached ever more closely with every new decree was this and nothing else. War socialism was by no means complete socialism, but it was full and true socialization without exception if one had kept on the path that had been taken.
Nothing about that is changed by the fact that the proceeds of production went first to the entrepreneur. The measures characterized as war-socialist in the narrow sense did not abolish entrepreneurial profit and interest on capital in principle, although the fixing of prices by the authorities took many steps in this direction. But precisely all the economic-policy decrees of the war period do belong to the full picture of war socialism; it would be mistaken to keep only particular measures in view and disregard others. Whatever the economic dictatorship of the various agencies of the war economy left free was gotten at by tax policy. War tax policy established the principle that all additional profit achieved beyond the profits of the prewar period was to be taxed away. From the beginning this was the goal that the policy aimed at and that it came closer to with each later decree. No doubt it would have completely reached this goal also if only it had had a little more time. It was carried out without regard to the change in the value of money that had occurred in the meanwhile, so that this meant a limitation of entrepreneurial profit not just to the amount obtained before the war but to a fraction of this amount. While entrepreneurial profit was thus limited on the top side, on the other side the entrepreneur was guaranteed no definite profit. As before, he still had to bear losses alone, while keeping no more chance of gain.
Many socialists declared that they were not thinking of an uncompensated expropriation of entrepreneurs, capitalists, and landowners. Many of them had the notion that a socialist community could allow the possessing classes to continue receiving their most recently received incomes, since socialization would bring such a great rise in productivity that it would be easy to pay this compensation. Under that kind of transition to socialism, entrepreneurs would have been compensated with larger amounts than under the one introduced by war socialism. They would have continued to receive as guaranteed income the profits that they had last received. It is incidental whether these incomes of the possessing classes would have had to continue only for a definite time or forever. War socialism also did not settle the question finally for all time. The development of wealth, income, and inheritance taxes would have been able, especially through extension of the progressivity of the tax rates, to achieve a complete confiscation soon.
The continued receipt of interest remained temporarily permitted to the owners of loan capital. Since they were suffering persistent losses of property and income from inflation, they offered no propitious object for greater intervention by the tax office. With regard to them, inflation was already performing the task of confiscation.
Public opinion in Germany and Austria, entirely dominated by the socialistic spirit, complained again and again that the taxation of war profits had been delayed too long and that even later it had not been applied with appropriate severity. One supposedly should have acted at once to collect all war profits, that is to say, all increases in wealth and income obtained during the war. Even on the first day of the war, therefore, complete socialization should have been introduced—leaving alone property incomes received before the war. It has already been explained why this was not done and what consequences for the conversion of industry onto a war footing would have resulted if this advice had been followed.
The better war socialism was developed, the more palpable did individual consequences of a socialistic order of society already become. In technical respects enterprises did operate no more irrationally than before, since the entrepreneurs, who remained at the head of the enterprises and formally filled their old positions, still harbored the hope of being able to keep for themselves—even if only by illegal means—a larger or smaller part of the surpluses earned and at least hoped for future removal of all measures of war socialism, which, after all, were still always officially declared exceptional wartime orders. Yet a tendency toward increasing expenses became noticeable, especially in trade, because of the price policy of the authorities and the practice of the courts in handling the provisions of penal law regarding exceeding the maximum prices: permitted prices were ascertained on the basis of the entrepreneur's outlays plus a margin of "simple profit," so that the entrepreneur's profit became all the greater the more dearly he had made purchases and the more expenses he had incurred.
Of greatest significance was impairment of the initiative of entrepreneurs. Since they shared more heavily in losses than in profits, the incentive to undertake risky ventures was only slight. Many production possibilities remained unused in the second half of the war because entrepreneurs shied away from the risk bound up with new investments and with introducing new production methods. Thus the policy of the state's taking over responsibility for possible losses, adopted especially in Austria right at the beginning of the war, was better suited for stimulating production. Toward the end of the war, views on this point had changed. With regard to importing particular raw materials into Austria from abroad, the question arose of who should bear the "peace risk," the danger of a loss from the price crash that was expected in the event of peace. The entrepreneurs associated in "centrals," whose chances of profit were limited, wanted to undertake the business only if the state were ready to bear the possible loss. Since this could not be arranged, the importation did not take place.
War socialism was only the continuation at an accelerated tempo of the state-socialist policy that had already been introduced long before the war. From the beginning the intention prevailed in all socialist groups of dropping none of the measures adopted during the war after the war but rather of advancing on the way toward the completion of socialism. If one heard differently in public, and if government offices, above all, always spoke only of exceptional provisions for the duration of the war, this had only the purpose of dissipating possible doubts about the rapid tempo of socialization and about individual measures and of stifling opposition to them. The slogan had already been found, however, under which further socializing measures should sail; it was called transitional economy.
The militarism of General Staff officers fell apart; other powers took the transitional economy in hand.
[Audio and epub editions forthcoming.]
In June 2004, Professor Hoppe visited the Mises Institute in Auburn to deliver an ambitious series of lectures titled Economy, Society, and History.
Over ten lectures, one each morning and afternoon for a week, Dr. Hoppe presented nothing short of a sweeping historical narrative and vision for a society rooted in markets and property. Delivered only from notes, to an audience of academics and intellectuals, the lectures showed astonishing depth and breadth.Even the most jaded scholars in the room were blown away by the erudition and scholarship of Hoppe’s presentation.
This project brings together the core of Hoppe’s lifetime of theoretical work in one vital and cohesive source. Here we find provocative themes developed by Hoppe in the 1980s and 90s, particularly in his essays found in A Theory of Socialism and Capitalism and The Economics and Ethics of Private Property. We also find his devastating critique of democracy, made famous in his seminal book Democracy—The God That Failed.
We’ve taken the recordings, edited them, and put them into a printed book. As always, Hoppe is equipped—and unafraid— to tackle history, anthropology, philosophy, sociology, ethics, politics, and economics, melding them into one coherent thesis:
Chapter 1: The Nature of Man and the Human Condition: Language, Property, and Production Property developed naturally, not artificially, as a consequence of human action. What is the philosophical justification for private property, and what does property mean for economics and justice?
Chapter 2: The Spread of Humans Around the World: The Extension and Intensification of the Division of LaborHow did man evolve to develop trade and specialization? What did that mean for the development of society?
Chapter 3: Money and Monetary Integration: The Growth of Cities and the Globalization of TradeMoney solves problems of barter and trade; good money makes global economics possible. But money is always and forever subject to corrupting monopolization by states and central banks. How do we separate money from the state, and separate trade from politics?
Chapter 4: Time Preference, Capital, Technology, and Economic GrowthTime, and our preference for present goods over future goods, informs everything we do. Low time preference, demonstrated by capital accumulation, is the key to advancing civilization. How do we encourage capital accumulation when the forces of statism work against us?
Chapter 5: The Wealth of Nations: Ideology, Religion, Biology, and EnvironmentHow did the West get rich? What intellectual movements threaten progress, or advance it?
Chapter 6: The Production of Law and Order: Natural Order, Feudalism, and FederalismMust law be positive rather than evolved? Who creates it, and who enforces it?
Chapter 7: Parasitism and the Origin of the StateHow did we get here? How does the ruling class derive its putative legitimacy, and what can the distant origins of governance teach us about the vast managerial social welfare states we endure today?
Chapter 8: From Monarchy to DemocracyIs democracy really the great advancement in human liberty we have been taught to believe? What is the role of natural and artificial elites?
Chapter 9: State, War, and ImperialismStates are necessarily expansionist and bellicose. How do we tame their warring and intervening nature?
Chapter 10: Strategy: Secession, Privatization, and the Prospects of LibertyCan private covenant communities replace the state? Why is a private property order morally urgent? Is secession viable? How do we move forward strategically?
As you can see, this book is a tremendous addition to Hoppe’s body of work, and a hugely important contribution to the “big picture” outlook for the West. Hoppe’s work is more important today than ever, given the penchant of modern bureaucratic states to war, intervene, tax, regulate, debase, and generally plunder the engines of peace and civilization.
Economy, Society, and History is a blueprint for understanding the world, rethinking it, and creating a better one.
So-called war socialism has been regarded as sufficiently argued for and justified with reference mostly to the emergency created by the war. In war, the inadequate free economy supposedly cannot be allowed to exist any longer; into its place must step something more perfect, the administered economy. Whether or not one should return after the war to the "un-German" system of individualism was said to be another question that could be answered in different ways.
This argumentation for war socialism is just as inadequate as it is characteristic of the political thinking of a people that was hampered in every free expression of views by the despotism of the war party. It is inadequate because it could really be a powerful argument only if it had been established that the organized economy is capable of yielding higher outputs than the free economy; that, however, would first have to be proved. For the socialists, who advocate the socialization of the means of production anyway and want to abolish the anarchy of production thereby, a state of war is not first required to justify socializing measures. For the opponents of socialism, however, the reference to the war and its economic consequences is also no circumstance that could recommend such measures. For anyone of the opinion that the free economy is the superior form of economic activity, precisely the need created by the war had to be a new reason demanding that all obstacles standing in the way of free competition be set aside. War as such does not demand a [centrally] organized economy, even though it may set certain limits in several directions to the pursuit of economic interests. In the age of liberalism, even a war of the extent of the World War (so far as such a war would have been thinkable at all in a liberal and therefore pacifistic age) would in no way have furthered tendencies toward socialization.
The most usual argument for the necessity of socialist measures was the argument about being besieged. Germany and its allies were said to be in the position of a besieged fortress that the enemy was trying to conquer by starving it out. Against such a danger, all measures usual in a besieged city had to be applied. All stocks had to be regarded as a mass under the control of a unified administration that could be drawn on for equally meeting the needs of all, and so consumption had to be rationed.
This line of argument starts from indisputable facts. It is clear that starving out (in the broadest sense of the term), which in the history of warfare had generally been used only as a tactical means, was used in this war as a strategic means.One war in which starving the opponent out was used as a strategic means was the Herero uprising in German Southwest Africa in 1904; in a certain sense the Civil War in North America and the last Boer War can also count here. But the conclusions drawn from the facts were mistaken. Once one thought that the position of the Central Powers was comparable to that of a besieged fortress, one would have had to draw the only conclusions that could be drawn from the military point of view. One would have had to remember that a besieged place, by all experience of military history, was bound to be starved out and that its fall could be prevented only by help from outside. The program of "hanging on" would then have made sense only if one could count on time's working for the besieged side. Since, however, help from outside could not be expected, one should not have shut one's eyes to the knowledge that the position of the Central Powers was becoming worse from day to day and that it was therefore necessary to make peace, even if making peace would have imposed sacrifices that did not seem justified by the tactical position of the moment. For the opponents would still have been ready to make concessions if they, for their part, had received something in return for the shortening of the war.
It cannot be assumed that the German General Staff had overlooked this. If it nevertheless clung to the slogan about "hanging on," that reflected not so much a misunderstanding of the military position as the hope for a particular psychic disposition of the opponent. The Anglo-Saxon nation of shopkeepers would get tired sooner than the peoples of the Central Powers, who were used to war. Once the English, also, felt the war, once they felt the satisfaction of their needs being limited, they would turn out to be much more sensitive than the Central Europeans. This grave error, this misunderstanding of the psyche of the English people, also led to adoption first of limited and then of unlimited submarine warfare. The submarine war rested on still other false calculations, on an overestimation of one's own effectiveness and on an underestimation of the opponent's defense measures, and finally on a complete misunderstanding of the political preconditions of waging war and of what is permitted in war. But it is not the task of this book to discuss these questions. Settling accounts with the forces that pushed the German people into this suicidal adventure may be left to more qualified persons.
But quite apart from these deficiencies, which more concern the generally military side of the question, the theory of siege socialism also suffers from serious defects concerning economic policy.
When Germany was compared with a besieged city, it was overlooked that this comparison was applicable only with regard to those goods that were not produced at home and also could not be replaced by goods producible at home. For these goods, apart from luxury articles, the rationing of consumption was in any case indicated at the moment when, with the tightening of the blockade and with the entry of Italy and Rumania into the war, all import possibilities were cut off. Until then it would have been better, of course, to allow full free trade, at least for the quantities imported from abroad, in order not to reduce the incentive to obtain them in indirect ways. It was mistaken in any case, as happened at the beginning of the war, especially in Austria, to resist price rises of these goods by penal measures. If the traders had held the goods back with speculative intent to achieve price increases, this would have limited consumption effectively right at the beginning of the war. The limitation of price increases was bound, therefore, to have downright harmful consequences. For those goods that could in no way be produced at home and also could not be replaced by substitutes producible at home, the state would better have set minimum rather than maximum prices to limit consumption as much as possible.
Speculation anticipates future price changes; its economic function consists in evening out price differences between different places and different points in time and, through the pressure which prices exert on production and consumption, in adapting stocks and demands to each other. If speculation began to exact higher prices at the beginning of the war, then it did indeed temporarily bring about a rise of prices beyond the level that would have been established in its absence. Indeed, since consumption would also thus be limited, the stock of goods available for use later in the war was bound to rise and thus would have led to a moderation of prices at that later time in relation to the level that was bound to have been established in the absence of speculation. If this indispensable economic function of speculation was to be excluded, something else should have immediately been put in its place, perhaps confiscation of all stocks and state management and rationing. In no way, however, was it suitable simply to be content with penal intervention.
When the war broke out, citizens expected a war lasting about three to six months. The merchant arranged his speculation accordingly. If the state had known better, it would have had the duty of intervening. If it thought that the war would already be ended in four weeks, then it could have intervened to keep price increases from being larger than seemed necessary for bringing stocks into harmony with demand. For that, too, fixing maximum prices would not have sufficed. If, however, the state thought that the war would last far longer than civilians thought, then it should have intervened, either by fixing minimum prices or by purchase of goods for the purpose of state stockpiling. For there was a danger that speculative traders, not familiar with the secret intentions and plans of the General Staff, would not immediately drive up prices to the extent necessary to assure the distribution of the small stocks on hand over the entire duration of the war. That would have been a case in which the intervention of the state in prices would have been thoroughly necessary and justified. That that did not happen is easy to explain. The military and political authorities were informed least of all about the prospective duration of the war. For that reason all their preparations failed, military as well as political and economic ones.
With regard to all those goods that even despite the war could be produced in territory of the Central Powers free of the enemy, the siege argument was already totally inapplicable. It was dilettantism of the worst sort to set maximum prices for these goods. Production could have been stimulated only by high prices; the limitation of price increases throttled it. It is hardly astonishing that state compulsion for cultivation and production failed.
It will be the task of economic history to describe in detail the stupidities of the economic policy of the Central Powers during the war. At one time, for example, the word was given to reduce the livestock by increased slaughtering because of a shortage of fodder; then prohibitions of slaughtering were issued and measures taken to promote the raising of livestock. Similar planlessness reigned in all sectors. Measures and countermeasures crossed each other until the whole structure of economic activity was in ruins.
The most harmful effect of the policy of siege socialism was the cutting off of districts with surpluses of agricultural production from territories in which consumption exceeded production. It is easy to understand why the Czech district leaders in the Sudetenland, whose hearts were on the side of the Entente, sought as much as possible to limit the export of foodstuff's out of the districts under their leadership to the German parts of Austria and, above all, to Vienna. It is less understandable that the Vienna government put up with this and that it also put up with its imitation by the German districts and also with the fact that Hungary shut itself off from Austria, so that famine was already prevailing in Vienna while abundant stocks were still on hand in the countryside and in Hungary. Quite incomprehensible, however, is the fact that the same policy of regional segmentation took hold in the German Reich also and that the agrarian districts there were permitted to cut themselves off from the industrial ones. That the population of the big cities did not rebel against this policy can be explained only by its being caught up in statist conceptions of economic life, by its blind belief in the omnipotence of official intervention, and by its decades-long ingrained mistrust of all freedom.
While statism sought to avoid the inevitable collapse, it only hastened it.
The pages that I herewith submit to the public do not presume to be more than observations about the crisis in world history that we are living through and contributions to understanding the political conditions of our time. I know that any attempt to offer more would be premature and therefore mistaken. Even if we were in a position to see interrelations clearly and to recognize where developments are heading, it would be impossible for us to confront the great events of our day objectively and not let our view be blurred by wishes and hopes. Standing in the middle of battle, one strives in vain to keep cool and calm. It exceeds human capacity to treat the vital questions of one's time sine ira et studio [without anger and partiality]. I should not be blamed for not being an exception to this rule.
It may perhaps seem that the topics treated in the individual parts of this book hang together only superficially. Yet I believe that they are closely connected by the purpose that this study serves. Of course, reflections of this kind, which must always remain fragmentary, cannot deal with the completeness and unity of the whole. My task can only be to direct the reader's attention to points that public discussion does not usually take sufficiently into account.
Vienna, beginning of July 1919
Professor Dr. L. Mises
The older socialists were opponents of democracy. They want to make the whole world happy with their plans and are impatient with anyone who is of another opinion. Their favorite form of state would be enlightened absolutism, in which they always secretly dream of themselves occupying the position of enlightened despot. Recognizing that they neither occupy this position nor can attain it, they seek the despot who would be ready to adopt their plans and become their tool. Other socialists, again, are oligarchically minded and want to have the world ruled by an aristocracy that includes the—in their opinion—really best people. In that regard it is a matter of indifference whether these aristocrats should be the philosophers of Plato, the priests of the Church, or the Newtonian Council of Saint-Simon.
With Marx there occurs in this respect, also, a complete change of interpretation. The proletarians form the immense majority of the population. They all necessarily have to become socialists, though, since consciousness is determined by social reality. Thus socialism, in contrast with all earlier class struggles, which had been movements of minorities or in the interests of minorities, is said to be the movement of the vast majority in the interest of the vast majority for the first time in history. It follows that democracy is the best means for realizing socialism. The real bedrock on which democratic socialism was built was that it found its base primarily in Germany, Austria, and Russia, thus in countries in which democracy had not been realized. There the democratic program was the obvious program of every opposition party and so necessarily of socialism also.
When the possibility offered itself in Russia to a very small number of socialists in relation to the millions of the people to grasp rule for themselves by capturing the means of power of broken-down Czarism, the principles of democracy were quickly thrown overboard. In Russia socialism certainly is not a movement of the immense majority. That it claims to be a movement in the interest of the immense majority is nothing special; all movements have claimed that. It is certain that the rule of the Bolsheviks in Russia rests just as much on possession of the government apparatus as the rule of the Romanovs once did. A democratic Russia would not be Bolshevik.
In Germany under the dictatorship of the proletariat there can be no problem, as its proponents assert, of defeating the resistance of the bourgeoisie to the socialization of the means of production. If the socialization of small peasant farms is renounced in advance and the continued receipt of small rentier incomes allowed also, as present-day socialism intends, then scarcely any resistance to socialization is to be expected in Germany. Liberal ideas, with which alone resistance against socialism could be mounted, have never won much ground in Germany; today they are shared by scarcely a dozen persons in Germany. Resistance to socialization based on the standpoint of private interests never has, however—rightly—any prospect of success, least of all in a country in which all industrial and mercantile wealth has always seemed to the great masses to be a crime. The expropriation of industry, of mining, and of big landholdings and the elimination of trade are the impetuous demand in Germany today of the overwhelming majority of the German people. To carry it out, dictatorship is needed least of all. Socialism can rely on the great masses at the moment; it does not yet have to fear democracy.
The German economy is today in the most difficult position imaginable. On the one hand the war has destroyed immense property values and laid upon the German people the obligation to pay huge reparations to the opponents; on the other hand it has brought clearly to consciousness the fact of the relative overpopulation of the German land. Everyone must recognize today that it will be extraordinarily difficult, if not impossible, for German industry after the war to compete with foreign industry without a sharp reduction of the wage level. Hundreds of thousands, even millions, of Germans are today seeing their small possessions melting away day by day. People who still considered themselves rich a few months ago, who were envied by thousands and, as "war winners," did not exactly enjoy affectionate attention in public, can today calculate exactly when they will have consumed the modest remains of their apparent wealth and will be left beggars. Members of the independent professions see how their standard of living is sinking day by day without hope of improvement.
That a people in such a position can be gripped by despair is not astonishing. It is easy to say that there is only one single remedy for the danger of the increasing misery of the entire German people, namely, to resume work as fast as possible and try, through improvements in the productive process, to make up for the damages inflicted on the German economy. But it is understandable that a people to whom the idea of power was preached for decades, whose instinct for force was awakened by the horrors of the long war, also seeks first of all in this crisis to resort again to power politics. The terrorism of the Spartacists continues the policy of the Junkers, as the terrorism of the Bolsheviks continues the policy of Czarism.
The dictatorship of the proletariat would facilitate getting over economic difficulties for the moment by expropriating the consumption goods held by the propertied classes. It is dear that that is not socialism and that no socialist theorist has ever advocated it. In this way one can only badly and only for a short time disguise the difficulties that confront production on a socialist basis. Imports of foodstuffs from abroad can be financed for a certain time by selling foreign securities and by exporting works of art and jewels. Sooner or later, however, this means must fail.
The dictatorship of the proletariat wants to use terror to nip any stirring up of opposition in the bud. Socialism is believed established for all eternity once its property has been taken away from the bourgeoisie and all possibility of public criticism has been abolished. It cannot be denied, of course, that much can be done in this way, that, above all, all European civilization can thus be destroyed; but one does not thereby build a socialist order of society. If the communist social order is less suited than one resting on private ownership of the means of production to bring about "the greatest happiness of the greatest number," then the ideas of liberalism cannot be killed off even by terrorist measures.
Marxian socialism, as a fundamentally revolutionary movement, is inwardly inclined toward imperialism. No one will dispute that, least of all the Marxists themselves, who straightforwardly proclaim the cult of revolution. It is less noted, however, that modern socialism of necessity must be imperialistic outwardly also.
Modern socialism does not come forth in propaganda as a rationalist demand; it is an economic-policy position that presents itself as a doctrine of salvation in the manner of religions. As an economic-policy idea it would have had to compete intellectually with liberalism; it would have had to try to invalidate the arguments of its opponents logically and to turn aside their objections against its own doctrines. Individual socialists have done that, too. By and large, though, socialists have scarcely bothered themselves with scientific discussion of the advantages and disadvantages of the two conceivable systems of social production. They have proclaimed the socialist program as a doctrine of salvation. They have represented all earthly suffering as an emanation of the capitalist social order and have promised, with the implementation of socialism, the removal of everything painful. They held the capitalist economy responsible for all shortcomings of the past and present. In the state of the future all longing and hoping will be fulfilled; there the restless will find rest; the unhappy, happiness; the inadequate, strength; the sick, cure; the poor, wealth; the abstinent, enjoyment. In the state of the future, work will be a pleasure and no longer a torment. In the state of the future, an art will flourish of whose magnificence "bourgeois" art gives no idea, and a science that will solve all riddles of the universe without remnant. All sexual need will disappear; man and wife will give each other happiness in love that earlier generations never dreamed of. Human character will undergo a thoroughgoing change; it will become noble and spotless; all intellectual, moral, and bodily inadequacies will fall away from mankind. What flourishes for the German hero in Valhalla, for the Christian in God's bosom, for the Moslem in Mohammed's paradise—socialism will realize all that on earth.
The Utopians, above all Fourier, were insatiable in wanting to paint the details of this life of ease. Marxism has most strictly tabooed every sketch of the state of the future. But this prohibition referred only to description of the economic, governmental, and legal order of the socialist state and was a masterful propaganda gambit. Since the arrangements of the future state were left in mysterious obscurity, the opponents of socialism were deprived of all possibility of criticizing them and perhaps showing that their realization could in no way create a paradise on earth. Depicting the favorable consequences of the socialization of property, on the contrary, was by no means as proscribed by Marxism as was demonstration of the ways and means by which it could be accomplished. In again and again representing all earthly evils as necessary concomitants of the capitalist social order and further declaring that they would be absent from the state of the future, it has, in utopian depiction of the happiness that it promises to bring, outdone the most imaginative authors of utopian novels. Mysterious intimation and mystical allusion have far stronger effect than open explanation.
That socialism appeared as a doctrine of salvation made the struggle against liberalism easy for it. Whoever seeks to refute socialism rationally encounters among most socialists not rational considerations, as he expects, but rather a belief, not derived from experience, in redemption by socialism. One undoubtedly can also defend socialism rationally. Yet for the great mass of its adherents it is a doctrine of salvation; they believe in it. For those for whom the religious gospels have lost force, it is, in place of faith, a consolation and hope in the difficulties of life. In the face of such conviction, all rationalist criticism fails. Whoever comes to the socialist of this sort with rational objections finds the same lack of understanding that rationalist criticism of the doctrines of faith encounters with the believing Christian.
In this sense, comparing socialism with Christianity was thoroughly justified. Yet the Kingdom of Christ is not of this world; socialism, on the contrary, wants to establish the kingdom of salvation on earth. Therein lies its strength, therein, however, its weakness too, from which it will collapse some day just as quickly as it has triumphed. Even if the socialist method of production really could raise productivity and provide greater welfare for all than the liberal method, it would be bound bitterly to disappoint its adherents, who also expect the highest exaltation of the inner feeling of happiness from it. It will not be able to remove the inadequacy of everything earthly, not quiet the Faustian drive, not fulfill inner yearning. When socialism will have become reality, it will have to recognize that a religion not referring to the life to come is an absurdity.
Marxism is an evolutionary theory. Even the word "revolution" has the meaning "evolution" in the sense of the materialistic interpretation of history. Yet regard for the Messianic character of the socialist gospel was bound to drive Marxian socialism again and again to endorsing violent overthrow, revolution in the strict sense of the word. It could not admit that evolution was coming nearer to socialism in any other way than that the contradictions of the capitalist mode of production were becoming ever more glaring and thereby bringing the revolutionary overthrow of capitalism into the near future. If it had been willing to admit that evolution was leading to the realization of socialism step by step, then it would have gotten into the embarrassment of having to explain just why its prophecies of salvation were not also being fulfilled step by step to some extent. For that reason Marxism necessarily had to remain revolutionary if it did not want to give up the strongest device of its propaganda, the doctrine of salvation; for that reason, despite all science, it had to hold firm to its theory of increasing misery and collapse. For that reason it had to reject the revisionism of Bernstein; for that reason it had to let not one iota of its orthodoxy be stolen from it.
Now, however, socialism is the victor. The day of fulfillment has dawned. Millions stand around impetuously demanding the salvation that is supposed to await them; they demand riches, they demand happiness. And now shall the leaders come and console the multitude by saying that diligent labor, perhaps after decades or centuries, will become their reward and that inner happiness can never be attained with outward means? Yet how have they reproached liberalism because it recommended diligence and thrift to the poor! Yet how have they derided the doctrines that would not ascribe all earthly hardship to the deficiency of social arrangements
Socialism has only one way out of this position. Regardless of the fact that it holds power, it must still keep trying to appear as an oppressed and persecuted sect, impeded by hostile powers from pushing through the essential parts of its program, and so shift onto others the responsibility for the nonappearance of the prophesied state of happiness. Along with that, however, the struggle against these enemies of general salvation becomes an unavoidable necessity for the socialist commonwealth. It must bloodily persecute the bourgeoisie at home; it must take the offensive against foreign countries that are not yet socialist. It cannot wait until the foreigners must turn to socialism voluntarily. Since it can explain the failure of socialism only by the machinations of foreign capitalism, it necessarily arrives at a new concept of the offensive socialist international. Socialism can be realized only if the whole world becomes socialist; an isolated socialism of one single nation is said to be impossible. Therefore, every socialist government must immediately concern itself with the extension of socialism abroad.
That is quite a different kind of internationalism from that of the Communist Manifesto. It is not defensively but offensively conceived. To help the idea of socialism to victory, however, it should suffice—one should think—for the socialist nations to arrange their societies so well that their example leads others to imitate them. Yet for the socialist state, attack on all capitalist states is a vital necessity. To maintain itself internally it must become aggressive externally. It cannot rest before it has socialized the whole world.
Socialist imperialism is also quite without a basis for economic policy. It is hard to see why a socialist commonwealth could not also acquire in trade with foreign countries all those goods that it could not produce itself. The socialist who is convinced of the higher productivity of communist production could dispute that least of all.Note how deficient the argument is in Marxist literature before 1918 for the thesis that socialism is possible only as world socialism.
Socialist imperialism outdoes every earlier imperialism in scope and depth. The inner necessity that has caused it to arise, rooted in the essence of the socialist gospel of salvation, drives it to fundamental boundlessness in every direction. It cannot rest before it has subjugated the entire inhabited world and before it has annihilated everything reminiscent of other forms of human society. Every earlier imperialism could do without further expansion as soon as it came up against obstacles to its spread that it could not overcome. Socialist imperialism could not do this; it would have to see such obstacles as difficulties not only for outward expansion but also for its development at home. It must try to annihilate them or itself disappear.
- Liberal or Pacifistic NationalismThat politics should be national is a modern postulate.
In most countries of Europe the princely state had replaced the estate system of the Middle Ages from the beginning of modern times. The political conception of the princely state is the interest of the ruler. The famous maxim of Louis XIV, L'état c'est moi, expresses most briefly the conception that was still alive at the three European imperial courts until the recent upheavals. It is no less clear when Quesnay, whose doctrines nevertheless already lead into the new conception of the state, precedes his work with the motto Pauvre paysan, Pauvre royaume; pauvre royaume, pauvre roi. It is not enough for him to show that on the well-being of the peasant that of the state also depends; he still considers it necessary to show that the king also can be rich only when the peasant is. Only then does the necessity appear proved of taking measures to raise the well-being of the peasants. For the object of the state is precisely the prince.
Against the princely state there then arises in the eighteenth and nineteenth centuries the idea of freedom. It revives the political thought of the republics of antiquity and of the free cities of the Middle Ages; it links up with the monarchomachs' hostility to princes; it patterns itself on the example of England, where the crown had already suffered a decisive defeat in the seventeenth century; it fights with the entire armament of philosophy, of rationalism, of natural law, and of history; it wins over the great masses through literature, which puts itself entirely at its service. Absolute kingship succumbs to the attack of the movement for freedom. In its place appears here parliamentary monarchy, there a republic.
The princely state has no natural boundaries. To be an increaser of his family estate is the ideal of the prince; he strives to leave to his successor more land than he inherited from his father. To keep on acquiring new possessions until one encounters an equally strong or stronger adversary—that is the striving of kings. For fundamentally, their greed for lands knows no boundaries; the behavior of individual princes and the views of the literary champions of the princely idea agree on that. This principle threatens, above all, the existence of all smaller and weaker states. That they are nevertheless able to maintain themselves is attributable only to the jealousy of the big ones, which anxiously watch that none should become too strong. That is the conception of European equilibrium, which forms coalitions and breaks them up again. Where it is possible without endangering the equilibrium, smaller states are destroyed; an example: the partition of Poland. Princes regard countries no differently from the way an estate owner regards his forests, meadows, and fields. They sell them, they exchange them (e.g., for "rounding off" boundaries); and each time rule over the inhabitants is transferred also. On this interpretation, republics appear as unowned property that anyone may appropriate if he can. This policy did not reach its high point, by the way, until the nineteenth century, in the Enactment of the Delegates of the Holy Roman Empire of 1803, in Napoleon's establishments of states, and in the decisions of the Congress of Vienna.
Lands and peoples are, in the eyes of princes, nothing but objects of princely ownership; the former form the basis of sovereignty, the latter the appurtenances of landownership. From the people who live in "his" land the prince demands obedience and loyalty; he regards them almost as his property. This bond that binds him with each one of his subjects should, however, also be the only one that joins the individual persons into a unit. The absolute ruler not only regards every other community between his subjects as dangerous, so that he tries to dissolve all traditional comradely relations between them that do not derive their origin from state laws enacted by him and is hostile to every new formation of community, perhaps through clubs; he also will not allow the subjects of his different territories to begin to feel themselves comrades in their role as subjects. But, of course, in seeking to tear apart all class ties to make subjects out of nobles, the bourgeoisie, and peasants, the prince atomizes the social body and thereby creates the precondition for the rise of a new political sentiment. The subject who has grown unaccustomed to feel himself a member of a narrow circle begins to feel himself a person, a member of his nation, and a citizen of the state and of the world. The way opens up for the new outlook on the world.
The liberal theory of the state, hostile to princes, rejects the princes' greed for lands and chaffering in lands. First of all, it finds it a matter of course that state and nation coincide. For so it is in Great Britain, the model country of freedom, so in France, the classical land of the struggle for freedom. That seems such a matter of course that no further word is wasted on it. Since state and nation coincide and there is no need to change this, there is no problem here.
The problem of state boundaries first appeared when the power of the idea of freedom gripped Germany and Italy. Here and in Poland there stands behind the despicable despots of the present day the great shadow of a vanished unified state. All Germans, Poles, and Italians have a great political goal in common: the liberation of their peoples from the rule of princes. That gives them first unity of political thinking and then unity of action. Across state boundaries, guarded by customs guards and gardeess, the peoples stretch their hands in unity. The alliance of the princes against freedom is confronted by the union of peoples fighting for their freedom.
To the princely principle of subjecting just as much land as obtainable to one's own rule, the doctrine of freedom opposes the principle of the right of self-determination of peoples, which follows necessarily from the principle of the rights of man.Cf. Sorel, Nouveaux essais d'histoire et de critique (Paris: 1898), pp. 99 ff. No people and no part of a people shall be held against its will in a political association that it does not want. The totality of freedom-minded persons who are intent on forming a state appears as the political nation; patrie, Vaterland becomes the designation of the country they inhabit; patriot becomes a synonym of freedom-minded.Cf. Michels, "Zur historischen Analyse des Patriotismus," Archiv für Sozialwissenschaft und Sozialpolitik, vol. 36, 1913, pp. 38 ff., 402 f.; Pressensé, "L'idée de Patrie," Revue mensuelle de l'École Anthropologie de Paris, vol. 9, 1899, pp. 91 ff. In this sense the French begin to feel themselves a nation when they break the despotism of the Bourbons and when they take up the struggle against the coalition of monarchs who threaten their just won freedom. The Germans, the Italians become nationally minded because foreign princes, joined in the Holy Alliance, hinder them from the establishing a free state. This nationalism directs itself not against foreign peoples but against the despot who subjugates foreign peoples also. The Italian hates above all not the Germans but the Bourbons and Habsburgs; the Pole hates not the Germans or Russians but the Czar, the King of Prussia, and the Emperor of Austria. And only because the troops on which the rule of the tyrants rests are foreign does the struggle also adopt a slogan against foreigners. But even in battle the Garibaldians shouted to the Austrian soldiers: Passate l'Alpi e tornerem fratelli.Cf. Robert Michels, "Elemente zur Entstehungsgeschichte des Imperialismus in Italien," Archiv für Sozialwissenschaft, vol. 34, 1912, p. 57. ["Go back across the Alps, and we'll become brothers again."] Among themselves the individual nations fighting for freedom get along marvelously. All peoples hail the struggle for freedom of the Greeks, the Serbs, and the Poles. In "Young Europe" the freedom fighters are united without distinction of nationality.
The nationality principle above all bears no sword against members of other nations. It is directed in tyrannos.
Therefore, above all, there is also no opposition between national and citizen-of-the-world attitudes. Cf. Seipel, Nation und Staat (Vienna: 1916), pp. 11 f. footnote; Meinecke, loc. cit., pp. 19 f. The idea of freedom is both national and cosmopolitan. It is revolutionary, for it wants to abolish all rule incompatible with its principles, but it is also pacifistic.Cf. Michels, "Patriotismus," loc. cit., p. 403. What basis for war could there still be, once all peoples had been set free? Political liberalism concurs on that point with economic liberalism, which proclaims the solidarity of interests among peoples.
One must also keep that in mind if one wants to understand the original internationalism of the socialist parties since Marx. Liberalism, too, is cosmopolitan in its struggle against the absolutism of the princely state. Just as the princes stand together to defend themselves against the advance of the new spirit, so the peoples also hold together against the princes. If the Communist Manifesto calls on the proletarians of all countries to unite in the struggle against capitalism, then that slogan is consistently derived from the asserted fact of the identity of capitalistic exploitation in all countries. It is no antithesis, however, to the liberal demand for the national state. It is no antithesis to the program of the bourgeoisie, for the bourgeoisie, too, is in this sense international. The emphasis lies not on the words "all countries" but on the word "proletarians." That like-thinking classes in the same position in all countries must combine is presupposed as a matter of course. If any point at all can be perceived in this exhortation, it is only the point made against pseudo-national strivings that fight every change in traditional arrangements as an infringement on warranted national individuality.
The new political ideas of freedom and equality triumphed first in the West. England and France thus became the political model countries for the rest of Europe. If, however, the liberals called for adoption of foreign institutions, then it was only natural that the resistance mounted by the old forces also made use of the age-old device of xenophobia. German and Russian conservatives also fought against the ideas of freedom with the argument that they were foreign things not suitable for their peoples. Here national values are misused for political purposes.Cf. Schultze-Gaevernitz, Volkswirtschaftliche Studien aus Russland (Leipzig: 1899), pp. 173 ff.; Bauer, Nationalitätenfrage, loc. cit., pp. 138 ff. But there is no question of opposition to the foreign nation as a whole or to its individual members.
So far as relations among peoples are concerned, therefore, the national principle is above all thoroughly peaceful. As a political ideal it is just as compatible with the peaceful coexistence of peoples as Herder's nationalism as a cultural ideal was compatible with his cosmopolitanism. Only in the course of time does peaceful nationalism, which is hostile only to princes but not to peoples also, change into a militaristic nationalism. This change takes place, however, only at the moment when the modern principles of the state, in their triumphant march from West to East, reach the territories of mixed population.
The significance of the nationality principle in its older peaceful form becomes especially clear to us when we observe the development of its second postulate. First of all, the nationality principle includes only the rejection of every overlordship and so also of every foreign overlordship; it demands self-determination, autonomy. Then, however, its content expands; not only freedom but also unity is the watchword. But the desire for national unity, too, is above all thoroughly peaceful.
One of its sources, as already mentioned, is historical remembrance. From the dismal present the glance turns back toward a better past. And this past shows a unified state, not in such splendid pictures for every people as for the Germans and the Italians, but, for most, attractive enough.
But the idea of unity is not merely romanticism; it is also important for political reality. In unity strength is sought to overcome the alliance of the oppressors. Unity in a unified state offers the peoples the highest assurance of maintaining their freedom. And there, too, nationalism does not clash with cosmopolitanism, for the unified nation does not want discord with neighboring peoples, but peace and friendship.
So we also see, then, that the idea of unity cannot exert its state-destroying and state-creating power where freedom and self-government already prevail and seem assured without it. To this day Switzerland has scarcely been tempted by that idea. The least inclination to secession is shown by the German-Swiss, and very understandably: they could only have exchanged freedom for subjugation in the German authoritarian state. But the French also, and on the whole also the Italians, have felt themselves so free in Switzerland that they felt no desire for political unification with their fellows in nationality.
For the national unified state, however, yet a third consideration is at work. Without doubt the stage of development of the international division of labor already reached today required an extensive unification of law and of communication and transportation facilities in general, and this demand will become all the more pressing the more the economy is further reshaped into a world economy. When economic contacts were still in their earliest stages, on the whole scarcely extending beyond the boundaries of a village, the splitting of the earth's surface into innumerable small legal and administrative districts was the natural form of political organization. Apart from military and foreign-policy interests, which, after all, did not press everywhere for union and for formation of great empires—and even where they were at work in this direction in the age of feudalism and still more in the age of absolutism, they did not always lead to formation of national states—there were no circumstances that demanded unification of law and administration. That became a necessity only to the extent that economic relations began to reach out more and more beyond the boundaries of provinces, of countries, and finally of continents.
Liberalism, which demands full freedom of the economy, seeks to dissolve the difficulties that the diversity of political arrangements pits against the development of trade by separating the economy from the state. It strives for the greatest possible unification of law, in the last analysis for world unity of law. But it does not believe that to reach this goal, great empires or even a world empire must be created. It persists in the position that it adopts for the problem of state boundaries. The peoples themselves may decide how far they want to harmonize their laws; every violation of their will is rejected on principle. Thus a deep chasm separates liberalism from all those views that want forcibly to create a great state for the sake of the economy.
Yet political realism must first still reckon with the existence of states and with the difficulties that they pit against the creation of supranational law and freedom of international transactions. It is with envy, therefore, that the patriots of nations fragmented into many states regard the nationally unified peoples. They want to follow their example. They view things with different eyes than do liberal doctrinaires. In the Germany of the German Confederation, the necessity of unification of law and the administration of justice, of communication and transportation facilities, and of the entire administration was recognized as urgent. A free Germany could also have been created through revolutions within the individual states; for that, unification would not have first been necessary. In favor of the unified state, however, there speaks in the eyes of political realists not only the necessity of setting an alliance of the oppressed against the alliance of the oppressors in order to achieve freedom at allThink of Schleswig-Holstein, the left bank of the Rhine, etc. but also the further necessity of holding together in order to find in unity the strength to preserve freedom. Even apart from that, the necessity of trade is pressing for unity. It will no longer do to permit the fragmentation in law, in monetary systems, in communications and transportation, and in many other fields, to continue. In all these fields the times require unification, even beyond national boundaries. Already the peoples are beginning to make preliminary preparations for world unity in all these matters. Does it not seem obvious to achieve in Germany, to begin with, what the other peoples have already achieved—to create a German civil law as precursor of the coming world law, a German penal law as a preliminary stage for world penal law, a German railroad union, a German monetary system, a German postal system? All that, however, the German unified state is to assure. The program of the men of freedom, therefore, cannot limit itself to the "auction of thirty princes' crowns" (Freiligrath); even if only because of the stage of economic development, it must call for the unified state.
Thus the striving for the unified state already contains the kernel of the new interpretation of the nationality principle, which leads from the peaceful liberal nationality principle to militant power-policy nationalism, to imperialism.
- Militant or Imperialistic NationalismA. The Nationality Question in Territories with Mixed PopulationsThe princely state strives restlessly for expansion of its territory and for increase in the number of its subjects. On the one hand it aims at the acquisition of land and fosters immigration; on the other hand it sets the strictest penalties against emigration. The more land and the more subjects, the more revenues and the more soldiers. Only in the size of the state does assurance of its preservation lie. Smaller states are always in danger of being swallowed up by larger ones.
For the free national state, all these arguments do not hold true. Liberalism knows no conquests, no annexations; just as it is indifferent towards the state itself, so the problem of the size of the state is unimportant to it. It forces no one against his will into the structure of the state. Whoever wants to emigrate is not held back. When a part of the people of the state wants to drop out of the union, liberalism does not hinder it from doing so. Colonies that want to become independent need only do so. The nation as an organic entity can be neither increased nor reduced by changes in states; the world as a whole can neither win nor lose from them.
Liberalism has been able to endure only in Western Europe and in America. In Central and Eastern Europe, after flourishing briefly, it was displaced again; its democratic program still lives on there only in the programs and more rarely in the deeds of the socialist parties. State practice has gradually perverted the pacifistic nationality principle of liberalism into its opposite, into the militant, imperialistic nationality principle of oppression. It has set up a new ideal that claims a value of its own, that of the sheer numerical size of the nation.
From the cosmopolitan standpoint, one must describe the splitting of mankind into different peoples as a circumstance that causes much trouble and costs. Much labor is spent on learning foreign languages and is wasted on translations. All cultural progress would make its way more easily, every contact between peoples would proceed better, if there were only one language. Even one who appreciates the immeasurable cultural value of diversity of material and intellectual arrangements and of the development of particular individual and national characters must admit this and must not deny that the progress of mankind would be made quite extraordinarily more difficult if there did not exist, besides the small nations numbering only a few hundred thousand or a few million souls, larger nations also.
But even the individual can experience the inconvenience of the multiplicity of languages. He notes it when he travels abroad, when he reads foreign writings, or when he wants to speak with his fellow men or write for them. The ordinary man may not care whether his nation is numerically larger or smaller, but for the intellectual worker this is of the greatest significance. For "for him language is more than a mere means of understanding in social contacts; it is for him one of his chief tools, indeed often his only tool, and one that he can scarcely change."Cf. Kautsky, Nationalität und Internationalität (Stuttgart: 1908), p. 19; also Paul Rohrbach, Der deutsche Gedanke in der Welt (Dusseldorf and Leipzig: Karl Robert Langewiesche Verlag, 1912), copies 108 to 112 thousand, p. 13. It is decisive for the success of literary work whether the author can make himself directly understood by a larger or a smaller number of persons. No one, therefore, desires a large size for his own nation more ardently than the poet and the scholarly writer, the intellectual leaders of nations. It is easy to understand why they may be enthusiastic about size. But that alone is far from explaining the popularity of this ideal.
For these leaders cannot in the long run even recommend any goals to the nation that the nation has not chosen itself. And there are still other ways to broaden the public for writers; the education of the people can be broadened, creating as many more readers and hearers as through diffusion of the national language abroad. The Scandinavian nations have trod this path. They seek national conquests not abroad but at home.
That the national state could become imperialistic, that, neglecting older principles, it could see a goal of its policy first in maintaining and then in increasing the number of members of the nation, even at the cost of the right of self-determination of individuals and of entire peoples and parts of peoples—for that development, circumstances were decisive that were foreign to the liberalism that had originated in the West and foreign to its pacifistic nationality principle. What was decisive was the fact that the peoples in the East do not have fully distinct areas of settlement but rather live locally mingled in broad territories, as well as the further fact that such mixing of peoples keeps occurring afresh through the migration of peoples. These two problems have brought militant or imperialistic nationalism to maturity. It is of German origin, for the problems out of which it arose first came onto the historical scene when liberalism reached German soil. But it has by no means remained limited to Germany; all peoples in a position to know that these circumstances are subjecting some of their fellow nationals to national alienation have followed the German people on the same path or will do so if history does not first find another solution to the problem.
Every observation of the problems to which we now turn must start from the fact that the conditions under which people live on particular parts of the earth's surface are different. We would best recognize the significance of this fact by trying to disregard it. If the conditions of life were the same everywhere on the earth's surface, then on the whole there would be no incentive for individuals and for peoples to change the places where they live.One could object that even if the conditions of life were everywhere the same, there would have to be migrations when one people grew in size more rapidly than others, for then migrations would have to take place out of the more densely settled territories into the more thinly settled ones. The Malthusian law entitles us to assume, however, that growth of population also depends on the natural conditions of life, so that merely from the assumption of the same external conditions of life there follows equality of increase in population.
That the conditions of life are unequal, however, brings it about that—to use Ségur's formulation—the history of mankind is the striving of peoples to progress from living in worse territories to better ones. World history is the history of national migrations.
National migrations take place either in forcible military form or in peaceful forms. The military form used to be the predominant one. The Goths, Vandals, Lombards, Normans, Huns, Avars, and Tartars seized their new homes with force and exterminated, drove away, or subjugated the local populations. Then there were two classes of different nationality in the country, the masters and the subjugated, which not only confronted each other as political and social classes but also were foreign to each other in ancestry, culture, and language. In the course of time these national contrasts disappeared, either because the conquerors were ethnically absorbed into the conquered or because the subjugated groups became assimilated to the victors. It has been centuries since this process took place in Spain and Italy, in Gaul, and in England.
In Eastern Europe there are still broad territories where this assimilation process has not begun at all or is only just beginning. Between the Baltic barons and their Estonian and Latvian tenants, between the Magyar or Magyarized nobles of Hungary and the Slavic or Rumanian peasants and farm workers, between the German townspeople of the Moravian cities and the Czech proletarians, between the Italian landlords of Dalmatia and the Slavic peasants and farm hands, the deep gap of national differences yawns even today.
The doctrine of the modern state and modern freedom that was developed in Western Europe knows nothing of these conditions. The problem of nationally mixed populations does not exist for it. For it, the formation of nations is a completed historical process. Frenchmen and Englishman today no longer take any foreign components into their European homelands; they live in compact territories of settlement. If individual foreigners do come to them, then they are easily and painlessly assimilated. No frictions between nationalities could arise from applying the nationality principle on English and French soil in Europe (but things are different in the colonies and in the United States). And so the opinion could also arise that the full application of the nationality principle could assure eternal peace. For since, according to the liberal view, wars of course arise only through kings' lust for conquest, there can be no more war once every people is constituted as a separate state. The older nationality principle is peaceful; it wants no war between peoples and believes that no reason for one exists.
Then it is suddenly discovered that the world does not show the same face everywhere as on the Thames and on the Seine. The movements of the year 1848 first lifted the veil that despotism had spread over the mixture of peoples in the empire of the Habsburgs; the revolutionary movements that later broke out in Russia, in Macedonia and Albania, in Persia and China, revealed the same problems there also. As long as the absolutism of the princely state had oppressed all in the same way, these problems could not be recognized. Now, however, scarcely as the struggle for freedom is beginning, they loom menacingly.Cf. Bernatzik, Die Ausgestaltung des Nationalgefühls im 19. Jahrhundert (Hanover: 1912), p. 24.
It seemed obvious to work for their solution with the traditional means of the Western doctrine of freedom. The majority principle, whether applied in the form of a referendum or in some other way, was considered suitable for solving all difficulties. That is democracy's answer. But here, was such a solution thinkable and possible at all? Could it have established peace here?
The basic idea of liberalism and of democracy is the harmony of interests of all sections of a nation and then the harmony of interests of all nations. Since the rightly understood interest of all strata of the population leads to the same political goals and demands, the decision on political questions can be left to the vote of the entire people. It may be that the majority errs. But only through errors that it itself has committed and whose consequences it itself suffers can a people achieve insight and can it become politically mature. Errors once committed will not be repeated; people will recognize where the best in truth is to be found. Liberal theory denies that there are special interests of particular classes or groups opposing the common good. It can therefore see only justice in the decisions of the majority; for the errors that were committed revenge themselves on all, both on those who had supported them and on the outvoted minority, which also must pay for not having understood how to win the majority over to its side.
As soon, however, as one admits the possibility and even the necessity of genuinely opposed interests, the democratic principle also has lost its validity as a "Just" principle. If Marxism and Social Democracy see an irreconcilable opposition of conflicting class interests everywhere, then they must, consistently, also reject the democratic principle. This has long been overlooked, since Marxism, precisely among those two nations among whom it had been able to gain the largest number of adherents, the Germans and Russians, has pursued not only socialist but also democratic goals. But that is only a matter of historical accident, the consequence of quite particular circumstances coming together. The Marxists fought for the right to vote, freedom of the press, and the right to form associations and assemblies as long as they were not the ruling party; where they came to power they did nothing more quickly than set these freedoms aside.Cf. Bucharin, Das Programm der Kommunisten (Bolschewiki) (Vienna: 1919), pp. 23 ff. That quite coincides with the behavior of the Church, which behaves democratically wherever others rule but, where it itself rules, wants nothing of democracy. A majority decision can never be "Just" for the Marxists as it is for liberalism; for them it is always only the expression of the will of a particular class. Even seen from this angle alone, therefore, socialism and democracy are irreconcilable contraries; the term Social Democrat contains a contradictio in adjecto. For the Marxists, only the triumph of the proletariat, the provisional goal and the end of historical evolution, is good; everything else is bad.
Like the Marxists, the nationalists also deny the doctrine of the harmony of all interests. Between peoples irreconcilable oppositions are said to exist; here one can never let things depend on the decision of the majority if one has the power to oppose it.
Democracy seeks first to solve the political difficulties that impede the establishment of a national state in territories with nationally mixed populations by those means that have proved themselves in nationally unified countries. The majority should decide; the minority should yield to the majority. That shows, however, that it does not see the problem at all, that it does not have any inkling of where the difficulty lies. Yet belief in the correctness and the all-healing power of the majority principle was so strong that people for a long time would not recognize that nothing could be accomplished with it here. The obvious failure was always attributed to other causes. There were writers and politicians who traced the national disorders in Austria to the fact that there still was no democracy in its territory; if the country should become democratically governed, then all friction between its peoples would disappear. Precisely the opposite is true. National struggles can arise only on the soil of freedom; where all peoples are subjugated—as in Austria before March 1848—then there can be no dissension among them.For that reason antidemocratic and churchly writers also recommend the return to the absolutism of the princes and of the Pope as a means of avoiding national struggles. The violence of the struggles between the nationalities grew to the extent that the old Austria approached democracy. They were not ended at all by the dissolution of the state; they are carried on only more bitterly in the new states, where ruling majorities confront national minorities without the mediation of the authoritarian state, which softens much harshness.
To recognize the deeper grounds for the failure of democracy in the nationality struggles of our time, one must first of all strive for clarity about the essence of democratic government.
Democracy is self-determination, self-government, self-rule. In democracy, too, the citizen submits to laws and obeys state authorities and civil servants. But the laws were enacted with his concurrence; the bearers of official power got into office with his indirect or direct concurrence. The laws can be repealed or amended, officeholders can be removed, if the majority of the citizens so wishes. That is the essence of democracy; that is why the citizens in a democracy feel free.
He who is compelled to obey laws on whose enactment he has no influence, he who must endure a government ruling over him in whose formation he can take no part, is, in the political sense, unfree and is politically without rights, even though his personal rights may be protected by law.Frequently, of course, civil rights can also be lost because of political powerlessness. That does not mean that every minority is politically unfree in the democratic state. Minorities can become the majority, and this possibility influences their position and the way that the majority must behave towards them. The majority parties must always take care that their actions do not strengthen the minority and do not offer it the opportunity to come to power. For the thoughts and programs of the minority affect the entire people as a political entity, whether or not they are able to prevail. The minority is the defeated party, but in the struggle of parties it has had the possibility of winning and, as a rule, despite the defeat, it maintains the hope of winning some time later and becoming the majority.
The members of national minorities that do not hold a ruling position by special privilege, are, however, politically unfree. Their political activity can never lead to success, for the means of political influence on their fellow men, the spoken and written word, are bound up with nationality. In the great national political discussions from which political decisions follow, the citizens of foreign nationality stand aside as mute spectators. They are negotiated about along with others, but they do not join in the negotiations. The German in Prague must pay municipal assessments; he too is affected by every decree of the municipality, but he must stand aside when the political struggle rages over control of the municipality. What he wishes and demands in the municipality is a matter of indifference to his Czech fellow citizens. For he has no means of influencing them unless he gives up the special ways of his people, accommodates himself to the Czechs, learns their language, and adopts their way of thinking and feeling. So long, however, as he does not do this, so long as he remains within his circle of inherited speech and culture, he is excluded from all political effectiveness. Although he also may formally, according to the letter of the law, be a citizen with full rights, although he may, because of his social position, even belong to the politically privileged classes, in truth he is politically without rights, a second-class citizen, a pariah. For he is ruled by others without himself having a share in ruling.
The political ideas that cause parties to come and go and states to be created and destroyed are bound up with nationality today just as little as any other cultural phenomenon. Like artistic and scientific ideas, they are the common property of all nations; no single nation can escape their influence. Yet every nation develops currents of ideas in its own special way and assimilates them differently. In every people they encounter another national character and another constellation of conditions. The idea of Romanticism was international, but every nation developed it differently, filled it with a particular content, and made something else out of it. We speak rightly, therefore, of German Romanticism as a particular trend in art that we can contrast with the Romanticism of the French or the Russians. And it is no different with political ideas. Socialism had to become something different in Germany, something different in France, something different in Russia. Everywhere, indeed, it met with a particular way of political thinking and feeling, with another social and historical development—in short, with other people and other conditions.
We now recognize the reason why national minorities that hold political power because of special privileges hang on to these privileges and to the ruling position bound up with them incomparably more tenaciously than do other privileged groups. A ruling class not of different nationality from the ruled still retains, even when overthrown, a greater political influence than would accrue to it according to the number of its members among the new rulers. It retains at least the possibility, under the new conditions, of fighting for power anew as the opposition party, of defending its political ideas, and of leading to new victories. The English Tories, as often as they were deprived of their privileges by a reform, have still celebrated a political resurrection every time. The French dynasties have not lost through dethronement all prospect of regaining the crown. They were able to form mighty parties that worked for a restoration; and if their efforts did not lead to success during the Third Republic, this was due to the intransigence and personal wretchedness of the pretender at the time and not to any fact that such efforts were quite hopeless. Rulers of foreign nationality, however, once they have left the scene, can never get power back unless they have the help of foreign arms; and, what is much more important, as soon as they no longer hold power, they not only are deprived of their privileges but are completely powerless politically. Not only are they unable to maintain influence corresponding to their numbers, but, as members of a foreign nationality, they no longer have any possibility at all of even being politically active or of having influence on others. For the political thoughts that now become dominant belong to a cultural circle that is foreign to them and are thought, spoken, and written in a language that they do not understand; they themselves, however, are not in a position to make their political views felt in this environment. From being rulers they become not citizens with equal rights but powerless pariahs who have no say when matters concerning them are being debated. If—without regard to theoretical and antiquarian misgivings that might be raised against it—we want to see a principle of modern democracy in the old postulate of the estates, nil de nobis sine nobis [nothing concerning us without us], we also see that it cannot be implemented for national minorities. They are governed; they do not have a hand in governing; they are politically subjugated. Their "treatment" by the national majority may be quite a good one; they may also remain in possession of numerous nonpolitical and even a few political privileges; yet they retain the feeling of being oppressed just because they are "treated" after all and may not take part.
The large German landowners in those Austrian crown lands that had a Slavic majority in the legislature felt themselves—despite their electoral privileges, which assured them a special representation in the provincial chamber and in the provincial committee—nevertheless oppressed, since they were faced by a majority whose political thinking they could not influence. For the same reason, German officeholders and house owners who possessed an electoral privilege that assured them a third of the seats on the municipal council in a municipality with a Slavic council majority still felt oppressed.
No less politically powerless are national minorities that never have possessed political dominance. This needs to be especially mentioned just as little of members of historyless nations who have lived as political inferiors for centuries under foreign rulers as of immigrants into colonial settlement areas overseas. Accidental circumstances may temporarily give them the possibility of political influence; in the long run this is out of the question. If they do not want to remain politically without influence, then they must adapt their political thinking to that of their environment; they must give up their special national characteristics and their language.
In polyglot territories, therefore, the introduction of a democratic constitution does not mean the same thing at all as introduction of democratic autonomy. Majority rule signifies something quite different here than in nationally uniform territories; here, for a part of the people, it is not popular rule but foreign rule.On the point that the majority principle appears applicable only where it is a question of settlement of differences within a homogeneous mass, cf. Simmel, Soziologie (Leipzig: 1908), pp. 192 ff. If national minorities oppose democratic arrangements, if, according to circumstances, they prefer princely absolutism, an authoritarian regime, or an oligarchic constitution, they do so because they well know that democracy means the same thing for them as subjugation under the rule of others. That holds true everywhere and also, so far, for all times. The often cited example of Switzerland is not relevant here. Swiss democratic local administration is possible without friction under the nationality circumstances of Switzerland only because internal migrations between the individual nationalities have long since had no significance there. If, say, migrations of French Swiss to the east should lead to stronger foreign national minorities in the German cantons, then the national peace of Switzerland would already have vanished long ago.
For all friends of democracy, for all those who see the political remedy only in the self-administration and self-government of a people, this must cause severe distress. The German democrats of Austria were in this position, above all, as well as the few honorable democrats that the Hungarian people counted in their midst. It was they who were looking for new forms of democracy to make democracy possible even in polyglot countries.
Furthermore, people tend to recommend proportional representation as a remedy for the defects of the majority system. For nationally mixed territories, however, proportional representation is no way out of these difficulties. A system of proportional representation is applicable only to elections but not also to decisions about acts of legislation, administration, and jurisprudence. Proportional representation makes it impossible, on the one hand, that one party, through gerrymandering, be represented less in the representative body than corresponds to its strength; on the other hand it assures the minority of representation in the bodies of elected representatives and so offers it the possibility of exercising a check on the majority and of making its own voice heard. All that does not operate for a national minority. Being an actual minority in the people, it can never hope to obtain a majority in the representative body through proportional representation. There remains to it, therefore, only the second significance of proportional representation. But the mere possibility of having some seats in the representative body is of little value for the national minority. Even when its representatives can sit in the representative body and take a part in deliberations, speeches, and decisions, the national minority still remains excluded from collaboration in political life. A minority is politically collaborating in the true sense of the word only if its voice is heard because it has prospects of coming to the helm some time. For a national minority, however, that is ruled out. Thus the activity of its deputies remains limited from the beginning to fruitless criticism. The words that they speak have no significance because they can lead to no political goal. In voting, their votes can be decisive only when nationally unimportant questions are on the agenda; in all other questions—and these are most of them—the national majority stands against it united like a phalanx. To realize this, one need only think of the roles that the Danes, Poles, and Alsatians played in the German Reichstag and the Croats in the Hungarian parliament or of the position that the Germans had in the Bohemian provincial legislature. If things were different in the Austrian Chamber of Deputies, if here, because no nation had an absolute majority, it was possible for the "delegation" of every single nation to become part of the majority, well, this proves nothing to the contrary because, after all, Austria was an authoritarian state in which not parliament but the government held all the cards. Precisely the Austrian Chamber of Deputies, in which the formation of parties was conditioned above all by tensions among nationalities, has shown how slightly a parliamentary collaboration of different peoples is possible.
It is therefore understandable why the principle of proportional representation also cannot be regarded as a usable means of overcoming the difficulties that arise from different nations living together. Where it has been introduced, experience has shown that it is admittedly quite usable for certain purposes, that it overcomes many frictions, but that it is far from being the remedy for national controversies that well-meaning utopians have considered it.
In Austria, the classical land of the nationality struggle, the proposal emerged in the first decade of the twentieth century for overcoming national difficulties by introducing national autonomy on the basis of the personality principle. These proposals, which came from the Social Democrats Karl RennerCf. Renner, Das Selbstbestimmungsrecht der Nationen in seiner Anwendung auf Österreich (Vienna: 1918), and numerous older writings of the same author. and Otto Bauer,Cf. Bauer, Nationalitätenfrage, loc. cit., pp. 324 ff. envisaged transformation of the Austrian authoritarian state into a democratic people's state. Legislation and administration of the entire state and the local administration of the autonomous areas should not extend to nationally disputed affairs; these should be administered in the local administrations by the members of the nations themselves, organized according to the personality principle, over whom, then, there should stand national councils as highest authorities of the individual nations. The educational system and the promotion of art and science, above all, were to be regarded as national issues.
Here we are not speaking of the significance that the program of national autonomy had in the historical development of the nationality program of the German-Austrians or of the basic presuppositions from which it proceeded. Here we must face only the question whether this program could have provided a satisfying solution to the fundamental difficulty that arises when different peoples live together. We can only reply "no" to this question. As before, those facts would still remain that exclude a national minority from participation in power and that, despite the letter of the law, which calls on them to join in governing, allow them to be not co-rulers but only the ruled. It is quite unthinkable from the start to split up all matters by nationality. It is impossible in a nationality mixed city to create two police forces, perhaps a German and a Czech, each of which could take action only against members of its own nationality. It is impossible to create a double railroad administration in a bilingual country, one under the control only of Germans, a second only of Czechs. If that is not done, however, then the above-mentioned difficulties remain. The situation is not as though handling political problems directly connected with language was all that caused national difficulties; rather, these difficulties permeate all of public life.
National autonomy would have offered national minorities the possibility of administering and arranging their school systems independently. They had this possibility to a certain degree, however, even without the implementation of this program, though at their own cost. National autonomy would have allowed them a special right of taxation for these purposes and, on the other hand, relieved them from contributing to the schools of other nationalities. That alone, however, is not worth as much as the authors of the program of national autonomy thought.
The position that the national minority would have obtained from the grant of national autonomy would have approximated the position of those privileged colonies of foreigners that the estate system established and that the princely state then established on models bequeathed by the estate system, perhaps like the position of the Saxons in Transylvania. This would not have been satisfactory in modern democracy. Generally speaking, the whole line of thought about national autonomy looks back more to the medieval conditions of the estate system than to the conditions of modern democracy. Given the impossibility of creating modern democracy in a multinational state, its champions, when as democrats they rejected the princely state, necessarily had to turn back to the ideals of the estate system.
If one looks for a model of national autonomy in certain problems of organization of minority churches, then this is only quite superficially a correct comparison. It is overlooked that since the force of faith no longer can, as it once could, determine the entire life style of the individual, there no longer exists between members of different churches today that impossibility of political understanding that does indeed exist between different peoples because of differences of language and the resulting differences in styles of thinking and of outlook.
The personality principle can bring no solution to the difficulties of our problem because it indulges in extreme self-deception about the scope of the questions at issue. If only language questions, so called in the narrower sense, were the object of the national struggle, then one could think of paving the way for peace between peoples by special treatment of those questions. But the national struggle is not at all limited to schools and educational institutions and to the official language of the courts and authorities. It embraces all of political life, even all that which, as Renner and many others with him believe, ties a unifying bond around the nations, the so-called economic aspect. It is astonishing that this could be misunderstood precisely by Austrians, who, after all, were bound to see every day how everything became a national bone of contention—road construction and tax reforms, bank charters and public purveyances, customs tariffs and expositions, factories and hospitals. And purely political questions above all. Every foreign-policy question is the object of national struggle in the multinational state, and never did this show up more clearly in Austria-Hungary than during the World War. Every report from the battlefield was received differently by the different nationalities: some celebrated when others grieved; some felt downcast when others were happy. All these questions are controversial by nationality; and if they are not included in the solution of the nationality question, then the solution just is not complete.
The problem that the national question poses is precisely that the state and administration are inevitably constructed on a territorial basis in the present stage of economic development and so inevitably must embrace the members of different nationalities in territories of mixed language.
The great multinational states, Russia, Austria, Hungary, and Turkey, have now fallen apart. But that too is no solution to the constitutional problem in polyglot territories. The dissolution of the multinational state gets rid of many superfluous complications because it separates territories from each other that are compactly inhabited by the members of one people.The abuse of the compactly settled territories of the Germans in Bohemia is disregarded here; the national question would he soluble there, only people do not want to solve it. The dissolution of Austria solves the national question for the interior of Bohemia, for Western Galicia, and for the greater part of Carniola. But, as before, it remains a problem in the isolated German cities and villages that are sprinkled in the Czech-language territory of Bohemia, in Moravia, in Eastern Galicia, in the Gottschee [Kocevje] district, etc.
In polyglot territories the application of the majority principle leads not to the freedom of all but to the rule of the majority over the minority. The situation is made no better by the fact that the majority, in inner recognition of its injustice, shows itself anxious to assimilate the minorities nationally by compulsion. That attitude of course also implies—as a keen writer has noted—an expression of the nationality principle, an acknowledgment of the demand that state boundaries should not stretch beyond the boundaries of peoples.Cf. Kjellén, loc. cit., p. 131. Still the tormented peoples wait for the Theseus who shall overcome this modern Procrustes.
A way must be found out of these difficulties, however. It is not a question only of small minorities (for example, remnants of migrations that have long since come to a standstill), as one would tend to think if one assessed this situation only from the point of view of a few German cities in Moravia or Hungary or of the Italian colonies on the east coast of the Adriatic. The great present-day migrations of peoples have given all these questions a heightened importance. Every day new migrations create new polyglot territories; and the problem that a few decades ago was visible only in Austria has long since become a world problem, although in another form.
The catastrophe of the World War has shown to what abyss that problem has led mankind. And all the streams of blood that have flowed in this war have not brought it a hairsbreadth closer to solution. In polyglot territories, democracy seems like oppression to the minority. Where only the choice is open either oneself to suppress or to be suppressed, one easily decides for the former. Liberal nationalism gives way to militant antidemocratic imperialism.
B. The Migration Problem and NationalismThe variety of conditions of life in the individual parts of the earth's surface touches off migrations of individual persons and entire peoples. If the world economy were managed by the decree of an authority that surveyed everything and ordered what was most appropriate, then only the absolutely most favorable conditions of production would be utilized. Nowhere would a less productive mine or a less productive field be in use if more productive mines or fields lay unused elsewhere. Before a less productive condition of production is put to use, one must always first consider whether there do not exist more productive ones. Less productive conditions of production that might be in use would be discarded at once if others should be found whose yield would be so much greater than an increased yield would be attained from discarding the old and introducing the new sources of production, even despite the loss to be expected because the immovably invested capital would become useless. Since the workers have to settle in places of production or in their immediate neighborhood, the consequences for the conditions of settlement follow automatically.
The natural conditions of production are by no means unchangeable. In the course of history they have undergone great changes. Changes can take place in nature itself, for example, through changes of climate, volcanic catastrophes, and other elemental events. Then there are the changes that occur from human activity, for example, exhaustion of mines and of the fertility of the soil. More important, however, are changes in human knowledge, which overturn traditional views about the productivity of the factors of production. New needs are awakened, either from the development of the human character or because the discovery of new materials or forces has stimulated them. Previously unknown production possibilities are discovered, either through the discovery of hitherto unknown natural forces and putting them to use or through the progress of productive techniques, which makes it possible to tap natural forces that had been unusable or less usable before. It follows that it would not be enough for the director of the world economy to determine the locations of production once and for all; he would continually have to make changes in them according to changing circumstances, and every change would have to go hand in hand with a resettlement of workers.
What would happen under ideal world socialism by order of the general director of the world economy is achieved in the ideal of the free world economy by the reign of competition. The less productive enterprises succumb to the competition of the more productive. Primary production and industry migrate from places of lower-yielding conditions of production to places of higher-yielding ones; and with them migrate capital, so far as it is mobile, and workers. The result for the movement of peoples is thus the same in either case: the stream of population goes from the less fruitful territories to the more fruitful.
That is the basic law of migrations of persons and peoples. It holds true in the same degree for the socialist and the free world economy; it is identical with the law under whose operation the distribution of population takes place in every smaller territory cut off from the outside world. It always holds true, even though its effectiveness may be disturbed in greater or lesser degree by extra-economic factors also, perhaps by ignorance of conditions, by sentiments that we are accustomed to calling love of home, or by intervention of an external power that hinders migration.
The law of migration and location makes it possible for us to form an exact concept of relative overpopulation. The world, or an isolated country from which emigration is impossible, is to be regarded as overpopulated in the absolute sense when the optimum of population—that point beyond which an increase in the number of people would mean not an increase but a decrease of welfare—is exceeded.Compare Wicksell, Vorlesungen über Nationalökonomie auf Grundlage des Marginalprinzipes (Jena: 1913), vol. 1, p. 50. A country is relatively overpopulated where, because of the large size of the population, work must go on under less favorable conditions of production than in other countries, so that, ceteris paribus, the same application of capital and labor yields a smaller output there. With complete mobility of persons and goods, relatively overpopulated territories would give up their population surplus to other territories until this disproportion had disappeared.
The principles of freedom, which have gradually been gaining ground everywhere since the eighteenth century, gave people freedom of movement. The growing security of law facilitates capital movements, improvement of transportation facilities, and the location of production away from the points of consumption. That coincides—not by chance—with a great revolution in the entire technique of production and with drawing the entire earth's surface into world trade, The world is gradually approaching a condition of free movement of persons and capital goods. A great migration movement sets in. Many millions left Europe in the nineteenth century to find new homes in the New World, and sometimes in the Old World also. No less important is the migration of the means of production: capital export. Capital and labor move from territories of less favorable conditions of production to territories of more favorable conditions of production.
Now, however—as a result of a historical process of the past—the earth is divided up among nations. Each nation possesses definite territories that are inhabited exclusively or predominantly by its own members. Only a part of these territories has just that population which, in conformity with the conditions of production, it would also have under complete freedom of movement, so that neither an inflow or an outflow of people would take place. The remaining territories are settled in such a way that under complete freedom of movement they would have either to give up or to gain population.
Migrations thus bring members of some nations into the territories of other nations. That gives rise to particularly characteristic conflicts between peoples.
In that connection we are not thinking of conflicts arising out of the purely economic side effects of migrations. In territories of emigration, emigration drives up the wage rate; in territories of immigration, immigration depresses the wage rate. That is a necessary side effect of migration of workers and not, say, as Social Democratic doctrine wants to have believed, an accidental consequence of the fact that the emigrants stem from territories of low culture and low wages. The motive of the emigrant is precisely the fact that in his old homeland, because of its relative overpopulation, he can get no higher wage. If this reason were absent, if there were no difference in the productivity of labor between Galicia and Massachusetts, then no Galician would emigrate. If one wants to raise the European territories of emigration to the level of development of the eastern states of the Union, then there is just nothing else to do than let the emigration proceed to the point that the relative overpopulation of the former and the relative underpopulation of the latter have disappeared. Clearly, American workers view this immigration just as unhappily as European employers view the emigration. Indeed, the Junker east of the Elbe thinks no differently about the flight of workers from the land when his tenant goes to West Germany than when he goes to America; the unionized worker of the Rhineland is disturbed by immigration from the lands east of the Elbe no less than members of a Pennsylvania trade union. But that in the one case the possibility exists of forbidding the emigration and immigration, or at least of impeding it, while in the other case such measures could be thought of by at most a few eccentrics born a couple of centuries too late, is only to be attributed to the fact that, besides damage to the interests of individuals in the case of international migration, other interests also are damaged.
Emigrants who settle in previously uninhabited territories can preserve and further cultivate their national character in the new home also. Spatial separation can lead over time to the emigrants' developing a new independent nationality. Such development of independence was in any case easier in times when transport and communication still had to struggle with great difficulties and when the written transmission of the national culture was greatly impeded by the slight diffusion of literacy. With the present-day development of the means of transportation and communication, with the relatively high degree of popular education and the wide dissemination of the monuments of national literature, such national splitting off and the formation of new national cultures is far more difficult. The trend of the times works rather toward convergence of the cultures of peoples living far apart, if not even toward a blending of nations. The bond of common language and culture that links England with its far-away dominions and with the United States of America, which now will soon have been politically independent for one and a half centuries, has become not looser but closer. A people that today sends out colonists into an uninhabited territory can count on the emigrants' keeping their national character.
If, however, the emigration is directed to already inhabited territories, then various possibilities are conceivable. It may be that the immigrants come in such masses or possess such superiority through their physical, moral, or intellectual constitution that they either entirely displace the original inhabitants, as the Indians of the prairies were displaced by the palefaces and were driven to destruction, or that they at least achieve domination in their new home, as would perhaps have been the case with the Chinese in the western states of the Union if legislation had not restricted their immigration in time or as could be the case in the future with the European immigrants into North America and Australia. Things are different if immigration takes place into a country whose inhabitants, because of their numbers and their cultural and political organization, are superior to the immigrants. Then it is the immigrants who sooner or later must take on the nationality of the majority.The assimilation is furthered if the immigrants come not all at once but little by little, so that the assimilation process among the early immigrants is already completed or at least already under way when the newcomers arrive.
The great discoveries had made the whole surface of the earth known to Europeans since the end of the Middle Ages. Now all traditional views about the inhabitability of the earth gradually had to change; the New World, with its excellent conditions of production, was bound to attract settlers from old and now relatively overpopulated Europe. At first, of course, it was only adventurers and political malcontents who moved far away to find a new home. Reports of their successes then drew others after them, at first only a few, then ever more and more, until finally in the nineteenth century, after improvement of the means of ocean transportation and the removal of limitations on freedom of movement in Europe, millions went migrating.
Here is not the place to investigate how it happened that all colonial land suitable for settlement by white Europeans was colonized by the English, Spanish, and Portuguese. Here it is enough for us to recognize the outcome that the best parts of the earth's surface inhabitable by whites thereby became English national property and that, in addition, the Spaniards and Portuguese in America, and scarcely also the Dutch in South Africa and the French in Canada, came onto the scene. And this outcome is extremely important. It made the Anglo-Saxons the most numerous nation among the white civilized peoples. This, coupled with the circumstance that the English possess the largest merchant fleet in the world and that they administer the best territories of the tropics as political rulers, had led to the fact that the world today wears an English face. The English language and English culture have impressed their stamp on our times.
For England this means above all that Englishmen who leave the island of Great Britain because of its relative overpopulation can almost always settle in territories where the English language and English culture prevail. When a Briton goes abroad, whether to Canada or to the United States or to South Africa or to Australia, he does cease to be a Briton, but he does not cease to be an Anglo Saxon. It is true that the English until quite recently, did not appreciate this circumstance, that they paid no special attention to emigration, that they faced the dominions and the United States indifferently, coldly, and sometimes even with hostility, and that only under the influence of Germany's efforts directed against them did they begin to seek closer economic and political relations first with the dominions and then with the United States. It is just as true that the other nations, which had been less successful in acquiring overseas possessions, also long paid just as little attention to this development of affairs as the English themselves and that they envied the English more for their rich tropical colonies, for their trade and seaport colonies, and for shipping, industry, and trade than for possession of territories of settlement, which were less appreciated.
Only as the stream of emigrants, flowing abundantly at first only from England, also came to be fed more from other European territories did people begin to concern themselves with the national fate of the emigrants. People noticed that while the English emigrants could maintain their mother tongue and national culture, home customs, and usage's of their fathers in their new homes, the other European emigrants overseas gradually ceased to be Dutchmen, Swedes, Norwegians, etc. and adapted themselves to the nationality of their environment. People saw that this alienation was unavoidable, that it occurred quicker here, slower there, but that it never failed to occur and that the emigrants—at the latest in the third generation, most already in the second, and not seldom even in the first—became members of Anglo-Saxon culture. The nationalists who dreamed about the size of their nation viewed this with sorrow, but it seemed to them that nothing could be done about it. They founded associations that endowed schools, libraries, and newspapers for the colonists to check the emigrants' national alienation; but what they achieved thereby was not much. People had no illusions about the fact that the reasons for emigration were of compelling economic nature and that the emigration as such could not be impeded. Only a poet like Freiligrath could ask the emigrants:
Oh sprecht! warum zogt ihr von dannen?Das Neckartal hat Wein und Korn.[Oh speak! Why are you moving away?The Neckar Valley has wine and grain.]The statesman and the economist well knew that there were more wine and more grain overseas than at home.
As late as the beginning of the nineteenth century people could scarcely suspect the significance of this problem. Ricardo's theory of foreign trade still started with the assumption that the free mobility of capital and labor exists only within the boundaries of a country. In the home country all local differences in the profit rate and the wage rate are evened out by movements of capital and workers. Not so for differences between several countries. Lacking there was that free mobility which would ultimately be bound to cause capital and labor to flow from the country offering less favorable conditions of production to the country of more favorable conditions. A range of emotional factors ("which I should be sorry to see weakened," the patriot and politician Ricardo interjects here into the exposition of the theorist) resists that. Capital and workers remain in the country, even though they thereby suffer a loss of income, and turn to those branches of production having, while not absolutely, still relatively more favorable conditions.Cf. Ricardo, Principles of Political Economy and Taxation in The Works of D. Ricardo, edited by McCulloch, second edition (London: 1852), pp. 76 ff. The basis of the free-trade theory is thus the fact that noneconomic reasons keep capital and labor from moving across national boundaries, even if this seems advantageous for economic motives. This may have been true on the whole in the days of Ricardo, but for a long time it has no longer been true.
But if the basic assumption of Ricardo's doctrine of the effects of free trade falls, then this doctrine must also fall along with it. There is no basis for seeking a fundamental difference between the effects of freedom in domestic trade and in foreign trade. If the mobility of capital and labor internally differs only in degree from their mobility between countries, then economic theory can also make no fundamental distinction between the two. Rather, it must necessarily reach the conclusion that the tendency inheres in free trade to draw labor forces and capital to the locations of the most favorable natural conditions of production without regard to political and national boundaries. In the last analysis, therefore, unrestricted free trade must lead to a change in the conditions of settlement on the entire surface of the earth; from the countries with less favorable conditions of production capital and labor flow to the countries with more favorable conditions of production.
The free-trade theory modified in this way, just like the doctrine of Ricardo, also reaches the conclusion that from the purely economic point of view nothing speaks against free trade and everything against protectionism. But since it leads to quite different results regarding the effect of free trade on locational shifts of capital and labor, it presents a quite changed point of departure for testing the extraeconomic reasons for and against the protective system.
If one sticks with the Ricardian assumption that capital and labor are not impelled to move abroad even by more favorable conditions of production, then it turns out that the same applications of capital and labor lead to different results in the individual countries. There are richer and poorer nations. Trade-policy interventions can change nothing about that. They cannot make the poorer nations richer. The protectionism of the richer nations, however, appears completely senseless. If one drops that Ricardian assumption, then one sees a tendency prevail over the entire earth toward equalization of the rate of return on capital and of the wage of labor. Then, finally, there no longer are poorer and richer nations but only more densely and less densely settled and cultivated countries.
There can be no doubt that, even then, Ricardo and his school would have advocated nothing other than the policy of free trade, since they could not have avoided recognizing that protective tariffs are not the way out of these difficulties. For England, however, this problem never existed. Its rich holdings of territories for settlement lets emigration appear a matter of national indifference to it. The British emigrants can maintain their national character even far away; they cease to be Englishmen and Scots, but they remain Anglo-Saxons, and the war showed anew what that means politically.
For the German people, though, things are different. For reasons that go far back, the German nation has no territories for settlement at its disposal where emigrants can maintain their German character. Germany is relatively overpopulated; it must sooner or later yield up its surplus population, and if for some reason or other it could not or would not do this, then the standard of living of the Germans would have to sink to a lower level. If, however, Germans do emigrate, then they lose their national character, if not in the first generation, then in the second, third, or at the latest the fourth.
That was the problem that German policy saw posed for it after the establishment of the empire of the Hohenzollerns. The German people faced one of those great decisions that a nation does not have to make every century. It was fateful that the solution to this great problem became urgent before another, no less great, problem was solved, that of the establishment of the German national state. Even only to comprehend a question of this significance and of this historical gravity in its full scope would have required a generation that could decide its fate fearlessly and freely. That, however, was not allowed to the German people of the Great Prussian Reich, the subjects of the twenty-two federated princes. In these questions, also, it did not take its fate into its own hands; it left the most important decision to the generals and diplomats; it followed its leaders blindly without noticing that it was being led to the precipice. The end was defeat.
As early as the beginning of the thirties of the nineteenth century, people in Germany had begun to concern themselves with the problem of emigration. Now it was the emigrants themselves who made the unsuccessful attempt to establish a German state in North America; now again it was the Germans at home who sought to take the organization of emigration into their hands. That these efforts could lead to no success is not surprising. How ever could the attempt to establish a new state succeed for the Germans, who in their own country were not even able to transform the pitiable multiplicity of several dozen patrimonial principalities, with their enclaves, their hereditary affiliations, and their family laws, into a national state? How could German men have found the strength to assert themselves out there in the wide world among Yankees and Creoles when at home they were not even able to put an end to the farcical rule of the miniature thrones of the Reuss and Schwarzburg princes? Where was the German subject to get the political insight that politics on the grand scale requires when at home it was forbidden to him "to judge the actions of the supreme state authority by the measure of his limited intellect?"Cf. the decree of 15 January 1838 of the Prussian Minister of the Interior, v. Rochow, reprinted in Prince-Smith's Gesammelte Schriften (Berlin: 1880), vol. 3, p. 230.
In the middle of the seventies of the last century the problem of emigration had acquired such significance that its solution could no longer be dragged out. The decisive thing was not that emigration was steadily growing. According to data of the United States, the immigration of Germans there (not counting Austrians) had risen from 6,761 in the decade 1821 to 1830 to 822,007 in the decade 1861 to 1870; then, right after 1874, an—although at first only temporary—drop-off in the German emigration to the United States occurred. Far more important was that it was becoming ever clearer that the conditions of production in Germany for agriculture and for the most important branches of industry were so unfavorable that competition with foreign countries was no longer possible. The extension of the railroad net in the countries of Eastern Europe and the development of ocean and river shipping made it possible to import agricultural products into Germany in such quantity and at such low prices that the continued existence of the bulk of German agricultural units was most seriously threatened. Already from the fifties Germany was a rye-importing country; since 1875 it has also been a wheat-importing country. A number of branches of industry, particularly the iron industry, also had to struggle with growing difficulties.
It is clear where the causes lay, even though people of the time may have felt it only vaguely. The superiority of the natural conditions of production of foreign countries made itself all the more strongly evident as the continuing development of means of transportation cheapened freight rates. People did try to explain the lesser competitive capacity of German production in another way; and in that connection, as indeed is generally characteristic of the discussion of problems of economic policy in Germany during the last few decades, people concerned themselves predominantly with nonessential side issues and so quite overlooked the great significance of the principles of the problem.
If people had recognized the fundamental significance of these problems and had grasped the deeper interconnection of things, then they would have had to say that Germany was relatively overpopulated and that to restore a distribution of population over the entire surface of the earth corresponding to the conditions of production, part of the Germans had to emigrate. Whoever did not share misgivings of national policy about a decline in the size of population or even about an end to the growth of population in Germany would have been content with this judgment. In any case he would have consoled himself with the fact that individual branches of production would move abroad partially in such a way that German entrepreneurs would establish enterprises abroad so that the consumption of the entrepreneurs' incomes would take place in the German Reich and would thereby expand the food-supply margin of the German people.
The patriot who sees his ideal in a large number of people would have had to recognize that his goal could not be reached without reduction of the standard of living of the nation unless the possibility were created, through acquiring colonies for settlement, of retaining part of the surplus population within the nation despite its emigration from the mother country. He would then have had to turn all his strength to acquisition of land for settlement. In the middle of the seventies of the nineteenth century, and even a decade longer, conditions were not at all yet such that it would not have been possible to reach this goal. In any case it could have been reached only in association with England. England was at that time and for long afterwards still troubled by a great concern, by anxiety that its Indian possession could be seriously threatened by Russia, For that reason it needed an ally that would have been in a position to hold Russia in check. Only the German Reich might have done that. Germany was strong enough to guarantee England the possession of India; Russia could never have thought of attacking India as long as it was not sure of Germany on its western border.To rule out any misunderstanding, let it be expressly noted that there is no intention here of taking a position on the question that was much discussed in Germany whether the "western" or "eastern" orientation for German policy was to be preferred. Both orientations were imperialist-minded, i.e., the question ran whether Germany should attack Russia or England. Germany should have allied itself with England to stand by it in a defensive war against Russia. There is no doubt, however, that then this war would never have occurred. England could have given a great compensation for this guarantee, and surely would have given it. Perhaps it would have let Germany have its extensive South African possession, which at that time had only a very thin Anglo-Saxon settlement; perhaps it also would have helped Germany obtain a large territory for settlement in Brazil or Argentina or in western Canada. Whether this was attainable may be doubted after all.But let it be noted that England, until the outbreak of the World War, repeatedly made attempts to have peaceful negotiations with Germany and was ready to buy peace even at the price of giving up some land. But it is certain that if Germany could have attained anything along this line at that time, it could have done so only in association with England. The great Prussian Reich of the Junkers east of the Elbe, however, wanted no alliance with liberal England. For reasons of domestic politics, the Three Emperors' League, the continuation of the Holy Alliance, seemed to it to be the sole suitable association that it could enter into. When this alliance finally showed itself untenable and the German Reich, faced with the choice either of siding with Russia against Austria-Hungary or with Austria-Hungary against Russia, decided for the alliance with Austria, then Bismarck still repeatedly sought to maintain a friendly relationship with Russia. So, then, this opportunity of acquiring a great territory for settlement for Germany remained unused.
Instead of seeking, in association with England, to acquire a colony for settlement, the German Reich made the transition to protective tariffs from 1879 on. As ever at great turning points of policy, here, too, people saw neither the deeper significance of the problem nor the meaning of the new policy being adopted. To the liberals the protective tariff seemed a temporary backsliding into a superseded system. The practitioners of political realism, that hodgepodge of cynicism, lack of conscience, and unvarnished selfishness, evaluated the policy merely from the standpoint of their own interests as an increase in the incomes of landowners and entrepreneurs. The Social Democrats trotted out their faded recollections of Ricardo; as for a deeper knowledge of things, which surely would not have been difficult with the help of this guide, they were hindered by their doctrinaire clinging to Marxist theory. Only much later, and even then only hesitantly, was the great significance grasped that that policy shift had not only for the German people but for all peoples.When Lensch (Drei Jahre Weltrevolution (Berlin: 1917], pp. 28 ff.) designates the shift in trade policy of 1879 as one of the deepest grounds of today's world revolution, then he is certainly to be agreed with, but for quite other reasons than those he adduces. In view of the events that have taken place in the meanwhile, it is no longer worth while to refute his further discussions.
The most remarkable thing about the protective tariff policy of the German Empire is that it lacked any deeper foundation. For the political realist it was sufficiently justified by its finding a majority in the German Reichstag. Any theoretical foundation for the protective tariff theory, however, looked very bad. The appeal to List's theory of an infant-industry tariff just did not hold water. It is no refutation of the free-trade argument to assert that the protective system puts idle productive forces to use. That they do not come into use without protection proves that their use is less productive than that of the productive forces used in their place. The infant industry tariff also cannot be economically justified. Old industries have an advantage over young ones in many respects. But the rise of new industries is to be deemed productive from the overall point of view only when their lesser productivity at the start is at least made up for by greater productivity later. Then, however, the new enterprises are not only productive from the point of view of the whole economy but also privately profitable; they would be brought into existence even without special encouragement. Every newly established firm reckons with such initial costs that should be recovered later. It is untenable to cite, in opposition, the fact that almost all states have supported the rise of industry by protective tariffs and other protectionistic measures. The question remains open whether the development of viable industries would have proceeded even without such encouragement. Within the territories of states, changes of location occur without any external help. In territories that lacked industry before, we see industries arise that not only maintain themselves successfully alongside those of older industrial territories but not seldom drive those quite out of the market.
None of the German tariff rates, moreover, could be called an infant-industry tariff; neither the grain tariffs nor the iron tariffs nor any one of the several hundred other protective tariffs may be given this name. And tariffs other than infant industry tariffs were never advocated by List; he was fundamentally a free-trader.
Moreover, the presentation of a protective-tariff theory in Germany has never once been attempted at all.Schuller, in Schutzzoll und Freihandel (Vienna: 1905), gives a theory of the setting of tariff rates; on his arguments for the protective tariff, cf. Mises, "Vom Ziel der Handelspolitik," Archiv für Sozialwissenschaft und Sozialpolitik, vol. 42, 1916/1917, p. 562, and Philippovich, Grundriss der politischen Ökonomie, vol. 2, 1 st part, seventh ed.(Tübingen: 1914), pp. 359 f. The longwinded and self-contradictory discussions about the necessity of protection for all national labor and of a gap-free tariff cannot lay claim to this name. They do indicate the direction in which reasons for the protective tariff policy had to be sought; they could not be suitable, however—and precisely because they renounced any economic line of thinking in advance and were oriented purely by power politics—for examining the question whether the goals being sought could also really be attained by this means.
Of the arguments of the protective-tariff advocates, we must at first leave aside the military one—or, as people now commonly say, the "war-economy" one—regarding autarky in case of war; that one will be discussed later. All other arguments start from the fact that the natural conditions for great and important branches of production are more unfavorable in Germany than in other territories and that the natural disadvantages must be compensated for by protective tariffs if production is to take place in Germany at all. For agriculture it could only be a question of thereby maintaining the internal market, for industry only of maintaining foreign markets, a goal that could be reached only by dumping by branches of production cartelized under the protection of the tariff. Germany, as a relatively overpopulated country working under more unfavorable conditions than foreign countries in a number of branches of production, had to export either goods or people. It decided for the former. It overlooked the fact, however, that export of goods is possible only if one competes with countries of more favorable conditions of production, that is, if, despite higher costs of production, one delivers just as cheaply as the countries producing at lower costs. That means, however, pressing down workers' wages and the standard of living of the whole people.
For years people in Germany could indulge in extreme illusions about that. To understand this interconnection of things, it would have been necessary to think economically and not in terms of statism and power politics. But some day it was nevertheless bound to impress itself on everyone with irrefutable logic that the protective tariff system was bound to fail in the end. One could deceive oneself about the fact that it was damaging the relative well-being of the German people as long as an absolute growth of national wealth could still be observed. But attentive observers of world economic development could not help but express misgivings about the future development of German foreign trade. What would happen to German commodity exports once an independent industry had become developed in the countries that still formed the market for German industry and had been in a position to produce under more favorable conditions?Cf., out of a large literature, Wagner, Agrar- und Industriestaat, second ed.
From this situation the desire finally arose among the German people for great colonies for settlement and for tropical territories that could supply Germany with raw materials. Because England stood in the way of the realization of these intentions, because England had broad territories at its disposal in which Germans could have settled, and because England possessed great tropical colonies, the desire arose to attack England and defeat it in war. That was the idea that led to construction of the German battle fleet.
England recognized the danger in time. First it strived for a peaceful settlement with Germany; it was ready to pay a high price for that. When this intention was wrecked on the resistance of German policy, England prepared itself accordingly. It was firmly resolved not to wait until Germany had a fleet superior to the English; it was resolved to wage war earlier, and it enlisted allies against Germany. When Germany got into war with Russia and France in 1914 over Balkan affairs, England fought also because it knew that in case of a German victory it would have to wage war alone with Germany in a few years. The construction of the German battle fleet had to lead to war with England before the German fleet had achieved superiority over the English. For the English knew that the German ships could be used in no other way than to attack England's fleet and its coast. The pretext with which Germany sought to conceal the ultimate intentions that it was pursuing by constructing the fleet was that it needed a mighty fleet to protect its expanded ocean trade. The English knew what to make of that. Once, when there still were pirates, merchant ships did need protection by cruisers on endangered seas. Since the establishment of security on the sea (approximately since 1860) that had no longer been necessary. It was quite impossible to explain the construction of a battle fleet usable only in European waters by a desire to protect trade.
It is also immediately understandable why, from the beginning, almost all states of the world sympathized with England against Germany. Most had to fear Germany's hunger for colonies. Only a few nations of Europe are in a situation similar to the German in being able to feed their populations within their own borders only under more unfavorable conditions than are found in the rest of the world. To these belong the Italians in the first place, and also the Czechs. That these two nations also were on the side of our adversaries was Austria's doing.That Japan and China were also against us is to be ascribed to the disastrous Chiao-chou policy.
Now the war has been fought, and we have lost it. The German economy has been quite shattered by the long "war economy"; in addition, it will have to bear heavy reparations burdens. But far worse than these direct consequences of the war must appear the repercussion on Germany's world economic position. Germany has paid for the raw-material supplies on which it depends partly by export of manufactures, partly from the yield of its foreign enterprises and capital investments. That will no longer be possible in the future. During the war the foreign investments of the Germans were expropriated or used up in payment for the import of various goods. The export of manufactures, however, will encounter extreme difficulties. Many markets have been lost during the war and will not be easy to win back. Here, too, the war has created no new situation but only has hastened a development that would have occurred without it. The impediment to trade caused by the war has brought new industries to life in Germany's former markets. They would have arisen even without the war, but later. Now, once they are there and are operating under more favorable conditions of production than German enterprises, they will pose severe competition to German exports. The German people will be compelled to shrink their consumption. They will have to work more cheaply, that is, live worse, than other peoples. The entire level of German culture will thereby be depressed. After all, culture is wealth. Without well-being, without wealth, there never has been culture.
True, emigration might still remain open. But the inhabitants of the territories that might be considered do not want to admit any German immigrants. They fear being outnumbered by the German elements; they fear the pressure that immigration would be bound to exert on wages. Long before the war, Wagner could already refer to the fact that, except for the Jews, there is no other people than the German "that is scattered in so many national fragments and individuals among other civilized peoples and other nations almost over the entire earth's surface, that often forms a quite capable element here, often also only a sort of cultural fertilizer, seldom in the leading positions in life, more frequently in the middle ones and down to the lower ones, little men and little women." And he added that "this German diaspora" is not much more liked, even though more respected, than Jews and Armenians and is not seldom subject to just as strong an aversion on the part of the native population.Cf. Wagner, loc. cit., p. 81. How will things become now, after the war?
Only now can one fully survey the damage that the departure from the principles of liberal policy has caused for the German people. How very different a position Germany and Austria would be in today if they had not undertaken the fateful return to the protective tariff! Of course, the size of the population would not be as large as it is today. But the smaller population could be living and working under conditions just as favorable as those of the other countries of the world. The German people would be richer and happier than it is today; it would have no enemies and no enviers. Hunger and anarchy—that is the result of the protectionist policy.
The outcome of German imperialism, which cast the German people into bitter misery and made it into a pariah people, shows that those whose leadership it followed in the last generation were not on the right path. Neither fame nor honor nor wealth nor happiness was to be found on this path. The ideas of 1789 would not have brought the German people to its position today. Did not the men of the Enlightenment, who today are reproached for lack of state feeling,Cf. Sprengel, Das Staatsbewusstein in der Deutschen Dichtung seit Heinrich von Kleist (Leipzig: 1918), pp. 8 ff. better understand what is good for the German people and the entire world? More clearly than all theories could do, the course of history shows that properly understood patriotism leads to cosmopolitanism, that the welfare of a people lies not in casting other peoples down but in peaceful collaboration. Everything that the German people possessed, its intellectual and material culture, it has uselessly sacrificed to a phantom, to no one's benefit and to its own harm.
A nation that believes in itself and its future, a nation that means to stress the sure feeling that its members are bound to one another not merely by accident of birth but also by the common possession of a culture that is valuable above all to each of them, would necessarily be able to remain unperturbed when it saw individual persons shift to other nations. A people conscious of its own worth would refrain from forcibly detaining those who wanted to move away and from forcibly incorporating into the national community those who were not joining it of their own free will. To let the attractive force of its own culture prove itself in free competition with other peoples—that alone is worthy of a proud nation, that alone would be true national and cultural policy. The means of power and of political rule were in no way necessary for that.
That nations favored by fate possess wide territories of settlement could provide no cogent grounds for adopting another policy. It is true that those colonies were not taken with smooth talk, and one can think only with shudders and anger of the fearful mass murders that prepared the basis for many of the colonial settlements flourishing today. But all other pages of world history were also written in blood, and nothing is more stupid than efforts to justify today's imperialism, with all of its brutalities, by reference to atrocities of generations long since gone. It must be recognized that the time for expeditions of conquest is past, that today it is at least no longer acceptable to use force on peoples of the white race. Whoever wanted to contradict this principle of modern political world law, an expression of the liberal ideas of the time of the Enlightenment, would have to set himself against all other nations of the world. It was a fateful error to want to undertake a new partition of the earth with cannons and armored ships.
The nations suffering from relative overpopulation in their homelands can no longer use those means of relief today that were usual at the time of national migrations. Full freedom of emigration and immigration and unlimited free mobility of capital must be their demand. Only in this way can they attain the most favorable economic conditions for their fellow nationals.
Of course, the struggle of nationalities over the state and government cannot disappear completely from polyglot territories. But it will lose sharpness to the extent that the functions of the state are restricted and the freedom of the individual is extended. Whoever wishes peace among peoples must fight statism.
C. The Roots of ImperialismIt is usual to seek the roots of modern imperialism in the desire for territories to settle and colonies to exploit. This interpretation represents imperialism as an economic necessity. We best recognize that this interpretation is inadequate if we consider how liberalism stands on the same problem. Its watchword is freedom of movement; at the same time, it is averse to all colonial undertakings. The proof that the liberal school has provided is irrefutable: that free trade and only free trade appears justified from the purely economic point of view, that only it guarantees the best provisioning of all persons, the greatest yield of labor with the smallest expenditure of costs.
This liberal dogma cannot be shaken, either, by the assertion—on whose correctness we offer no opinion—that there are peoples who are not ready for self-government and never will be ready. These lower races supposedly must be politically governed by the higher races, without economic freedom being in any way limited thereby. Thus have the English long interpreted their rule in India, thus was the Congo Free State conceived: the open door for economic activity of all nations in free competition both with the members of the ruling nation and with the natives. That the practice of colonial policy deviates from this ideal, that it again, as formerly, regards the natives only as a means, not as an end in their own right, that it—above all the French, with their trade-policy assimilation system—excludes from the colonial territories all who do not belong to the ruling nation, is only a consequence of imperialistic lines of thinking. But where do these come from?
An individualistic justification for imperialism can also be found. That is the one based on the conditions of territories with mixed population. There the consequences of the application of the democratic principle were bound by themselves alone to lead to militant aggressive nationalism. Things are no different in those territories to which the stream of immigration is directed today. There the problem of mixed languages arises ever anew, there imperialistic nationalism must also arise ever anew. Thus we see efforts growing in America and in Australia for limitation of undesired—foreign-nationality—immigration, efforts that were bound to arise out of the fear of being outnumbered by foreigners in one's own country at the same time that the fear arose that the immigrants of foreign national origin could no longer be fully assimilated.
Doubtless this was the point from which the rebirth of imperialistic thinking proceeded. From here the spirit of imperialism gradually undermined the entire thought structure of liberalism, until finally it could also replace the individualistic basis from which it had originated with a collectivistic one. The idea of liberalism starts with the freedom of the individual; it rejects all rule of some persons over others; it knows no master peoples and no subject peoples, just as within the nation itself it distinguishes between no masters and no serfs. For fully developed imperialism, the individual no longer has value. He is valuable to it only as a member of the whole, as a soldier of an army. For the liberal, the number of fellow members of his nationality is no unduly important matter. It is otherwise for imperialism. It strives for the numerical greatness of the nation. To make conquests and hold them, one must have the upper hand militarily, and military importance always depends on the number of combatants at one's disposal. Attaining and maintaining a large population thus becomes a special goal of policy. The democrat strives for the unified national state because he believes that this is the will of the nation. The imperialist wants a state as large as possible; he does not care whether that corresponds to the desire of the peoples.We have seen how the striving for the unified national state originates from the desire of the peoples. Imperialism interprets the matter otherwise. For it, the idea of the unified state is a legal title for annexations. Thus the Pan-Germans wanted to annex the German cantons of Switzerland and even the Netherlands against their will.
The imperialistic people's state scarcely differs from the old princely state in its interpretation of sovereignty and its boundaries. Like the latter, it knows no other limits to the expansion of its rule than those drawn by the opposition of an equally strong power. Even its lust for conquest is unlimited. It wants to hear nothing of the right of peoples. If it "needs" a territory, then it simply takes it and, where possible, demands further from the subjugated peoples that they find this just and reasonable. Foreign peoples are in its eyes not subjects but objects of policy. They are—quite as the princely state once thought—appurtenances of the country where they live. Expressions also recur in the modern imperialistic manner of speaking, therefore, that were believed to be already forgotten. People speak again of geographic boundaries,The answer of the nationality principle to the theory of natural geographic boundaries was given by Arndt when he explained that "the single most valid natural boundary is made by language" (Der Rhein. Deutschlands Strom aber nicht Deutschlands Grenze, 1813, p. 7) and then was aptly formulated by J. Grimm when he speaks of the "natural law . . . that not rivers and not mountains form the boundary lines of peoples and that for a people that has moved over mountains and rivers, its own language alone can set the boundary" (loc. cit., p. 557). How one can manage to derive from the nationality principle the demand for annexation of the territories "of the small, unviable peoples, specifically, those incapable of having their own state" may be seen in Hasse, Deutsche Politik, vol. 1, third part (Munich: 1906), pp. 12 f. of the necessity of using a piece of land as a "buffer zone"; territories are again rounded off; they are exchanged and sold for money.
These imperialistic doctrines are common to all peoples today. Englishmen, Frenchmen, and Americans who marched off to fight imperialism are no less imperialistic than the Germans. Of course, their imperialism differed from the German variety before November 1918 in one important point. While the other nations brought their imperialistic efforts to bear only against the peoples of the tropics and subtropics and treated the peoples of the white race in conformity with the principles of modern democracy, the Germans, precisely because of their position in the polyglot territories in Europe, directed their imperialistic policy against European peoples also.Only in impeding immigration does imperialism on the part of the Anglo-Saxons operate against the whites also. The great colonial powers have held fast to the democratic-pacifistic nationality principle in Europe and America and have practiced imperialism only against the African and Asiatic peoples. They have therefore not come into conflict with the nationality principle of the white peoples, as has the German people, which even in Europe has sought to practice imperialism everywhere.
To justify the application of imperialistic principles in Europe, the German theory saw itself compelled to fight the nationality principle and replace it with the doctrine of the unified state. Small states are said no longer to have any justification for their existence nowadays. They are said to be too small and too weak to form an independent economic territory. They supposedly must therefore necessarily seek links with larger states in order to form an "economic and trench community" with them.Cf. Naumann, Mitteleuropa (Berlin: Georg Reimer, 1915), pp. 164 ff. (Central Europe, trans. by Christabel M. Meredith, New York: Knopf, 1917, pp. 179 ff.); Mitscherlich, Nationalstaat und Nationalwirtschaft und ihre Zukunft (Leipzig: 1916), pp. 26 ff; on other writers of the same orientation, cf. Zurlinden, Der Weltkrieg. Vorläufige Orientierung von einem schweizerischen Standpunkt aus, vol. 1 (Zurich: 1917), pp. 393 ff.
If this means no more than that small states are scarcely able to mount sufficient resistance to the lust for conquest of their more powerful neighbors, well, one cannot contradict that. Small states cannot in fact compete with large ones on the battlefield; if it comes to war between them and a great power, then they must succumb unless help comes to them from outside. This help seldom is lacking. It is provided by large and small states, not from sympathy or on principle but in their own interest. In fact, we see that small states have maintained themselves for centuries just as well as the great powers. The course of the World War shows that even nowadays small states do not always prove weakest in the end. If one seeks to prod the small states by threats into association with a larger state or if one compels them into subjugation through force of arms, well, this is no proof of the assertion that "time is working against small state sovereignties."Cf. Renner, Österreichs Erneuerung, vol. 3 (Vienna: 1916), p. 65. This proposition is no less correct or false today than in the days of Alexander the Great, Tamerlane, or Napoleon. The political ideas of modern times allow the continued existence of a small state to appear rather more secure today than in earlier centuries. That the Central Powers won military victories over a number of small states during the World War in no way justifies our declaring that "running a state on a small scale" is just as out of date today as so running an ironworks. When Renner, with reference to military victories that German and Austrian troops won over the Serbs, thinks he can dispose of the nationality principle with the Marxist expression: "the material conditions of being a state rebel against its immaterial ones—a contradiction of concepts that in practice becomes a tragic fate for people and state,"Renner, Österreichs Erneuerung, vol. 3 (Vienna: 1916), p. 66. he is thereby overlooking the fact that military weakness could be fatal for small states thousands of years ago also.
The assertion that all small states have had their day is further supported by Naumann, Renner, and their followers by the remark that a state must at least possess enough territory for a self-sufficient economy. That this is not true is already clear from what was said earlier. There can be no question of a test of economic self-sufficiency in the formation of states at a time when the division of labor embraces broad stretches of land, whole continents, indeed the whole world. It does not matter whether the inhabitants of a state meet their needs directly or indirectly by production at home; what is important is only that they can meet them at all. When Renner confronted the individual Austrian nations striving for political independence with the question of where they then would obtain this or that article once they had been detached from the whole of the Austro-Hungarian state, well, that was absurd. Even at the time when the state structure was unified, they did not obtain these goods for nothing but only for value supplied in return, and this value in return does not become greater when the political community has fallen apart. This objection would have had some sense only if we were living at a time when trade between states was impossible.
The size of a state's territory therefore does not matter. It is another question whether a state is viable when its population is small. Now, it is to be noted that the costs of many state activities are greater in small states than in large ones. The dwarf states, of which we still have a number in Europe, like Liechtenstein, Andorra, and Monaco, can organize their court systems by levels of jurisdiction, for example, only if they link up with a neighboring state. It is clear that it would be financially quite impossible for such a state to set up as comprehensive a court system as that which a larger state makes available to its citizens, for example, by establishing courts of appeal. One can say that, seen from this point of view, states encompassing a smaller number of people than the administrative units of the larger states are viable only in exceptional cases, namely, only when they have especially rich populations. The smaller states for which this precondition does not hold will, for reasons of state finance, have to link their administrations with a larger neighboring state.Cf. also the speech of Bismarck in the session of the Prussian House of Deputies of 11 December 1867 on Prussia's treaty of accession with the principality of Waldeck-Pyrmont. (Fürst Bismarcks Reden, edited by Stein, vol. 3, pp. 235 ff.) Nations so small in number of people that they do not satisfy these conditions do not exist at all and cannot exist at all, since the development of an independent standard language presupposes, after all, the existence of several hundred thousand speakers.
When Naumann, Renner, and their numerous disciples recommended to the small peoples of Europe an association with a Central Europe under German leadership, they completely misunderstood the essence of the protective-tariff policy. On political or military grounds, an alliance with the German nation assuring independence to all participants could be desirable for the small nations of Eastern and Southeastern Europe. In no case, however, could an alliance that would be serviceable exclusively to German interests appear welcome to them. That was the only kind, however, that the advocates of Central Europe had in view. They wanted an alliance that would enable Germany to compete militarily with the world's great powers for colonial possessions, possessions whose advantages could have benefited the German nation alone. They conceived of the Central European world empire, furthermore, as a protective-tariff community. Just that, however, is what all these smaller nations do not want. They do not want to be mere markets for German industrial products; they do not want to forgo developing at home those branches of industry that have their natural locations there and importing from outside Germany the goods produced more cheaply there. It was thought that the rise in prices of agricultural products that was infallibly bound to occur in consequence of incorporation into the Central European tariff territory would, even by itself alone, be attractive to the predominantly agrarian states whose incorporation into the Central European empire was being sought. It was overlooked, however, that this argument could make an impression only on economically untrained persons. It is not to be denied that Rumania, say, on joining a German-Austrian-Hungarian customs community, would have experienced a rise in the prices of agricultural products. It is overlooked, however, that industrial products would have risen in price, on the other hand, since then Rumania would have had to pay the higher German domestic prices, while if it is not joined in a customs community with Germany, it pays the lower world-market prices. What it would have lost from joining the German customs community would have been greater than what it would have gained thereby. At present Rumania is a relatively underpopulated or at least a not overpopulated country; that means that the bulk of its export goods can at present and in the foreseeable future be exported without any dumping. Rumania has no enterprises in primary production and only a few in industry whose location would not be natural. Things are different for Germany, which, precisely in the most important branches of production, works under more unfavorable conditions than foreign countries.
The imperialistic way of thinking, which comes forward with the claim to be helping modern economic development to its rightful condition, is in truth gripped by barter-economy and feudal preconceptions. In the age of the world economy it is downright nonsensical to represent the demand for creation of large autarkic economic territories as an economic demand. In peacetime it is a matter of indifference whether one produces foodstuffs and raw materials at home oneself or, if it seems more economic, obtains them from abroad in exchange for other products that one has produced. When a medieval prince acquired a piece of land where ore was mined, then he had a right to call this mine his own. But if a modern state annexes a mining property, these mines still have not thereby become those of its citizens. They must buy their products by transferring products of their own labor just as they did before, and that changes have occurred in the political order remains without significance for ownership of them. If the prince is happy about the annexation of a new province, if he is proud about the size of his realm, that is immediately understandable. If, however, the common man is happy that "our" realm has become larger, that "we" have acquired a new province, well, that is a joy that does not arise from the satisfaction of economic needs.
In economic policy, imperialism in no way suits the stage of world economic development reached in 1914. When the Huns slashed through Europe killing and burning, they harmed their enemies by the destruction that they left behind, but not themselves also. But when German troops destroyed coal mines and factories, then they also worsened the provisioning of the German consumer. That coal and various manufactured products can be produced in the future only in smaller quantities or only with higher costs will be felt by everyone involved in world economic transactions.
Once that has been recognized, however, then only the military argument can still be adduced in favor of the policy of national expansion. The nation must be populous to field many soldiers. Soldiers are needed, however, to acquire land on which soldiers can be raised. That is the circle that the imperialistic way of thinking does not escape.
D. PacifismDreamers and humanitarians have long campaigned for the idea of general and eternal peace. Out of the misery and distress that wars have brought to individuals and peoples, the deep longing arose for peace that should never again be disturbed. Utopians paint the advantages of freedom from war in the most splendid colors and call on states to unite in an enduring alliance for peace embracing the entire world. They appeal to the highmindedness of emperors and kings; they refer to divine commands and promise whoever would realize their ideals undying fame far exceeding even that of the great war heroes.
History has omitted these peace proposals from its agenda. They have never been anything more than literary curiosities that no one took seriously. The powerful have never thought of renouncing their power; it has never occurred to them to subordinate their interests to the interests of humanity, as the naive dreamers demanded.
To be judged quite differently from this older pacifism, which was carried along by general considerations of humanitarianism and horror of bloodshed, is the pacifism of the Enlightenment philosophy of natural law, of economic liberalism, and of political democracy, which has been cultivated since the eighteenth century. It does not arise from a sentiment that calls on the individual and the state to renounce the pursuit of their earthly interests out of thirst for fame or in hope of reward in the beyond; nor does it stand as a separate postulate without organic connection with other moral demands. Rather, pacifism here follows with logical necessity from the entire system of social life. He who, from the utilitarian standpoint, rejects the rule of some over others and demands the full right of self-determination for individuals and peoples has thereby rejected war also. He who has made the harmony of the rightly understood interests of all strata within a nation and of all nations among each other the basis of his world view can no longer find any rational basis for warfare. He to whom even protective tariffs and occupational prohibitions appear as measures harmful to everyone can still less understand how one could regard war as anything other than a destroyer and annihilator, in short, as an evil that strikes all, victor as well as vanquished. Liberal pacifism demands peace because it considers war useless. That is a view understandable only from the standpoint of the free-trade doctrine as developed in the classical theory of Hume, Smith, and Ricardo. He who wants to prepare a lasting peace must, like Bentham, be a free-trader and a democrat and work with decisiveness for the removal of all political rule over colonies by a mother country and fight for the full freedom of movement of persons and goods.Cf Bentham, Grundsätze für ein zukünftiges Völkerrecht und für einen dauernden Frieden, translated by Klatscher (Halle: 1915), pp. 100 ff. Those and no others are the preconditions of eternal peace. If one wants to make peace, then one must get rid of the possibility of conflicts between peoples. Only the ideas of liberalism and democracy have the power to do that.Today people have managed to hold liberalism responsible for the outbreak of the World War. Compare, on the other hand, Bernstein, Sozialdemokratsche Völkerpolitik (Leipzig: 1917), pp. 170 ff., where the close connection of free trade with the peace movement is mentioned. Spann, an opponent of pacifism, expressly emphasizes the "dislike and dread of war which today characterizes the capitalist community" (loc. cit., p. 137).
Once one has abandoned this standpoint, however, one can make no sound argument against war and conflict. If one holds the view that there are irreconcilable class antagonisms between the individual strata of society that cannot be resolved except by the forcible victory of one class over others, if one believes that no contacts between individual nations are possible except those whereby one wins what the other loses, then, of course, one must admit that revolutions at home and wars abroad cannot be avoided. The Marxian socialist rejects war abroad because he sees the enemy not in foreign nations but in the possessing classes of his own nation. The nationalistic imperialist rejects revolution because he is convinced of the solidarity of interests of all strata of his nation in the fight against the foreign enemy. Neither is a principled opponent of armed intervention, neither a principled opponent of bloodshed, as the liberals are, who sanction only defensive war. Nothing, therefore, is in such bad taste for Marxian socialists as to fume over war, nothing in such bad taste for chauvinists as to fume over revolution, out of philanthropic concern for the innocent blood thereby shed. Quis tulerit Gracchos de seditione querentes? [Who could endure the Gracchi complaining of sedition?]
Liberalism rejects aggressive war not on philanthropic grounds but from the standpoint of utility. It rejects aggressive war because it regards victory as harmful, and it wants no conquests because it sees them as an unsuitable means for reaching the ultimate goals for which it strives. Not through war and victory but only through work can a nation create the preconditions for the well-being of its members. Conquering nations finally perish, either because they are annihilated by strong ones or because the ruling class is culturally overwhelmed by the subjugated. Once already the Germanic peoples conquered the world, yet were finally defeated. East Goths and Vandals went down fighting; West Goths, Franks and Lombards, Normans and Varangians remained victors in battle, but they were culturally defeated by the subjugated; they, the victors, adopted the language of the defeated and were absorbed into them. One or the other is the fate of all ruling peoples. The landlords pass away, the peasants remain; as the chorus in the Bride of Messina expresses it: "The foreign conquerors come and go, and we obey but we remain." The sword proves in the long run not to be the most suitable means of gaining broad diffusion for a people. That is the "impotence of victory" of which Hegel speaks.Compare Hegel, Werke, third edition, vol. 9 (Berlin: 1848), p. 540.,One could raise the question of what, then, the distinction between pacifism and militarism really consists, since the pacifist, too, is fundamentally not for maintaining peace at any price; rather, under certain conditions he prefers war to an unbearable state of peace; and conversely, the militarist, too, does not want to wage perpetual war but only to restore a definite condition that he regards as desirable. Both supposedly stand, therefore, in fundamental opposition to the absolute life renouncing passivity that the Gospel proclaims and that many Christian sects practice; between the two themselves, however, there exists only a difference of degree. In fact, however, the contrast is so great that it becomes a fundamental one. It lies, on the one hand, in assessment of the size and difficulty of the impediment barring us from peace and, on the other hand, in assessment of the disadvantages connected with conflict. Pacifism believes that we are barred from eternal peace only by a thin partition whose removal must lead at once to the state of peace, while militarism sets such remote goals for itself that their attainment in the foreseable future cannot be expected, so that a long era of war still lies ahead. Liberalism believed that eternal peace could be lastingly established merely by the abolition of princely absolutism, German militarism, however, was clear about the fact that achieving and maintaining the German supremacy being sought would continually entail wars for a long time yet. Furthermore, pacifism always has an eye open to the damages and disadvantages of war, while militarism considers them slight. From that there then follows in pacifism its outspoken preference for the state of peace and in militarism its constant glorification of war and, in its socialist form, of revolution. A further fundamental distinction between pacifism and militarism is possible according to their positions on the theory of power. Militarism sees the basis of rule in material power (Lassalle, Lasson), liberalism in the power of the mind (Hume).
Philanthropic pacifism wants to abolish war without getting at the causes of war.
It has been proposed to have disputes between nations settled by courts of arbitration. Just as in relations between individuals self-help is no longer permitted and, apart from special exceptional cases, the harmed person has only the right to call on the courts, so must things also become in relations between nations. Here also force would have to give way to law. It is supposedly no harder to settle disputes between nations peacefully than those among individual members of a nation. The opponents of arbitration in disputes between nations were to be judged no differently than the medieval feudal lords and brawlers, who also resisted the jurisdiction of the state as far as they could. Such resistance's must simply be abolished. If this had already been done years ago, then the World War, with all of its sad consequences, could have been avoided. Other advocates of arbitration between states go less far with their demands. They desire the obligatory introduction of arbitration, at least for the near future, not for all disputes but only for those touching on neither the honor nor the conditions of existence of nations, that is, only for the lesser cases, while for the others the old method of decision on the field of battle could still be retained.
It is a delusion to assume that the number of wars can thereby be reduced. For many decades already, wars have still been possible only for weighty reasons. That requires neither confirmation by citing historical examples nor even a long explanation. The princely states waged war as often as required by the interests of princes aiming at extending their power. In the calculation of the prince and his counselors, war was a means just like any other; free from any sentimental regard for the human lives that were thereby put at stake, they coolly weighed the advantages and disadvantages of military intervention as a chess player considers his moves. The path of kings led literally over corpses. Wars were not perhaps begun, as people are accustomed to saying, for "trivial reasons." The cause of war was always the same: the princes' greed for power. What superficially looked like the cause of war was only a pretext. (Remember, say, the Silesian wars of Frederick the Great.) The age of democracy knows no more cabinet wars. Even the three European imperial powers, which were the last representatives of the old absolutist idea of the state, had for a long time already no longer possessed the power to instigate such wars. The democratic opposition at home was already much too strong for that. From the moment when the triumph of the liberal idea of the state had brought the nationality principle to the fore, wars were possible only for national reasons. That could be changed neither by the fact that liberalism soon was seriously endangered by the advance of socialism nor by the fact that the old military powers still remained at the helm in Central and Eastern Europe. That is a success of liberal thinking that can no longer be undone, and that should not be forgotten by anyone who undertakes to revile liberalism and the Enlightenment.
Whether the arbitration procedure should now be chosen for less important disputes arising in relations among nations or whether their settlement should be left to negotiations between the parties is a question that interests us less here, however important it may otherwise be. It must be noted only that all arbitration treaties discussed in recent years seem suitable only for settlement of such less important matters of dispute and that up to now all attempts further to extend the range of international arbitration have failed.
If it is asserted that utterly all disputes between peoples can be settled through courts of arbitration, so that decision by war can be quite eliminated, then the fact must be noted that every administration of justice first presupposes the existence of a generally recognized law and then the possibility of applying the legal maxims to the individual case. Neither applies to those disputes between nations of which we speak. All attempts to create a substantive international law through whose application disputes among nations could be decided have miscarried. A hundred years ago the Holy Alliance sought to elevate the principle of legitimacy to the basis of international law. The possessions of the princes at that time were to be protected and guaranteed both against other princes and also, in line with the political thinking of the time, against the demands of revolutionary subjects. The causes of the failure of this attempt need not be investigated at length; they are obvious. And yet today people seem inclined to renew the same attempt again and to create a new Holy Alliance in Wilson's League of Nations. That it is not princes but nations that are guaranteeing their possessions today is a distinction that does not affect the essence of things. The decisive thing is that possessions are ensured at all. It is again, as a hundred years ago, a division of the world that presumes to be an eternal and final one. It will be no more enduring than the earlier one, however, and will, no less than that one, bring blood and misery to mankind.
As the legitimacy principle as understood by the Holy Alliance was already shaken, liberalism proclaimed a new principle for regulating relations among nations. The nationality principle seemed to signify the end of all disputes between nations; it was to be the norm by which all conflict should be peacefully solved. The League of Nations of Versailles adopts this principle also, though, to be sure, only for the nations of Europe. Yet in doing so it overlooks the fact that applying this principle wherever the members of different peoples live mingled together only ignites conflict among peoples all the more. It is still more serious that the League of Nations does not recognize the freedom of movement of the person, that the United States and Australia are still allowed to block themselves off from unwanted immigrants. Such a League of Nations endures so long as it has the power to hold down its adversaries; its authority and the effectiveness of its principles are built on force, to which the disadvantaged must yield but which they will never recognize as right. Never can Germans, Italians, Czechs, Japanese, Chinese, and others regard it as just that the immeasurable landed wealth of North America, Australia, and East India should remain the exclusive property of the Anglo-Saxon nation and that the French be allowed to hedge in millions of square kilometers of the best land like a private park.
Socialist doctrine hopes for establishment of eternal peace through the realization of socialism. "Those migrations of individuals," says Otto Bauer, "that are dominated by the blindly prevailing laws of capitalist competition and are almost fully exempt from the application of deliberate rules then cease. Into their place steps the deliberate regulation of migrations by the socialist community. They will draw immigrants to where a larger number of people at work increases the productivity of labor; where the land bestows a declining yield to a growing number of persons, they will induce part of the population to emigrate. With emigration and immigration thus being consciously regulated by society, the power over its language boundaries falls for the first time into the hands of each nation. Thus, no longer can social migrations against the will of the nation repeatedly violate the nationality principle."Cf. Bauer, loc. cit., p. 515.
We can imagine the realization of socialism in two ways. First, in its highest fulfillment as a socialist world state, as unified world socialism. In such a state the office responsible for the overall control of production will determine the location of each unit of production and thereby also regulate migrations of workers and thus perform the same tasks that fall to the competition of producers in the—so far not even approximately implemented—free economy. This office will resettle workers from the territories with more unfavorable conditions of production into those with more favorable conditions. Then, however, nationality problems will still turn up in the socialist world community. If spinning and iron production are to be cut back in Germany and expanded in the United States, then German workers will have to be resettled in Anglo-Saxon territory. It is precisely such resettlements that, as Bauer says, repeatedly violate the nationality principle against the will of the nation; but they violate it not only in the capitalist economic order, as he thinks, but in the socialist order just the same. That they are governed in the liberal economic order by the "blindly ruling" laws of capitalist competition but in the socialist community are "deliberately" regulated by society is incidental. If the deliberate regulation of the migrations of workers is guided by the rational point of view of pure economic efficiency—which of course Bauer too, and with him every Marxist, takes for granted—then it must lead to the same result that free competition also leads to, namely, that workers, without regard to historically inherited national conditions of settlement, are resettled where they are needed for exploitation of the most favorable conditions of production. Therein, however, lies the root of all national frictions. To assume that migrations of workers transcending the boundaries of national territories of settlement would not lead to the same conflicts in the socialist community as in the free community would of course be a downright utopian way of thinking. If, though, one wants to conceive of the socialist community as a nondemocratic one, then such an assumption is permissible; for, as we have seen, all national frictions first arise under democracy. World socialism, conceived of as a world empire of general servitude of peoples, would admittedly bring national peace also.
The realization of socialism is also possible, however, otherwise than through a world state. We can imagine a series of independent socialist political systems—perhaps nationally unified state—existing side by side without there being a common management of world production. The individual communities, which then are owners of the natural and produced means of production located in their territories, are connected with each other only in the exchange of goods. In a socialism of that kind, national antagonisms will not only not be made milder in comparison with the situation in the liberal economic order but will be considerably sharpened. The migration problem would lose nothing of its capacity to create conflicts between peoples. The individual states would perhaps not completely shut themselves off from immigration, but they would not allow immigrants to acquire resident status and to acquire a full share of the fruits of national production. A kind of international migrant-worker system would arise. Since each one of these socialist communities would have the product of the natural resources found in its territory at its disposal, so that the income of the residents of the individual territories would be different in size—larger for some nations, smaller for others—people would resist the inflow of elements of foreign nationality even for this reason alone. In the liberal economic order it is possible for members of all nations to acquire private ownership of the means of production of the entire world so that, e.g., Germans also can assure themselves a part of the land resources of India and, on the other hand, again, German capital can move to India to help exploit the more favorable conditions of production there. In a socialist order of society, that sort of thing would not be possible, since political sovereignty and economic exploitation must coincide in it. The European peoples would be excluded from ownership in foreign continents. They would have to endure calmly the fact that the immeasurable riches of overseas territories redound to the advantage of the local inhabitants only and would have to observe how a part of this landed wealth remains unexploited because capital for its use cannot be obtained.
All pacifism not based on a liberal economic order built on private ownership of the means of production always remains utopian. Whoever wants peace among nations must seek to limit the state and its influence most strictly.
It is no accident that the basic ideas of modern imperialism can already be found in the writings of two fathers of German socialism and of modern socialism in general, namely, in the works of Engels and Rodbertus. From the statist outlook of a socialist it seems obvious, because of geographic and commercial necessities, that a state must not let itself be shut off from the sea.Cf. Rodbertus, Schriften, edited by Wirth, new edition, vol. 4 (Berlin: 1899), p. 282. The question of access to the sea, which has always directed the Russian policy of conquest in Europe and in Asia and has dominated the behavior of the German and Austrian states regarding Trieste and of the Hungarian state regarding the South Slavs and which has led to the infamous "corridor" theories to which people want to sacrifice the German city of Danzig, does not exist at all for the liberal. He cannot understand how persons may be used as a "corridor," since he takes the position from the first that persons and peoples never may serve as means but always are ends and because he never regards persons as appurtenances of the land on which they dwell, The free-trader, who advocates complete freedom of movement, cannot understand what sort of advantage it offers to a people if it can send its export goods to the coast over its own state territory. If the old Russia of Czarism had acquired a Norwegian seaport and in addition a corridor across Scandinavia to this seaport, it could not thereby have shortened the distance of the individual parts of the Russian interior from the sea. What the Russian economy feels as disadvantageous is that the Russian production sites are located far from the sea and therefore lack those advantages in the transport system that ease of ocean freight transport assures. But none of that would be changed by acquisition of a Scandinavian seaport; if free trade prevails, it is quite a matter of indifference whether the nearest seaports are administered by Russian or other officials. Imperialism needs seaports because it needs naval stations and because it wants to wage economic wars. It needs them not to use them but to exclude others from them. The nonstatist economy of trade free of the state does not recognize this argumentation.
Rodbertus and Engels both oppose the political demands of the non-German peoples of Austria. That the Germans and Magyars, at the time when the great monarchies really became a historical necessity in Europe, "put all these small, stunted, impotent nationlets together into a great empire and thereby made them capable of taking part in a historical development to which they, left to themselves, would have remained quite foreign"—for not having understood that, Engels reproaches the Pan-Slavists. He admits that such an empire cannot prevail "without forcibly crushing many a tender flowerlet of a nation. But without force and without iron ruthlessness, nothing is accomplished in history; and if Alexander, Caesar, and Napoleon had possessed the same capacity for compassion to which Pan-Slavism now appeals for the sake of its decayed clients, what then would have become of history! And are the Persians, Celts, and Christian Germans not worth the Czechs and the people of Ogulin and Sereth?"Cf. Mehring, Aus dem literarischen Nachlass von Marx, Engels und Lassalle, vol 3(Stuttgart: 1902), pp. 255 f. These sentences could have come quite well from a Pan-German writer or mutatis mutandis from a Czech or Polish chauvinist, Engels then continues: "Now, however, in consequence of the great progress of industry, trade, and communications, political centralization has become a much more pressing need than back in the fifteenth and sixteenth centuries. What still must be centralized becomes centralized. And now the Pan-Slavists come and demand that we should 'set free' these half-Germanized Slavs, we should undo a centralization that is imposed on these Slavs by all their material interests?" That is in essence nothing but Renner's doctrine of the tendency toward concentration in political life and of the economic necessity of the multinational state. We see that the orthodox Marxists did Renner an injustice in accusing him of heresy as a "revisionist."
The way to eternal peace does not lead through strengthening state and central power, as socialism strives for. The greater the scope the state claims in the life of the individual and the more important politics becomes for him, the more areas of friction are thereby created in territories with mixed population. Limiting state power to a minimum, as liberalism sought, would considerably soften the antagonisms between different nations that live side by side in the same territory. The only true national autonomy is the freedom of the individual against the state and society. The "statification" of life and of the economy leads with necessity to the struggle of nations.
Full freedom of movement of persons and goods, the most comprehensive protection of the property and freedom of each individual, removal of all state compulsion in the school system, in short, the most exact and complete application of the ideas of 1789, are the prerequisites of peaceful conditions. If wars then cease, "then peace has proceeded from the inner forces of things, then people and indeed free people have become peaceful."Cf. W. Humboldt, Ideen zu einem Versuch, die Grenzen der Wirksamkeit des Staats zu bestimmen, edition of the "Deutsche Bibliothek," (Berlin), p. 66.
Never have we been further from this ideal than today.
- On the History of German DemocracyA. PrussiaAmong the most notable phenomena of the history of the last hundred years is the fact that the modern political ideas of freedom and self-government could not prevail among the German people, while elsewhere they could make themselves influential almost everywhere on earth. Everywhere democracy has been able to overcome the old princely state; everywhere the revolutionary forces have triumphed. Only precisely in Germany and in Austria—and besides there only in Russia—has the democratic revolution been defeated again and again. While every nation of Europe and America has experienced an age of liberalism in constitutional and economic policy, in Germany and Austria only slight successes have been accorded to liberalism. In the political sector, the old princely state, as represented at its purest in the constitution of Prussia under Frederick the Great, did indeed have to grant some concessions, but it was far from transforming itself into a parliamentary monarchy of, say, the English or Italian sort; as a result of the great political movements of the nineteenth century the authoritarian state appears here.
The democratic state, as we see it realized almost everywhere at the beginning of the twentieth century, rests on the identity of the rulers and the ruled, of the state and of the people. In it no government is possible against the will of the majority of the people. In it government and the governed, state and people, are one. Not so in the authoritarian state. Here on the one side stand the state-preserving elements, which regard themselves and themselves alone as the state; the government proceeds from them and identifies itself with them. On the other side stands the people, which appears only as object, not as subject, of government actions, which addresses the state sometimes pleadingly, sometimes demandingly, but which never identifies itself with it. This antithesis found its most eloquent expression in former Austrian parliamentary language in the contrast of "state necessities" with "people's necessities." The former were understood to include what the state and the latter what the people sought from the financial expenditures of the budget, and the deputies were at pains to be compensated for the granting of state necessities by the granting of people's necessities—which sometimes were necessities of the individual political parties or even of individual deputies. These contraries could never have been made understandable to an English or French politician; he would not have been able to understand how something could be necessary for the state without at the same time being necessary for the people, and conversely.
The contrast between authorities and people which characterizes the authoritarian state is not quite identical with the one between prince and people that characterizes the princely state; still less is it identical with the contrast between the prince and the estates in the old estate system. In their contrast with the modern democratic state, with its fundamental unity of government and people, however, all these dualistic state forms do share a common characteristic.
Attempts have not been lacking to explain the origin and basis of this peculiarity of German history. Those writers made it easiest for themselves who believed they understood the authoritarian state as the emanation of a special type of German spirit and sought to portray the democratic national state as "un-German," as not suitable for the soul of the German.Max Weber provided a destructive critique of these theories in Parlament und Regierung im neugeordneten Deutschland (Munich: 1918). Then, again, the attempt has been made to draw the special political position of Germany into an explanation. A state that seems endangered by external enemies in such a way as the German state was supposedly cannot tolerate a freedom-oriented constitution at home. "The measure of political freedom that can be permitted in governmental institutions must rationally be inversely proportional to the military-political pressure bearing on the borders of the state."Cf. Hintze in the collective work Deutschland und der Weltkrieg (Leipzig: 1915), p. 6. A penetrating critique of these views, which rest on a proposition of the English historian Seeley, appears in Preuss, Obrigkeitsstaat und grossdeutscher Gedanke (Jena: 1916), pp. 7 ff. That an intimate connection must exist between the political position and the constitution of a people will be conceded without further ado. But it is striking that efforts were made to bring only the foreign political position, but not the domestic political position, into explaining constitutional conditions. In what follows the converse procedure will be followed. An attempt will be made to explain that much-discussed peculiarity of German constitutional life by domestic political conditions, namely, by the position of the Germans of Prussia and Austria in the polyglot territories.
When the subjects of the German princes began to awake from their centuries-long political slumber, they found their fatherland torn to shreds, divided as patrimonial estates among a number of families whose external impotence was but poorly cloaked by their ruthless internal tyranny. Only two territorial princes were strong enough to stand on their own feet; their means of power rested, however, not on their German position but on their possessions outside Germany. For Austria this assertion needs no further justification; the fact was never disputed. It was otherwise for Prussia. It is common to overlook the fact that the position Of Prussia in Germany and in Europe always remained insecure until the Hohenzollerns succeeded in building a rather large contiguous state territory, first by the annexation of Silesia, which at the time was half Slavic, and then by the acquisition of Posnania and West Prussia. Precisely those deeds of Prussia on which its power rested—its participation in the victory over the Napoleonic system, the crushing of the revolution of 1848, and the war of 1866—could not have been accomplished without the non-German subjects of its eastern provinces. Even the acquisition of German land accomplished by the struggles waged from 1813 to 1866 with the help of its non-German subjects in no way shifted the center of gravity of the Prussian state from the east to the west. Still, as before, the undiminished maintenance of its possessions east of the Elbe remained a condition of existence for Prussia.
The political thinking of the German mind, which was slowly maturing for public life, could be modeled on none of the states existing on German soil. What the patriotic German saw before him was only the ruins of the old imperial magnificence and the disgraceful and slovenly administration of the German petty princes. The way to the German state would have to involve the overthrow of these small despots. All agreed on that. What, however, should happen to the two German powers?
The difficulty inherent in the problem may best be recognized from a comparison with Italy. Conditions in Italy were similar to those in Germany. Blocking the modern national state were a number of petty princes and the great power Austria. The Italians would have gotten rid of the former quickly, but of the latter—by themselves—never. And Austria not only held fast to a large part of Italy directly, it also protected the sovereignty of the individual princes in the remaining territories. Without Austria's intervention, Joachim Murat or General Pepe would long since probably have established an Italian national state. But the Italians had to wait until Austria's relations with the other powers offered them the opportunity to reach their goal. Italy owes its freedom and unity to French and Prussian help, and in a certain sense to English help also; to unite Trentino, too, with the kingdom of Italy required the help of the entire world. The Italians themselves lost all the battles they fought against Austria.
In Germany conditions were different. How were the German people to succeed in overcoming Austria and Prussia, the two mighty military monarchies? Foreign help, as given in Italy, could not be counted on. The most natural course would probably have been for the German national idea to acquire so much power over the Germans in Prussia and Austria that they strove for a united Germany. If the Germans, who were the majority by far in the Prussian army and represented the most important element in the Austrian army, had proved true as Germans the way the Magyars did in 1849 as Magyars, then there would have arisen out of the confusions of the revolution of 1848 a German Reich free and united from the Belt to the Etsch. The non-German elements in the armies of Austria and Prussia would hardly have been in a position to mount successful resistance to the assault of the entire German people.
The Germans in Austria and Prussia, however, were also opponents or at least only limited adherents of the German strivings for unity—and that is what was decisive. The efforts of the men of St. Paul's Church suffered shipwreck, not, as legends have it, because of doctrinairism, idealism, and professorial ignorance of the ways of the world but rather because of the fact that the majority of Germans supported the cause of the German nation only half-heartedly. What they desired was not the German state alone but rather the Austrian or the Prussian state as well at the same time—and this is not to mention those who actually considered themselves only Austrians or Prussians and not at all Germans.
We who today are accustomed to seeing the pure Prussian and the pure Austrian only in the conservative east of the Elbe and the Alpine clerical, we who in the appeal to Prussia or Austria can always see only the pretexts of enemies of the national state—we can only with difficulty concede even mere good faith to the black-and-yellow and black-and-white patriots of that time. This not only does a serious injustice to men about whose honorable striving there should be no doubt; this lack of historical perspective also blocks our path to knowledge of the most important events of German history.
Every German knows the passage in Goethe's Dichtung und Wahrheit in which the aging poet portrays the deep impression that the figure of Frederick the Great made on his contemporaries.The criticism that Mehring makes (Die Lessing-Legende, third edition [Stuttgart: 1909] pp. 12 ff.) does not weaken the force of this passage as evidence for the views of the old Goethe. It is true that the state of the Hohenzollerns, too, which Prussian court historiography lauded as the implementation of all utopias, was not a whit better than the other German states; and Frederick William I or Frederick II were no less hateful despots than any Württemberg or Hessian lord. But one thing distinguished Brandenburg-Prussia from the other German territories: the state was not ridiculous; its policy was purposeful, steady, and power-seeking. This state could be hated, it might be feared, but it could not be overlooked.
If, thus, the political thoughts of even the non-Prussian Germans secretly strayed toward Prussia out of the narrowness of their political existence, if even foreigners judged this state not totally unfavorably, was it any wonder that the beginnings of political thought in the Prussian provinces clung more often to the Prussian state, which, with all its faults, still had the advantage of actual existence, than to the dream of a German state, which was unmasked every day by the wretchedness of the Holy Roman Empire? Thus a Prussian state-consciousness was formed in Prussia. And these feelings were shared not only by the salaried champions of the Prussian state apparatus and its beneficiaries but also by men of undoubtedly democratic sentiments like WaldeckCf. Oppenheim, Benedikt Franz Leo Waldek (Berlin: 1880), pp. 41 ff. and hundreds of thousands like him.
It is common to describe the German question much too narrowly as the opposition of great-German and small-German. In truth the problem was larger and broader. It was first of all the gap that yawned between German national sentiment on the one side and Austrian and Prussian state-consciousness on the other.
The German unified state could have been built only on the ruins of the German states; whoever wanted to construct it therefore first had to root out those sentiments that were striving to maintain the Prussian and Austrian states. In March 1848 that seemed easy to do. At that time it could be expected that the Prussian and Austrian democrats, faced with the need to decide, would, even if perhaps after inner struggles, join the side of a great and unified Germany. Yet in both great German states, democracy was defeated sooner than one would have thought possible. Its sway lasted scarcely a few weeks in Vienna and Berlin; then the authoritarian state embarked on the plan that pulled the reins tight. What was the cause? The turnaround did come extraordinarily quickly. Right after the complete victory of democracy in March, the power of the new spirit began to crumble; and after a short time the Prussian army, led by the Prince of Prussia, who had fled the country only shortly before, could already take the offensive against the revolution.
There should be general agreement that the position of the eastern provinces of Prussia was decisive here.Cf. Bismarck, Gedanken und Erinnerungen (Stuttgart: 1898), vol. 1, p. 56. If this is remembered, it will not be too hard to understand clearly the causes of the turnaround. There in the East the Germans were in the minority amidst a numerically superior population of foreign language; there they had to fear that the lmplementation and application of democratic principles would cost them the ruling position that they had so far possessed. They would have become a minority that could never have expected to acquire power; they would have had to taste that lack of political rights that is the fate of minorities of foreign nationality.
The Germans of the provinces of Prussia, Posnania, and Silesia could hope for nothing good from democracy. That, however, determined the positions of the Germans of Prussia on the whole, for the Germans of the polyglot territories had much greater political importance than corresponded to their numbers. These Germans included, after all, almost all members of the higher strata of the population of those provinces—the officials, teachers, merchants, estate owners, and larger industrialists. In the upper strata of the Germans of Prussia, the members of the threatened borderlands therefore formed a numerically far larger part than the German borderland inhabitants formed on the whole in the total German population of Prussia. The solid mass of inhabitants of the borderlands joined with the parties supporting the state and thereby gave them preponderance. The idea of the German state could win no power over the non-German subjects of Prussia, and its German subjects feared German democracy. That was the tragedy of the democratic idea in Germany.
Here lie the roots of the peculiar political-intellectual constitution of the German people. It was the threatened position of the Germans in the borderlands that caused the ideal of democracy in Germany to fade quickly away and the subjects of Prussia, after a short honeymoon of revolution, to return penitently to the military state. They knew now what lay ahead for them in democracy. However much they might despise Potsdam's despotism, they had to bow to it if they did not want to fall under the rule of Poles and Lithuanians. From then on they were the faithful guard of the authoritarian state. With their help the Prussian military state triumphed over the men of freedom. All Prussia's political questions were now judged exclusively according to the position in the East. It was what determined the feeble position of the Prussian liberals in the constitutional conflict. It was what caused Prussia to seek Russian friendship, so long as that could be done at all, and thereby thwarted the natural alliance with England.
It now occurred to the Prussian authoritarian state to apply its methods of gaining and maintaining its position in Germany to the solution of the greater German national problem also. The weapons of the Junkers had triumphed in Germany. They had crushed the German bourgeoisie; they had excluded the Habsburg influence and elevated the Hohenzollerns high above the smaller and middle princes. Prussian military power suppressed the non-German elements in the Slavic eastern provinces of Prussia, in North Schleswig, and in Alsace-Lorraine. The bright splendor of the victories won in three wars shone on Prussian militarism. As it had crushed with power everything trying to hinder it on its way, so it believed it should also use armed force to solve all newly arising problems. By the power of weapons the hard-pressed position of the Habsburgs and the Germans in the Danube monarchy should be sustained and conquests made in the East and West and overseas.
The liberal theory of the state had long since exposed the error in this reasoning. The theorists and practitioners of power politics should have remembered Hume's famous arguments that all rule rests on power over minds; the government is always only a minority and can govern the majority only because the latter either is convinced of the legitimacy of the rulers or considers their rule desirable in its own interests.Cf. Hume, Of the First Principles of Government (Essays, edited by Frowde), pp. 29 if. Then they could not have overlooked the fact that the German authoritarian state, even in Germany, rested in the last analysis not on the power of bayonets but precisely on a particular disposition of the German mind, which was caused by the national conditions of settlement of the Germans in the East. They should not have deceived themselves over the fact that the defeat of German liberalism was attributable solely to the conditions of settlement in the German East: the rule of democracy there would have led to driving the Germans out and depriving them of rights; hence a predisposition toward antidemocratic currents had been created in wide circles of the German people. They would have had to recognize that even the German authoritarian state, like any other state, rested not on victories of weapons but on victories of the spirit, on victories won by dynastic-authoritarian sentiment over liberal sentiment. These relationships could not be misinterpreted worse than they were by that German school of political realists that denied the influence of every intellectual current in the life of nations and wanted to trace everything back to "real power relations." When Bismarck said that his successes rested only on the power of the Prussian army and had only derision and scorn for the ideals of St. Paul's Church, then he overlooked the fact that the power of the Prussian state was grounded on ideals also, although on the opposite ideals, and that it would have had to collapse immediately if liberal thought had penetrated the Prussian army further than it actually did. Those circles that were anxiously striving to keep the "modern spirit of demoralization" away from the army were better informed in this respect.
The Prussian authoritarian state could not defeat the world. Such a victory could have been achieved by a nation hopelessly in the minority only through ideas, through public opinion, but never with weapons. But the German authoritarian state, filled with a boundless contempt for the press and for all "literature," scorned ideas as a means of struggle. For its adversaries, however, the democratic idea made propaganda. Not until the middle of the war, when it was already too late, was it recognized in Germany what power lay in this propaganda and how vain it is to fight with the sword against the spirit.
If the German people found the allotment of territories of settlement on the earth unjust, then they should have sought to convert the public opinion of the world, which did not see the injustice of this allotment. Whether this would have been possible is another question. It is not wholly improbable that allies for this struggle could have been found, united with whom much, perhaps even everything, could have been attained. It is certain, however, that the undertaking of a nation of eighty million to fight against the whole remaining world was hopeless if it was not pursued with intellectual means. Not with weapons but only with the spirit can a minority overcome the majority. True practical politics is the only kind that knows how to enlist ideas in its service.
- On the History of German DemocracyB. AustriaThe teleological interpretation of history, by which all historical events appear as realization of definite goals set for human development, has assigned many kinds of task to the Danube state of the Habsburgs, which for four hundred years has maintained its position among the European powers. Now it should be the shield of the West against the threat from Islam, now the stronghold and refuge of Catholicism against the heretics; others wanted to see it as the support of the conservative element in general, still others as the state summoned by its nationally polychromatic character to promote peace among peoples by way of example.A compendium of the various tasks that people have sought to assign to Austria is given by Seipel, loc. cit., pp. 18 ff. One sees that the tasks were multifarious; according to the shape of political affairs, people favored now the one and now the other interpretation. History goes its course, however, without regard to such chimeras. Princes and peoples bother themselves very little over what missions the philosophy of history assigns to them.
Causal historiography does not look for the "mission" or the "idea" that nations and states have to realize; it seeks the political concept that forms states out of nations and parts of nations. The political concept at the basis of almost all state structures of the last centuries of the Middle Ages and the first centuries of modern times was princely dominion. The state existed for the sake of the king and his house. That holds true of the state of the Austrian Habsburgs, from the Ferdinand who as German emperor was called the First to the Ferdinand who as Austrian emperor was the only one of that name, just as it holds true of all other states of that time. In that respect the Austrian state was no different from the other states of its time. The hereditary lands of Leopold I were fundamentally no different from the state of Louis XIV or Peter the Great. But then came other times. The princely state succumbed to the attack of the freedom movement; in its place appeared the free national state. The nationality principle became the bearer of state coherence and the concept of the state. Not all states could take part in this development without change in their geographical extent; many had to submit to changes in their territory. For the Danube monarchy, however, the nationality principle actually signified the negation of its justification for existence.
Far-seeing Italian patriots passed the death sentence on the state of the House of Habsburg-Lorraine as early as 1815; no later than 1848 there already were men among all peoples forming the Empire who agreed with this opinion, and for more than a generation one could easily say that the entire thinking youth of the Monarchy—perhaps aside from part of the Alpine Germans educated in Catholic schools—were hostile to the state. All non-Germans in the country longingly awaited the day that would bring them freedom and their own national state. They strove to get out of the "married-together" state. Many of them made compromises. They saw with open eyes how things stood in Europe and in the world; they had no illusions about the impediments that initially still stood in the way of realization of their ideals, and they were therefore ready to moderate their claims in the meanwhile. They came to terms with the provisional continuation of the Austrian and Hungarian states; indeed, even more, they used the Dual Monarchy as a counter in their own game. The Poles, the South Slavs, the Ukrainians, and in a certain sense the Czechs also, sought to make the weight of this great state, which despite everything was still powerful, serviceable for their own purposes. Superficial critics have sought to conclude from that fact that these peoples had reconciled themselves to the existence of the state, that they even desired it. Nothing was more wrong than this view. Never did irredentism seriously disappear from the program of any of the non-German parties. It was tolerated that official circles did not openly show the ultimate goals of their national strivings in Vienna; at home, however, people thought and spoke, with formal attention to the limits drawn by the paragraphs on high treason of the penal law, of nothing other than liberation and shaking off the yoke of the foreign dynasty. The Czech and Polish ministers, and even the numerous South Slav generals, never forgot that they were sons of subjugated peoples; never did they feel themselves in their court positions as other than pacemakers of the freedom movement that wanted to get out of this state.
Only the Germans took a different position toward the state of the Habsburgs. It is true that there was also a German irredentism in Austria, even if one may not interpret in this sense every hurrah for the Hohenzollerns or for Bismarck shouted at solstice festivals, student assemblages, and gatherings of voters. But although the Austrian government in the last forty years of the existence of the Empire was, with a few transitory exceptions, more or less anti-German and often draconically persecuted relatively harmless utterances of German national sentiments, while far sharper speeches and deeds of the other nationalities enjoyed benevolent toleration, the state-supporting parties among the Germans always kept the upper hand. Up to the last days of the Empire the Germans felt themselves the real champions of the state idea, citizens of a German state. Was that a delusion, was it political immaturity?
To be sure, a large part, even the largest part, of the German people in Austria was and today still is politically backward. But this explanation cannot satisfy us. We just are not satisfied with the assumption of an innate political inferiority of the German; we seek precisely the causes that made the Germans march politically behind the Ruthenians and Serbs. We ask ourselves how it then happened that all other peoples inhabiting the imperial state readily adopted the modern ideas of freedom and national independence but that the German-Austrians so much identified themselves with the state of the Habsburgs that, for the sake of its continuation, they finally readily incurred the immense sacrifices of goods and blood that a war of more than four years imposed on them.
It was German writers who expounded the theory that the Austro-Hungarian dual state was no artificial construction, as the doctrine misled by the nationality principle announced, but rather a natural geographic unit. The arbitrariness of such interpretations of course needed no special refutation. With this method one can just as well prove that Hungary and Bohemia had to form one state as the opposite. What is a geographic unit, what are "natural" boundaries? No one can say. With this method Napoleon I once argued France's claim to Holland, for the Netherlands are an alluvial deposit of French rivers; with the same method Austrian writers sought, before the fulfillment of Italian strivings for unity, to support the right of Austria to the lowlands of upper Italy.Cf. p. 79 above; further, the criticism in Justus, "Sozialismus und Geographie, "Der Kampf, vol. 11, pp. 469 ff. Today the czechs apply this theory to justify the annexation of German Bohemia.
Another interpretation is of the state as an economic territory, which was urged above all by Renner, who, besides that, also considered the geographic interpretation of the state valid. For Renner the state is an economic community," an "organized economic territory." Unified economic territories should not be torn apart; thus it was foolish to want to destroy the continued territorial existence of the Austro-Hungarian Monarchy.Cf. Renner, ?sterreichs Erneuerung Marximus, Krieg und Internationale (Stuttgart: 1917); on the other hand, Mises, :Vom Ziel der Handelspolitik," loc. cit., pp. 579 ff. (during the writing of this essay only the first volume of ?sterreichs Erneuerung was available to me), further, Justus, loc.cit.,; Emil Lederer, "Zeitgem?sse Wandlungen der sozialistischen Idee und Theorie," Archiv f?r Sozialwissenschaft, vol. 45, 1918/1919, pp. 261 ff. But this unified economic territory is just what the non-German people of Austria did not want; they did not let themselves be influenced by Renner's arguments either. Why did the Germans, precisely the Germans of Austria, create such doctrines, which were supposed to prove the necessity of this state, and sometimes even consider them right?
That the Germans always cared somewhat for the Austrian state, although this state was not at all a German state and, when it suited it, oppressed the Germans just the same as or even more than its other peoples—we must try to understand that fact by the same principle that explains the development of the Prussian-German political spirit of conservatism and militarism.
The political thinking of the Germans in Austria suffered from a double orientation toward the German and toward the Austrian state. After they had awakened from the centuries long sleep into which the Counter-Reformation had sunk them and when they began, in the second half of the eighteenth century, timidly to concern themselves with public questions, the Germans in Austria turned their thoughts to the Reich also; many a bold person dreamed, even before March 1848, of a unified German state. But never did they make it clear to themselves that they had to choose between being German and being Austrian and that they could not desire the German and the Austrian state at the same time. They did not or would not see that a free Germany was possible only if Austria was destroyed first and that Austria could endure only if it withdrew part of its best sons from the German Reich. They did not see that the goals they sought were incompatible and that what they wanted was an absurdity. They were not at all conscious of their halfheartedness, that halfheartedness that caused the whole pitiable irresoluteness of their policy, that halfheartedness that brought failure to all and everything they undertook.
Since Königgrätz it has become the fashion in North Germany to doubt the German sentiment of the German-Austrians. Since people equated German and Reichs-German without further ado and, moreover, true to the generally prevailing statist way of thinking, also identified all Austrians with the policy of the Vienna court, it was not hard to find a basis for this interpretation. It was nevertheless thoroughly wrong. Never did the Germans of Austria forget their national character; never, not even in the first years following the defeat in the Bohemian campaign, did they lose for even a minute the feeling of belonging together with the Germans on the other side of the black-and-yellow border-posts. They were German and also wanted to remain so; least of all should they be blamed for also wanting to be Austrians at the same time by those who subordinated the German idea to the Prussian.
No less wrong, however, is the opinion that was widespread in Austrian court circles that the German-Austrians were not serious about their Austrianism. Catholic-oriented historians sadly lamented the decline of the old Austria, that Austrian princely state which, from Ferdinand II until the outbreak of the revolution Of March 1848, had been the protector of Catholicism and of the legitimist idea of the state in Europe. Their complete lack of understanding of everything that had been thought and written since Rousseau, their aversion to all political changes that had taken place in the world since the French Revolution, caused them to believe that that esteemed old state of the Habsburgs could have endured if the "Jews and Freemasons" had not brought on its downfall. Their entire grudge was directed against the Germans in Austria and among them above all against the German Liberal Party, to which they attributed responsibility for the decline of the old empire. They saw how the Austrian state was more and more falling apart internally; and they dumped the guilt precisely onto those who alone were the champions of the Austrian state idea, who alone affirmed the state, who alone desired it.
From the moment when the modern ideas of freedom also crossed the boundaries of Austria, which had been anxiously guarded by Metternich and Sedlnitzky, the old Habsburg family state was done for. That it did not fall apart as early as 1848, that it could maintain itself for seventy years more—that was solely the work of the Austrian state idea of the German Austrians, that was solely the service of the German freedom parties, of precisely those who were more hated and persecuted by the court than all others, more hated even than those who openly threatened and fought the continuation of the state.
The material basis of the Austrian political thought of the German-Austrians was the fact of German settlements strewn over the entire extent of the Habsburg lands. As a result of centuries-long colonization, the urban bourgeoisie and the urban intelligentsia were German everywhere in Austria and Hungary, large landownership was in great part Germanized, and everywhere, even in the middle of foreign-language territory, there were German peasant settlements. All Austria outwardly bore a German stamp; everywhere German education and German literature were to be found. Everywhere in the Empire the Germans were also represented among the petty bourgeoisie, among the workers, and among the peasants, even though in many districts, especially in Galicia, in many parts of Hungary, and in the coastal territories, the German minority among the members of the lower strata of the people was quite small. But in the entire Empire (upper Italy excepted) the percentage of Germans among the educated and among the members of the higher strata was quite considerable, and all those educated persons and prosperous bourgeois who were not themselves German and did not want to acknowledge belonging to the German nation were German by their education, spoke German, read German, and appeared at least outwardly to be German. That part of the Austrian population that most strongly felt the intolerableness of the tyranny of the Vienna government and alone seemed capable of replacing the court circles in governing were the upper middle class and the members of the free professions and educated persons—just those strata that are commonly called the bourgeoisie and the intellectuals. But they were German in the entire Empire, at least in lands belonging to the German Federation. Thus Austria no doubt was not German, but politically it wore a German face. Every Austrian who wanted to take any interest at all in public affairs had to master the German language. For the members of the Czech and of the Slovene peoples, however, education and social ascent could be achieved only through Germanness. They still had no literature of their own that would have made it possible for them to do without the treasures of German culture. Whoever rose became German because precisely the members of the higher strata were German.
The Germans saw that and believed that it had to be so. They were far from wanting to Germanize all non-Germans compulsorily, but they thought that this would take place on its own. They believed that every Czech and South Slav would try, even in his own interest, to adopt German culture. They believed that it would remain so forever, that for the Slav the way to culture was Germanness, and that social ascent was bound up with Germanization. That these peoples also could develop independent cultures and independent literatures, that from their midst they could also bring forth independent national characters—they did not think of that at all. Thus the naive belief could arise among them that all Austria felt and thought politically as they did, that all had to share their ideal of the great, mighty, unified state of Austria, which could bear only a German stamp.
Those were the political ideas with which the German-Austrians went into the revolution. The disappointment that they experienced was abrupt and painful.
Today, as we look back in review over the development of the last seven decades, it is easy to say what position the Germans should have taken in view of the new state of affairs; it is easy to show how they could and should have done better. Today one can clearly show how much better the German nation in Austria would have fared if it had adopted in 1848 that program that it in 1918 then perforce made its own. The share that would have fallen to the German people in a splitting up of Austria into independent national states in the year 1848 was bound to have been far larger than the one that it acquired in 1918 after the terrible defeat in the World War. What held the Germans back at that time from undertaking a clean separation between German and non-German? Why did they not make the proposal themselves; why did they reject it when the Slavs brought it forth?
It has already been mentioned that the Germans then held the widespread opinion that the Germanization of the Slavs was only a question of time, that it would take place without external compulsion by the necessity of development. Even this interpretation alone was bound to influence the entire choice of positions on the problem of nationalities. The decisive factor, however, was different. It was that the Germans could not and did want to give up the national minorities sprinkled in the contiguous territories of settlement of the other peoples. They had blood brothers living everywhere in Slavic territory; all cities there were either entirely or at least in large part German. Of course, it was only a fraction of the whole German people in Austria that they would have given up in this way. But the numerical significance of this enclaved population in relation to all the rest of the German people in Austria hardly expresses the significance of the loss that they would thereby have suffered. These enclaved people belonged in greatest part to the higher strata of the nation. To give them up signified, therefore, a far heavier loss than the mere numbers indicated. To give them up meant to give up the best parts of the German people in Austria; it meant to sacrifice the University of Prague and the merchants and factory owners of Prague, Brünn [Brno], Pilsen [Plzen], Budweis [Ceske Budejovice], 0lmütz [Olomouc], of Trieste, Laibach [Ljubljana], of Lemberg [Lwów, Lvov], Czernowitz [Cernauti, Chernovtsy], of Pest, Pressburg [Bratislava], Temesvar [Timisoara], etc., who were very significant for Austrian conditions. To give them up meant to wipe out the colonizing work of centuries; it meant to deliver up German peasants in all parts of the broad empire, German officers and officials, to being deprived of rights.
One now understands the tragic position of the Germans in Austria. With a bold, defiant spirit of rebellion the Germans had risen up to break the despotism and take the government of the state into their own hands; they wanted to create a free, great Austria out of the hereditary estate of the dynasty. Then they had to recognize all at once that the great majority of the people did not at all desire their free German Austria, that they even preferred to remain subjects of the Habsburgs rather than be citizens of an Austria bearing a German stamp. Then they discovered to their dismay that the application of democratic principles was bound to lead to the dissolution of this empire, in which, after all, they had been the leading elements intellectually and wished to remain the leading elements. Then they had to recognize that democracy was bound to deprive German citizens of territories inhabited predominantly by Slavs of their political rights. They had to recognize that the Germans of Prague and Brünn [Brno] were indeed in a position to take the scepter away from the Habsburgs and establish a parliamentary form of government but that they not only had nothing to win thereby but much to lose. Under the despotism of the sovereign's officials, they could still live as Germans; although they might also be subjects, they were still subjects enjoying the same rights as other subjects. But in a free state they would have become second-class citizens; for others, foreigners, whose language they did not understand, whose train of thought was foreign to them, on whose politics they could have had no influence, would have harvested the fruits of their struggle for freedom. They recognized that they were without power against the crown, for the crown could always call up peoples against them to whom their voice could not penetrate; they recognized and had to feel it as painful, when Slavic regiments subdued the uprising of German citizens and students, that they had no prospect of shaking off the yoke that oppressed them. At the same time, however, they recognized that the victory of the old reactionary Austria still had to be more welcome to them than victory of the new freedom-oriented state; for under the scepter of the Habsburgs they still could live as Germans; under the dominion of the Slavs, however, there was for them only political death.
Scarcely a people has ever found itself in a more difficult political position than the German-Austrians after the first heady days of the March 1848 revolution. Their dream of a free German Austria had suddenly come to naught. In view of their national comrades scattered about in foreign territories of settlement, they could not desire the dissolution of Austria into national states; they had to desire the continued existence of the state, and then there remained nothing else for them than to support the authoritarian state. The Habsburgs and their adherents, however, did not desire an alliance with the anticlerical liberals. They would rather have seen the state collapse than share it with the German freedom party. They recognized only too soon that the Germans in Austria were bound to be a pillar of the state whether they wanted to be or not, that one could rule without danger in Austria without the Germans and even against them, because the Germans were not in a position to form a serious opposition; and they oriented their policy accordingly.
Thus every straightforward policy was made impossible for the Germans of Austria. They could not work seriously for democracy, for that would have been national suicide; they could not renounce the Austrian state because, despite everything, it still offered protection against the most extreme oppression. From this division the divided German policy developed.
The essence of the policy was maintaining the national patrimony, as it was called, that is, the effort to hold back the gradually occurring annihilation of the German minorities strewn about in territory of foreign settlement. From the beginning that was a hopeless undertaking, for these minorities were fated to disappear.
Only the peasant settlements had the possibility, where the German settlers were living together in self-contained villages, of still preserving their German character. Of course, even here the process of de-Germanization goes on uninterruptedly. Even mere economic contact with neighbors of foreign nationality, which becomes all the more active as economic development proceeds, wears away at their special character and makes it difficult for a small colony far removed from the main stem of its people to preserve its mother tongue. The effect of the school is added; even the German school in foreign land must include the language of the country in the curriculum if it is not to make the later advancement of the children all too difficult. Once the youth learns the language of the country, however, there begins that process of adaptation to the environment that finally leads to complete assimilation. What is decisive, however, is that a locality in the modern economic organism in which constant migrations must take place cannot long exist without immigration from the outside or without loss of population to the outside. In the first case the locality is exposed to being inundated by members of foreign nationalities and, in further consequence, to the native population's also losing its original national character; in the second case, the leftover part of the population remaining behind may well preserve its original nationality, but the emigrants become nationally alienated. Of the numerous peasant settlements that had arisen, strewn about and isolated, in the Habsburg lands, only those where modern industry or mining developed did become alienated from German character. In the remaining ones immigration from outside was lacking. But the better, more energetic elements are gradually moving away; they may gain economically thereby, but they lose their nationality. The ones remaining behind can preserve their national character but often suffer from inbreeding.
In short, the German minorities in cities strewn about in Slavic land were hopelessly fated to decline. With the abolition of the pre-1848 labor-rent system, the migration movement set in in Austria also. Internal migrations took place on a large scale. Thousands moved from the countryside into the cities and industrial centers, and the immigrants were Slavs, who quickly pushed the Germans into the numerical minority.On the causes of the faster population growth of the Slavs, to which is to be ascribed the fact that the movement into the cities in Austria had a predominantly Slavic character, cf. Hainisch, Die Zukunft der Deutsch?sterreicher (Vienna: 1892), pp. 68 ff.
Thus the Germans of the cities saw the Slavic tide rising all around them. Around the old center of the city, where German townspeople had dwelt for centuries, a garland of suburbs developed where no German sound was heard. Within the old city everything still bore a German stamp: the schools were German, German was the language of the city administration, and the Germans still held all municipal offices. But day by day their number dwindled. First the German petty bourgeoisie disappeared. Bad times had come for the crafts and trades, on whose golden base the German colonization of these lands had once grown up; they declined uninterruptedly, for they were not capable of competing with factory industry, just that industry that was attracting the Slavic workers. The German master craftsman sank into the proletariat; and his children, who went into the factory along with the Slavic immigrants, became Slavs through contact with their new comrades. But the German patrician families also became ever smaller in number. They became poor because they could not adapt to the new conditions, or they died out. Replacements did not come. Earlier, those who had risen from below became German. This was now no longer true. Slavs who had become rich were no longer ashamed of their national character. If the old German families shut themselves off from the upstarts, they formed a new Slavic society of the upper strata.
The German policy in Austria, which was based on maintaining the political power position of these minorities, became in this way a conservative, a reactionary, policy. Every conservative policy, however, is fated from the start to fail; after all, its essence is to stop something unstoppable, to resist a development that cannot be impeded. What it can gain at best is time, but it is questionable whether this success is worth the cost. Every reactionary lacks intellectual independence. If one wanted to apply here metaphors taken over from military thinking, as is usual for all lines of political thought in Germany, then one could say that conservatism is defense and, like every defense, lets the terms be dictated to it by its adversary, while the attacker dictates the terms of action to the defender.
The essence of German policy in Austria had become that of holding lost positions as long as possible. Here one struggled over the seats in the administration of a municipality, there over a chamber of commerce, there again over savings bank or even over only a government job. Little questions were puffed up to great significance. It was bad enough that the Germans thereby put themselves repeatedly in the wrong when, for example, they denied the Slavs the establishment of schools or when they sought with the means of power available to them to make forming clubs or holding meetings more difficult. But it was still worse that in these struggles they a]ways suffered and were bound to suffer defeats and that they thereby became accustomed to being always in retreat and being always defeated. The history of the German policy in Austria is a chain of uninterrupted failures.
These conditions had a devastating effect on the German spirit. People gradually grew accustomed to looking at every measure, every political matter, exclusively from the viewpoint of its local significance. Every reform in public life, every economic measure, every construction of a road, every establishment of a factory, became a question of national patrimony. To be sure, the Slavs also looked at everything from this point of view, but the effect on the political character of the nation was different with them. For through these ways of thinking the Germans became reactionaries, enemies of every innovation, opponents of every democratic arrangement. They left to the Slavs the cheap fame of being fighters for the modern European spirit in Austria and took it upon themselves again and again to support and defend what was out of date. All economic and cultural progress and especially every democratic reform that was carried through in Austria was bound to work against the German minorities in the polyglot territories. It was therefore resisted by the Germans; and if it finally triumphed, then this victory was a defeat for the Germans.
This policy also deprived the Germans of every freedom against the Crown. In the revolution of 1848 the Germans of Austria had risen against the Habsburgs and their absolutism. But the German Liberal Party, which had written the principles of 1848 on its banner, was not in a position to lead the struggle against the Dynasty and against the Court with vigor. It had no firm ground under its feet in the polyglot lands; it was dependent on the favor and disfavor of the government there. If the Court wanted, it could annihilate it; and it did so too.
The empire of the Habsburgs was erected by Ferdinand II on the ruins of the freedoms of the estates and the ruins of Protestantism. It was not only the Bohemian estates that he had to fight against, but also the Styrian and Austrian. The Bohemian rebels fought against the Emperor in alliance with those of Lower and Upper Austria; and the Battle on the White Mountain established the absolute rule of the Habsburgs not only over Bohemia, Moravia, and Silesia but also over the Austrian lands. From the beginning the Habsburg Empire was neither German nor Czech; and when in 1848 it had to fight for its existence anew, Czech and German freedom movements alike were against it. After the establishment of sham constitutionalism in the sixties, the Court would much rather have relied on the Slavs than on the Germans. For years the government was carried on with the Slavs against the Germans; for nothing was more hateful to the Court than the German element, which could not be forgiven for the loss of political position in the German Reich. But all the concessions of the Court could not hold the Czechs and South Slavs firm to the authoritarian state. Among all other peoples of Austria the democratic idea triumphed over the authoritarian idea; it was not possible for the authoritarian state to work with them in the long run. Only with the Germans was it otherwise. Against their will they could not get loose from the Austrian state. When the state called them, they were always at its service. In the Empire's death hour the Germans stood loyal to the Habsburgs.
A turning point in the history of the German-Austrians was the Peace of Prague, which drove Austria out of the political structure of Germany. Now the naive belief was done for that Germanness and Austrianness could be reconciled. Now it seemed that one had to choose between being German and being Austrian. But the Germans in Austria did not want to see the necessity of this decision; they wanted, as long as they could, to remain both Germans and Austrians at the same time.
The pain that the German-Austrians felt in 1866 over the turn of events went deep; they never were able to recover from the blow. So quickly had the decision broken over them, so quickly had the events played themselves out on the battlefield, that they had scarcely become conscious of what was going on. Only slowly did they grasp the meaning of what had happened. The German fatherland had expelled them. Were they then not also Germans? Did they not remain Germans, even if there was no place for them in the new political structure being erected on the ruins of the German Confederation?
No one has given better expression to this pain than the aged Grillparzer. He who put into the mouth of Ottokar von Horneck the praise of the "rosy-cheeked youth" Austria and made Libussa proclaim a great future to the Slavs in obscure words,"You who have long served will finally rule" (Libussa, fifth act). he, who was totally an Austrian and totally a German, finds his equilibrium again in the proud verses:
Als Deutscher ward ich geboren,Bin ich noch einer?Nur was ich deutsch geschrieben,Das nimmt mir keiner.[As a German I was born,Am I one still?Only what I have written in GermanNo one takes away from me.]But the German-Austrians had to come to terms with the fact that no Germany still existed, only a Great Prussia. From then on they no longer existed for the Germans in the Reich; they no longer bothered themselves about them, and every day the facts belied the pretty words spoken at gymnastic and shooting festivals. The Great Prussian policy prepared to travel those paths on which it finally wound up at the Marne. It no longer cared about the Germans in Austria. The treaties that bound the Austro-Hungarian Monarchy with the German Reich from 1879 on were concluded by the Great Prussian authoritarian government with the Emperor of Austria and the Magyar oligarchy in Hungary. Precisely they took away from the Germans in Austria the hope of being able to count on the help of the Germans in the Reich with regard to irredentist strivings.
The defeat that the Great German idea had suffered at Königgrätz was at first papered over by the fact that precisely because of the unfortunate outcome of the war the German liberal Party for a short time acquired a certain, if limited, influence on state affairs. For a dozen years it could furnish ministers to the government; during this time it repeatedly furnished ministers, even the Prime Minister, and pushed through many important reforms against the will of the Crown, the feudal nobility, and the Church. With extreme exaggeration, that has been called the rule of the Liberal Party in Austria. In truth, the Liberal Party never ruled in Austria; it could not rule. The majority of the people never followed its banners. How could non-Germans also have joined this German party? Among the Germans it always, even when it was flourishing, met strong opposition from the Alpine peasants blindly following the clergy. Its position in the House of Deputies rested not on having the majority of the people behind it but on the electoral system, which in a subtle manner favored the upper middle class and the intelligentsia but withheld the right to vote from the masses. Every extension of the right to vote, every change in the arrangement of electoral districts or of the manner of voting, had to be and was damaging to it. It was a democratic party, but it had to fear the consistent application of democratic principles. That was the inner contradiction from which it suffered and from which it was finally bound to be ruined; it resulted with compelling necessity from that proton pseudos [basic fallacy] of its program, which sought to reconcile Germanness with Austrianness.
The German Liberal Party could exert a certain influence on the government as long as this was allowed to it from above. The military and political defeats that the old Austrian princely state had repeatedly suffered compelled the Court to yield temporarily. The Liberals were needed; they were summoned into the ministries not, as it were, because they could no longer be resisted but rather because only they could be expected to put state finances in order and carry through the defense reform. Since no one knew where else to turn, they were entrusted with the reconstruction as the only party that affirmed Austria. They were dismissed in disfavor when they were thought to be no longer needed. When they tried to resist, they were annihilated.
Then Austria gave up on itself. After all, the German Liberal Party had been the only one that had affirmed this state, that sincerely desired it and acted accordingly. The parties that the later governments depended on did not desire Austria. The Poles and Czechs who held ministerial portfolios were not seldom competent as specialists and even sometimes pursued a policy that benefited the Austrian state and its peoples. But all their thinking and efforts always concerned only the national plans for the future of their own peoples. Their relation to Austria was always guided only by regard to their peoples' strivings for independence. To their own consciences and to the fellow members of their nationality, their administration of office seemed valuable only for the successes that they obtained in the national emancipation struggle. Not because they had administered their offices well were they given credit by their fellow countrymen, on whose opinion alone they as parliamentarians laid weight, but because they had done much for national separatism.
Besides being filled by Czechs, Poles, and occasional South Slavs and clerical Germans, the highest positions of the Austrian authoritarian government were almost always filled by officials whose only political goal was the maintenance of the authoritarian government and whose only political means was divide et impera. Here and there an old Liberal still turns up in between, usually a professor seeking in vain to swim against the current, only finally, after many disappointments, to disappear again from the political scene.
The point at which the interests of the Dynasty and of the Germans seemed to meet was their aversion to democracy. The Germans of Austria had to fear every step on the way to democratization because they were thereby being driven into the minority and delivered up to a ruthless arbitrary rule of majorities of foreign nationality. The German Liberal Party recognized that fact and turned energetically against all efforts for democratization. The contradiction with its liberal program into which it thereby fell caused its ruin. Faced with a historic decision in which it had to choose between the wretched muddling along of the Austrian state for a few decades at the price of giving up the freedom-oriented principles of its program and the immediate annihilation of this state with sacrifice of the German minorities in the territories of foreign language, it undoubtedly made the wrong choice. It may be blamed for that. Yet nothing is more certain than that in the position it found itself in, it could not choose freely. It simply could not sacrifice the minorities any more than the German parties that succeeded it in Austria could do so.
No reproach is less justified, therefore, than that the German liberals had been poor politicians. This judgment is usually based on their position on the question of the occupation of Bosnia and Herzegovina. That the German Liberal Party had spoken out against the imperialist tendencies of Habsburg militarism was much held against it, especially by Bismarck. Today one will judge otherwise about that. What was previously a matter of reproach against the German Liberal Party—that it had sought to resist militarism and that it went into opposition right at the beginning of the expansion policy that finally led to the Empire's downfall—will in the future redound to its praise and not to its blame.
The German Liberal Party had in any case a much deeper insight into the conditions of existence of the Austrian state than all other powers and parties operating in this country. The Dynasty, especially, had done its utmost to hasten the destruction of the Empire. Its policy was guided less by rational considerations than by resentment. It persecuted the German liberal Party in blind rage with its hate, even beyond the grave. Since the German Liberals had become antidemocratic, the Dynasty, which always wanted only to restore the old princely state and to which even the authoritarian state seemed too modern a form of state constitution, thought it could indulge in democratic antics from time to time. Thus it repeatedly pushed through the extension of the right to vote against the will of the Germans, each time with the result that the German elements in the House of Deputies lost ground and the radical-national elements of the non-Germans won ever greater influence. Austrian parliamentarianism was thereby finally blown apart. With Badeni's electoral reform of the year 1896 the Empire entered a state of open crisis. The House of Deputies became a place in which the deputies no longer pursued any goal other than to demonstrate the impossibility of the continued existence of this state. Everyone who observed party relations in the Austrian House of Deputies was bound to recognize immediately that this state could still drag out its existence only because European diplomacy was at pains to postpone the danger of war as long as possible. Already twenty years before the end of the war, the domestic political conditions of Austria were more than ripe for collapse.
The German parties that succeeded the German Liberals showed much less insight into political conditions than the much-reviled German Liberals. The German Nationalist factions, which energetically fought the German Liberals, behaved like democrats at the beginnings of their party activity, when they were still concerned with overcoming the German Liberals. Very soon, however, they had to recognize that democratization in Austria was identical with de-Germanization, and from this recognition they then became just as antidemocratic as the German Liberals had once become. If one disregards the resonant words with which they sought in vain to conceal the paltriness of their program, as well as their anti-Semitic tendencies, which from the standpoint of maintenance of German character in Austria had to be called downright suicidal, then the German Nationalists really differed from the German Liberals only on one single point. In the Linz Program they gave up German claims to Galicia and Dalmatia and contented themselves with claiming for Germanism the lands of the former German Confederation. In raising this claim, however, they clung to the same error that the German Liberals had committed, namely, underrating the capacity for development and the prospects for the future of Slavs of western Austria. They had decided just as little as the German Liberals to sacrifice the German minorities scattered in foreign-language lands, so that their policy incorporated the same irresolution as that of the old German Liberals. They did indeed play with Irredentist thoughts more often than the Liberals, but they never had anything seriously in mind other than maintaining the Austrian state under German leadership and German predominance. Faced with the same choice that the German Liberals had been faced with, they trod the same path that the Liberals had already embarked on before them. They decided for the maintenance of the Empire and against democracy. Thus their fate also became the same as that of the old German Liberals. They were used by the Dynasty in the same way as the Liberals. The Dynasty could treat them as badly as possible and yet knew that it could always count on them.
The greatest error that the German Liberals committed in judging their fellow citizens of foreign language was that they saw in all non-Germans nothing but enemies of progress and allies of the Court, of the Church, and of the feudal nobility. Nothing is easier to understand than that this interpretation could arise. The non-German peoples of Austria were equally averse to Great-Austrian and Great-German aspirations; they had recognized earlier than all others, earlier even than the German Liberal party, that Austria's support was to be sought only in the party association of the German liberals. To annihilate the German Liberal Party therefore became the most important and at first the only goal of their policy, and in so doing they sought and found as allies all those who, like them, were fighting this party to the death. Thus the serious error for which they paid dearly could arise among the liberals. They misunderstood the democratic element in the fight of the Slavic nations against the Empire. They saw in the Czechs nothing other than the allies and willing servants of the Schwarzenbergs and Clam-Martinics. The Slavic movement was compromised in their eyes by its alliance with the Church and the Court. How, also, could those men who had fought on the barricades in 1848 forget that the uprising of the German bourgeoisie had been put down by Slavic soldiers?
The mistaken position of the German Liberal Party on national problems resulted from this misunderstanding of the democratic content of the nationality movements. Just as they did not doubt the final victory of light over darkness, of the Enlightenment over clericalism, so they also did not doubt the final victory of progressive Germanism over the reactionary Slavic masses. In every concession to Slavic demands it saw nothing other than concessions to clericalism and militarism.Note that Marx and Engels had also fallen into the same error; quite like the Austrian-German Liberals, they too saw reactionary doings in the national movements of the nations without history and were convinced that with the unavoidable victory of democracy, Germanism would triumph over these dying nationalities. Cf. Marx, Revolution und Kontrerevolution in Deutschland, German translation by Kautsky, third edition (Stuttgart: 1913), pp. 61 ff.; Engels (Mehring, loc. cit.), pp. 246 ff. Cf. in addition Bauer, "Nationalit?tenfrage," loc. cit., pp. 271 f.
That the position of the Germans on the political problems of Austria was determined by the force of the conditions into which history had placed them is best shown by the development of the nationality program of German Social Democracy in Austria. Social Democracy had first won ground in Austria among the Germans, and for long years if was and remained no more than a German party, with a few fellow travelers among the intellectuals of the other nationalities. At this time when, because of the electoral system, it was scarcely possible for it to play a role in Parliament, it could regard itself as uninvolved in the national struggles. It could take the position that all national quarrels were nothing more than an internal concern of the bourgeoisie. On the vital questions of Germanism in Austria, it took no position other than that of its brother party in the German Empire toward the foreign policy of the Junkers, of the National Liberals, or even of the Pan-Germans. If those German parties that were waging the national struggle reproached it, like the German clericals and the Christian Socialists, for harming its own people by its behavior, well, this was thoroughly justified at the time, even though the extent of this damage was only slight precisely because of the also slight political significance of Social Democracy at the time. The more, however, the significance of Social Democracy in Austria grew—and it grew above all because in Austrian conditions Social Democracy was the only democratic party among the Germans of Austria—it was all the more bound to acquire the responsibility that was incumbent on every German party in Austria in national questions. It began to become German-nationalist; then, no more than the two older German parties of Austria, could it get around the conditions that had brought Germanism and democracy into contradiction in Austria. Just as the German Liberal Party finally had to drop its democratic principles because following them was bound to lead to harming Germanism in Austria, just as the German Nationalist Party had done the same, so Social Democracy too would have had to do this if history had not forestalled it and shattered the Austrian state before this turn of events was fully completed.
After a series of programmatic declarations of merely academic value had been overtaken by the facts, Social Democracy at first made a try with the program of national autonomy.Cf. Marx, Revolution und Kontrerevolution in Deutschland, pp. 52 ff.
There is no doubt that this program rests on a deeper grasp of nationality problems than the Linz Program, on which, though, the flower of German Austria at the time had also collaborated. In the decades between these two programs, much had taken place that was bound to open the eyes of the Germans of Austria also. But there, too, they could not escape the constraint that historical necessity had placed on them. The program of national autonomy, even if it spoke of democracy and self-government, was also basically nothing but what the nationality programs of the German Liberals and the German Nationalists had really been in essence: namely, a program for saving the Austrian state of Habsburg-Lorraine dominion over the Imperial and Royal hereditary lands. It claimed to be much more modern that the older programs, but it was in essence nothing else. One cannot even say that it was more democratic than the earlier ones, for democracy is an absolute concept, not a concept of degree.
The most important difference between the program of national autonomy and the older German nationality programs is that it feels the necessity of justifying the existence and demonstrating the necessity of the existence of the Austrian state not only from the standpoint of the Dynasty and from the standpoint of the Germans but also from that of the other nationalities. And it does not content itself, moreover, with those showy phrases that were usual among the so-called black-and-yellow writers, as, for example, with a reference to the maxim of Palacky that one would have had to invent Austria if it had not already existed. But this argument, which was worked out particularly by Renner, is totally untenable. It starts with the idea that maintaining the Austro-Hungarian customs territory as a distinct economic territory is in the interest of all the peoples of Austria and that each one, therefore, has an interest in creating an order that maintains the viability of the state. That this argument is not correct has already been shown; when one has recognized the faultiness of the program of national autonomy, then one sees immediately that it contains nothing but an attempt to find a way out of the nationality struggles without destroying the Habsburg state. Not quite unjustifiably, therefore, the Social Democrats have occasionally been called Imperial and Royal Social Democrats; they did appear as the only pro-state party in Austria, especially at those moments of the kaleidoscopically changing party constellation in Austria when the German Nationalists temporarily set aside their Austrian sentiment and behaved irredentistically.
The collapse of Austria saved Social Democracy from going too far in this direction. In the first years of the World War, Renner, in particular, did everything in this respect that was at all possible with his doctrines that opponents called social imperialism. That the majority of his party did not unconditionally follow him on this path was not a merit of its own but rather the consequence of growing dissatisfaction with a policy that was imposing the most extreme bloody sacrifices on the population and condemning it to hunger and misery.
The German and German-Austrian Social Democrats could represent themselves as democratic because they were opposition parties without responsibility as long as the German people could not fully accept democratic principles, fearing that their application would harm the Germans in the polyglot territories of the East. When, with the outbreak of the World War, a part, perhaps the largest part, of the responsibility for the fate of the German people fell to them too, they also took the path taken before them by the other democratic parties in Germany and Austria. With Scheidemann in the Reich and with Renner in Austria they made the change that was bound to take them away from democracy. That Social Democracy did not proceed further on this path, that it did not become a new guard of the authoritarian state which, with regard to democracy, would scarcely have been different from the National Liberals in the Reich and the German Nationalists in Austria—that was due to the sudden change in conditions.
Now, with defeat in the World War and its consequences for the German position in the territories with mixed population, the circumstances have been removed that previously forced all German parties away from democracy. The German people can today seek salvation only in democracy, in the right of self-determination both of individuals and of nations.The same causes that held the German people back from democracy were at work in Russia, Poland, and Hungary also. One will have to draw them into the explanation if one wants to understand the development of the Russian Constitutional Democrats or of the Polish club in the Austrian Imperial Council or of the Hungarian party of 1848.
Recorded at the Mises Institute in Auburn, Alabama, on 21 July 2021. Download the slides from this lecture at Mises.org/MU21_PPT_25.
Recorded at the Mises Institute in Auburn, Alabama, on 19 July 2021. Includes an introduction by Jeff Deist.
Hans Hoppe’s famous “argumentation ethics” has generated a great deal of attention among libertarians, and deservedly so. Has Hoppe produced an ironclad demonstration that people have libertarian rights? I don’t propose to contribute to that discussion on this occasion. Rather, I should like to focus on a preliminary issue. It is one to which Hoppe has also made an outstanding contribution, but it has been neglected owing to the fascination of argumentation ethics.
The contribution takes rise from a penetrating question he asks: What is the origin of disputes about property? In his important essay, “The Justice of Economic Efficiency,” he answers in this way:
Let me clarify an essential similarity between the problem facing political economy and that facing political philosophy—a similarity that political philosophers in their widespread ignorance of economics generally overlook only to wind up in endless ad hoceries. The recognition of scarcity is not only the starting point for political economy; it is the starting point of political philosophy as well. Obviously, if there were a superabundance of goods, no economic problem whatsoever would exist. With a superabundance of goods such that my present use of them would neither reduce my own future supply nor the present or future supply of them for any other person, ethical problems of right or wrong, just or unjust would not emerge either since no conflict over the use of such goods could possibly arise. Only insofar as goods are scarce are economics and ethics required. In the same way, just as the answer to the problem of political economy must be formulated in terms of rules constraining the possible uses of resources qua scarce resources, political philosophy too must answer in terms of property rights. In order to avoid inescapable conflicts, it must formulate a set of rules assigning rights of exclusive control over scarce goods. (Note that even in the Garden of Eden, a person’s body, the space occupied by that body, and time would still be scarce and to that extent political economy and philosophy would still have a task, however limited, to fulfill.)
Hoppe makes even clearer the fundamental importance of scarcity and conflict in this passage, from “The Problem of Social Order”:
Robinson Crusoe, alone on his island, can do whatever he pleases. For him, the question concerning rules of orderly human conduct—social cooperation—simply does not arise. Naturally, this question can only arise once a second person, Friday, arrives on the island, yet even then, the question remains largely irrelevant so long as no scarcity exists. Suppose the island is the Garden of Eden. All external goods are available in superabundance. They are “free goods,” such as the air that we breathe is normally a “free” good. Whatever Crusoe does with these goods, his actions have repercussions neither with respect to his own future supply of such goods, nor with regard to the present or future supply of the same goods for Friday (and vice versa). Hence, it is impossible that there could ever be a conflict between Crusoe and Friday concerning the use of such goods. A conflict becomes possible only if goods are scarce, and only then can there arise a problem of formulating rules which make orderly, conflict-free social cooperation possible.
Hoppe’s solution to the problem of conflict rests on two premises. First, all rights are property rights. Second, property rights must be specified in a way that precludes different people from having control over the same resource. If the first premise is true, then if conflicts over property rights can be avoided, all conflicts over rights can in principle be settled. The second premise is merely another way of stating the requirement that the delimitation of property rights avoids conflict.
We must now inquire, is the first premise true? Murray N. Rothbard has made the most effective defense of it, and, as is often the case, Hoppe is his faithful disciple. As Rothbard explains, ostensible human rights that are not “cashed out” in property rights, such as the right to free speech, are intolerably vague. Once property rights have been properly determined, no other rights are needed:
[H]uman rights, when not put in terms of property rights, turn out to be vague and contradictory, causing liberals to weaken those rights on behalf of “public policy” or the “public good.” As I wrote in another work [Man Economy and State, chap. 18]:
Take, for example, the “human right” of free speech. Freedom of speech is supposed to mean the right of everyone to say whatever he likes. But the neglected question is: Where? Where does a man have this right? He certainly does not have it on property on which he is trespassing. In short, he has this right only either on his own property or on the property of someone who has agreed, as a gift or in a rental contract, to allow him on the premises. In fact, then, there is no such thing as a separate “right to free speech”; there is only a man's property right: the right to do as he wills with his own or to make voluntary agreements with other property owners. (The Ethics of Liberty, chap. 15)
Everything, then, depends on specifying property rights in such a way as to avoid conflict. How may this be done? Hoppe claims that the way to do this has been well known for centuries.
I did not discover this solution, nor did Rothbard, for that matter. Rather, the solution has been known for hundreds of years if not for much longer. Murray Rothbard’s claim to fame is “merely” that he rediscovered this old and simple solution and formulated it more clearly and convincingly than anyone before him. Let me begin by formulating the solution—first for the special case represented by the Garden of Eden and subsequently for the general case represented by the “real” world of all-around scarcity—and then proceed to the explanation of why this solution, and no other one, is correct. In the Garden of Eden, the solution is provided by the simple rule stipulating that everyone may place or move his own body wherever he pleases, provided only that no one else is already standing there and occupying the same space. Outside of the Garden of Eden, in the realm of all-around scarcity, the solution is provided by this rule: everyone is the proper owner of his own physical body as well as of all places and nature-given goods that he occupies and puts to use by means of his body, provided only that no one else has already occupied or used the same places and goods before him. This ownership of “originally appropriated” places and goods by a person implies his right to use and transform these places and goods in any way he sees fit, provided only that he does not thereby uninvitedly change the physical integrity of places and goods originally appropriated by another person. (“Rothbardian Ethics,” in The Economics and Ethics of Private Property, p. 386, emphasis in original)
Hoppe claims not only that this rule avoids conflicts in resources, but that one is rationally required to adopt it. To explain this would require an account of argumentation ethics, but it is enough for now to set out the basics of the problem of social order as this noted thinker takes them to be.
Pregnant Nicole Harper was doing what she was supposed to do: she was slowing down and signaling that she was looking for a safe place to pull over. That's when a state trooper decided to flip her car over.
Original Article: "Pregnant Woman Tries to Comply with Police Orders, Then the Cop Attacks Her"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
While the recent clamp-down on power from public universities has mainly been in the realm of speech and expression, like almost every other government institution, they have used covid-19 as an opportunity to control students further.
Original Article: "Government Schools Use Covid as an Excuse to Tighten Totalitarian Grip"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
It’s been said by democracy’s critics that the system is essentially two wolves and a sheep deciding what’s for dinner. But to its defenders, democracy has been described as an ethical ideal and a way of life—these conceptions nearly implying a metaphysical manifestation
Original Article: "Democracy According to The Office"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
ABSTRACT: Herbert Spencer and F.A. Hayek developed bodies of liberal political thought that stress the importance of evolutionary social adaptation as a type of spontaneous order. An evolutionary social theory, properly understood, can form part of a liberal theory of politics. Improperly understood, it has been employed to form defenses of the modern nation-state, and nation-states are not products of spontaneous social evolution but rather are destructive of it. Hayek and Spencer both regard social evolution as a process that is progressive in nature, producing large, complex industrial societies. Their emphasis on the importance of our lack of knowledge needed to design social norms and of the destructive nature of efforts to do so generally supports the classical liberal values of limited government and personal freedom for which they argued. On the other hand, their evolutionary arguments to explain the emergence and persistence of freedom and limited government in mass societies are deficient, because the evolutionary arguments on which they rely depend upon social rules being established and sustained in smaller societies than the mass societies they imagine as the end of social evolution. A consistent liberal evolutionist, therefore, would not also defend the nation-state.
Keywords: evolution, spontaneous order, herbert spencer, friedrich hayek, classical liberalism
Dr. Boykin is Associate Professor of Political Science, Georgia Gwinnett College (sboykin@ggc.edu). The author thanks his colleagues Dr. Laura Bourland, Dr. Dovilė Budrytė, and Dr. Laura Young for comments on an early draft of the article.
F. A. Hayek once described himself as a “ghost from the nineteenth century” (Hayek 1982, 287). He does in fact form a bridge in the tradition of classical liberal thought between the nineteenth and twentieth centuries; in particular, his use of evolutionary theory to support political and economic liberalism revives a number of Herbert Spencer’s core ideas. This article compares the main views of Hayek and Herbert Spencer and argues that their evolutionary analyses should not include the nation-state.
Considering Spencer and Hayek together is significant for two reasons. First, as a matter of intellectual history, the likeness of Hayek’s and Spencer’s central ideas is remarkable. Hayek seldom refers to Spencer, and he never acknowledges any acquaintance with Spencer’s antirationalist social theory or psychology, both of which argue along lines quite similar to his own. Hayek’s contribution to political theory lies in his effort to build a system of liberal thought on the ideas of spontaneous order and social evolution, and his writings have played an important role in recent developments in classical liberal thought. Like Hayek, Spencer mounted a systematic defense of classical liberalism on the same fundamental ideas and was an intellectual leader among the liberals of his day. Given the critical notice devoted to Hayek over the last two decades, it is unfortunate that interest in Spencer’s work faded so quickly after his death in 1904.
Second, the measure of agreement between Hayek and Spencer represents the attributes of a distinctive political argument. Spencer’s and Hayek’s defense of classical liberalism rests ultimately on their claim that once evolution gives rise to liberal societies, it becomes irrational to turn back. This is so, they argue, because our inevitable lack of knowledge of complex social phenomena in developed societies and our reliance on tacit or inarticulate knowledge makes market intervention and social planning, which they interpret as a return to the institutions of preliberal societies, impracticable and destructive. This line of thought became more pronounced in Hayek’s later work, but much the same type of argument was clearly spelled out in Spencer’s writings of the nineteenth century. The side-by-side comparison of Hayek and Spencer offered here brings the key elements of this defense of classical liberalism into sharp focus and provides a perspective from which the theoretical possibilities and implications of this type of liberal thought can be fleshed out.
Finally, this article builds to an analytical point of current interest: a coherent liberal evolutionism should not include the nation-state. In broad outline, Spencer’s and Hayek’s contrast of societies established and maintained by consciously designed order and those that emerged through an evolved order of norms has much to offer libertarian political theory. On the other hand, their evolutionary arguments to explain the emergence and persistence of freedom and limited government in mass societies are deficient, because the evolutionary arguments on which they rely depend upon social rules being established and sustained in societies smaller than the mass societies they imagine as the end of social evolution. In fact, we should expect evolved social rules to decay and disappear in mass societies, creating a vacuum that leads to the growing political power that Spencer and Hayek warn against. A consistent liberal evolutionist would not defend the nation-state. A coherent liberal evolutionism does not regard social and cultural development as having a historical direction such as greater group size, and it is the state, not evolution, that establishes the ever-larger societies that Spencer and Hayek envision through force, not voluntary cooperation. A well-developed and properly circumscribed theory of social evolution can help illuminate the emergence of institutions that form the framework of a free society, including private property, markets, and such intermediate social structures as the nuclear family. An evolutionary social theory, properly understood, can form part of a libertarian political theory. It should not be employed to form defenses of the modern nation-states, which are not products of spontaneous social evolution but rather are destructive of it because they create societies too large for evolved cultural rules to persist.
The first two sections discuss and compare Spencer’s and Hayek’s theories of social evolution. The final section shows why the evolutionary processes they describe do not operate successfully in mass societies and thus that a liberal evolutionism should not include the nation-state.
I. SPENCER ON SOCIAL EVOLUTION Spencer is popularly misconceived as a crude “social Darwinist” who regarded social evolution as a brutal contest among individuals (see, e.g., Hoftstadter 1955, 41–46). His views were not that simple. He argued that social evolution tends toward the development of larger, more complex societies that produce greater freedom and want satisfaction for their members. For Spencer, social evolution produces moral sentiments that support principled behavior based on ideas of just conduct and altruism.
Social evolution proceeds in part by means of group competition and in part by means of individual competition. Group selection involves, in the most visible way, armed conflict among societies in which some displace or subsume others. More generally, social or “superorganic” evolution proceeds by group selection as the cultural institutions and practices of a group that serve group survival functions tend to persist and enable that group’s practices and institutions to displace those which are less effective at promoting group survival in other groups. This is a key locus of social evolution, and it is an aspect of Spencer’s thought that is similar to Hayek’s. Social evolution for Spencer also involves competition among individuals, though his view of individual competition places greater emphasis on individual adaptation than the “social Darwinism” with which he is popularly associated (Taylor 2007, 52–56; Carneiro and Perrin 2002, 233).“Social Darwinism” is a concept invented by Richard Hoftstadter ([1944] 1983) and never described a real movement in sociology or political thought. Hofstadter created the philosophical bogeyman of a laissez-faire capitalism grounded in the idea that individual competition would eliminate the weak and unfit and produce a superior species, but the authors to whom he applied the term, particularly Spencer and William Graham Sumner, did not really employ such an idea, so “social Darwinism” was for Hofstadter “an epithet to discredit views he opposed” (Leonard 2009, 41). This last dimension of social evolution occurs within a much broader process of social change operating at the level of social groups. A key feature of Spencer’s thought that is of particular importance for the argument in part III below is that he views social evolution as including violent conquest to establish states and as progressive in producing larger societies. He regards regressive change to “militancy” and socialism as a product of bad policy rather than as a by-product of mass societies.
Social Evolution
Spencer’s theory of social evolution is grounded initially in his psychology, which sought to harmonize empiricism and a subjectivism derivative of Kant’s epistemology via evolutionary theory. The human mind develops through experience of the world, but our experience is a translation of the environment through our nervous systems, which we have inherited and which develop over our lifetimes in response to our interaction with our environment. We learn through trial and error in our experiences, and learning modifies the connections in the nervous system that classify the phenomena we encounter (Spencer 1896, 1:330–75, 468–96). Individuals’ minds grow more complex through learning and adaptation, and many of the connections of the nervous system are passed on to subsequent generations by means of Lamarckian transmission of acquired characteristics (1:439–67). As a result, the minds of human beings have become more complex over the course of generations.
Spencer describes social evolution in terms of variation and natural selection among both individuals and groups. Human action is goal directed, and “adjusted actions are preceded by unadjusted ones” (Spencer [1897] 1982, 1:50). Behavior patterns that bring a greater degree of goal fulfillment are naturally selected over those that are less efficient. Through a testing process of trial and error, both in the individual and the group, we move to “adjusted actions” from “unadjusted ones.” The “evolution of conduct” involves competition among individuals: “[A] successful adjustment by one creature involves an unsuccessful adjustment by another creature, either of the same kind or of a different kind” (1:51–52). Spencer refers to this, however, as “imperfectly evolved conduct”; he argues that the emergence of moral constraints on individual competition increases the likelihood that more individuals in a group will realize their goals (1:59–79). Group survival also supports the emergence of altruistic behavior (1:234–38). The emergence and development of moral sentiments tempers individual competition and promotes group survival:
[C]onduct restrained within the required limits, calling out no antagonistic passions, favors harmonious cooperation, profits the group, and, by implication, profits the average of its individuals. Consequently, there results, other things equal, a tendency for groups formed of members having this adaptation of nature, to survive and spread. (2:43)
Social evolution, which involves both individual competition and group selection, tends toward the development of moral sentiments and social institutions and practices that promote optimal well-being and make “the totality of life greater” (2:52–53).
Spencer thus argues that social evolution has efficiency properties that tend to increase the quantity of want satisfaction in a society. He draws his conclusions from the emergence of animal behavior that has the results he describes, an argument to be found in the work of contemporary biologists analyzing the emergence of cooperative and altruistic behavior among animals (Smith 1978, 1982; Smith and Price 1973, 15–18; Dawkins 1989, 166–88). He uses this argument to explain the emergence of morality among human beings, equating “highly evolved conduct” with “what is called good conduct” among human beings (Spencer [1879] 1982, 1:78–79).
The morality and culture of societies evolve as “changing systems of ethics, proper to changing ratios between warlike activities and peaceful activities” under changing circumstances (Spencer [1897] 1982, 1:170; Spencer 1901, 1:442). Morals and culture evolve through an unplanned evolutionary process as groups whose practices support larger populations and produce greater want satisfaction for their members emerge and spread. As this process cannot be planned, it is a species of spontaneous social order.
Evolution and Spontaneous Social Order
Societies are analogous to individual organisms in that “both consist of mutually dependent parts. In both cases, the assumption of unlike activities by the component members is possible only on the condition that they severally benefit in due degrees by one another’s activities” (Spencer [1897] 1982, 1:175–76). Although some authors have argued that he held an organic view of societies (Offer 2010, 196–222; Paul 1988, 269–70; Paul 1983, 621), Spencer states that his reason for analogizing organisms and societies is to facilitate the depiction of evolved social order, and by no means to argue that the two types of order are the same.Spencer states that his comparison of organic and social order is only for the purpose of “illustrations of structures and functions in general.” “Here let it once more be distinctly asserted that there exist no analogies between the body politic and a living body, save those that are necessitated by that mutual dependence of parts which they display in common” (Spencer [1897] 1901, 1:592). Taylor (1992, 132) suggests that Spencer’s comparison of society and organism is intended to engender “the view that society was not an object of conscious human design” and that this limits the ability of government to rationally direct social processes (see also Gray 1985, 246–53; Simon 1960, 294–99; Elwick 2003, 35–72). For Spencer, social evolution is the emergence and development of spontaneous social order, and the ability to control spontaneous social processes in a beneficial manner is highly limited. The complexity of societies greatly limits the ability to intervene rationally on behalf of some particular goal, because the unintended consequences of such intervention may be destructive: “[T]his spontaneously-formed social organization is so bound together that you cannot act on one part without acting more or less on all parts” (Spencer [1884] 1982, 392).
Spencer argues that evolving social orders tend to grow larger, and that as they grow larger, they also grow more complex. A social order grows more complex, because as it grows larger there emerges a “progressive differentiation of structures” which “is accompanied by progressive differentiation of functions” (Spencer [1897] 1901, 1:450). As a society grows more complex, it also grows more abstract. This occurs as individuals come to rely more and more on the emerging complex relations of the social order; it is those relations which become the more permanent elements of the order, as the individuals who compose it change over time (Spencer [1897] 1901, 1:452–60; Spencer [1884] 1982, 392). Spencer identifies two ways in which a society may become larger and more complex: either a discrete social group may proliferate, or different groups may be joined together. Spencer refers to the latter as a “compound” group. A larger social order clearly requires a greater productive capacity to support it. This is made possible by structural and functional differentiation. As a society grows larger, its productive and political order becomes more complex, both in terms of structure and function (Spencer [1897] 1901, 1:463–89; Spencer [1857] 1971). It is this greater complexity that permits the support of a larger population: “But along with advance of organization, every part, more limited in its office, performs its office better; the means of exchanging benefits becomes greater; each aids all, and all aid each with increasing efficiency; and the total activity we call life, individual or national, augments” (Spencer [1897] 1901, 1:489). Social evolution thus tends toward a larger and more complex social order.
Spencer classifies societies into “militant” and “industrial” types. One way that groups grow is through conquest of one group by another or through the formation of military alliances for common defense or imperialism (Spencer [1897] 1901, 1:519–22). In such a society, military preparedness is likely to be one of the group’s main purposes. Spencer argues that if the group’s main purpose is military readiness, that purpose entails the concentration of power, which extends over the society’s productive activities as well as its relations with other groups (1:523–47). Spencer describes the “militant” society as one in which “compulsory co-operation” (coercion as opposed to voluntary cooperation) predominates (1:564) (emphasis in original).
Industrial societies evolve from militant societies, because the origin of large societies is initially in conquest or defense-oriented military alliances (Spencer [1897] 1901, 1:565). Industrial society, as a sociological type, is a construct rather than an empirically observable social order, because real societies only approximate it in some respects. In the industrial society, production is carried on by exchange rather than by government direction, and individuals in it have rights to property. Disagreements are resolved by bargaining or impartial adjudication rather than by arbitrary decisions of the state. Persons in such a society view their actions toward others as being constrained by rules and view their government as being limited in its authority over them ( 1:564–69). “Voluntary co-operation” predominates in an industrial society (1:569, emphasis in original). An industrial society may revert to the militant form through foreign threat or imperialism, and Spencer saw this as happening in the Europe of his time (Spencer [1897] 1901, 1:579–86). Spencer also saw the emergence of socialism as another means by which this transformation might occur. Socialism requires massive intervention and direction by the state in a society’s economic life, which requires the concentration of power (Spencer [1884] 1982, 498–518).
Evolution and Ethics
For Spencer, the good associated with social evolution does not rest upon the fallacious notion that whatever evolves is good in a moral sense simply because it has evolved. G. E. Moore famously attributed the naturalistic fallacy to evolutionary ethics, but he observed correctly that “[t]he view, which, as I have said, seems to be Mr. Spencer’s main view, may also be held without fallacy. It may be held that the more evolved, though not itself the better, is a criterion, because a concomitant, of the better” (Moore 1903, 54). In Spencer’s theory, social evolution inclines toward greater degrees of complexity and, in consequence, greater productivity. In industrial society, cooperative rather than coerced interaction is possible. Cooperation requires that individuals keep agreements. If they do this, they will be better off, both individually and collectively, because voluntary social relations permit the greater complexity of social relations which makes a society more productive. Voluntary social relations are also nonviolent, so that no one is actively harmed by the actions of others (Spencer [1897] 1982, 1:170–78). Nonviolent, cooperative social relations are good, because they make those who live in such an environment better off.
For beyond so behaving that each achieves his ends without preventing others from achieving their ends, the members of a society may give mutual help in the achievement of ends. And if, either indirectly by industrial cooperation, or directly by volunteered aid, fellow citizens can make easier for one another the adjustment of acts to ends, then their conduct assumes a still higher phase of evolution; since whatever facilitates the making of adjustments by each, increases the totality of the adjustments made, and serves to render the lives of all more complete ( 1:53–54).
Spencer’s argument for the good of social evolution is utilitarian. Social evolution inclines toward a larger, more complex social order that generates greater amounts of want satisfaction due to the greater productivity of the society. Also, more people may experience life itself, since the evolving social order grows larger. Life is good, Spencer argues, because life makes pleasure possible, and “the good is universally the pleasurable” (1:66).
Although Spencer's ethics are utilitarian, and he argues that acts are good if they generate utility, he is critical of the “empirical” utilitarianism that advocates choosing particular acts or rules based upon their expected social utility. Spencer argues that interpersonal comparisons of utility are too likely to be wrong to be useful, and that
Making general happiness the immediate object of pursuit, implies numerous and complicated instrumentalities officered by thousands of unseen and unlike persons, and working upon millions of other persons unseen and unlike. Even the few factors in this immense aggregate of appliances which are known, are very imperfectly known; and the great mass of them are unknown. (Spencer [1897] 1982, 1:187)
He argues that individual rights are the means to generate the greatest amount of utility in a social environment about which we have limited knowledge. The reason individuals should be treated as bearers of rights is that these rights establish an industrial society, which can support a greater number of persons enjoying higher levels of well-being (1:236–38).
As products of social evolution, Spencerian moral rights arise in particular societies as customary or conventional rules, even though Spencer, when engaging in moral philosophy, defends them as consistent with his law of equal freedom and on utilitarian grounds (Spencer [1884] 1982, 141–58; Weinstein 1998, 72–74, 156–62). Rights are “conditions to the achievement of happiness,” and “our rational course is to bring existing intelligence to bear on these products of past intelligence, with the expectation that it will verify the substance of them while possibly correcting the form” (Spencer [1897] 1982, 1:199). Spencer understood rights to liberty and the protection of private property as means to social cooperation and adaptation, “[s]o that utility, not as empirically estimated but as rationally determined, enjoins this maintenance of individual rights; and, by implication, negatives any course which traverses them” (Spencer [1884] 1982, 163–64).In Social Statics, Spencer argued that private ownership of land reduced the land available to be owned by others, so the right to property drawn from the law of equal freedom did not apply in this context. See Spencer ([1850] 1970, 103-22). Spencer thus at one time argued for a form of voluntarism or individualist anarchism, at least for the ideal society, combined with land nationalization. Whether these ideas cohere is questionable, but Spencer later vociferously rejected his early land reform idea. See Spencer ([1897] 1982, 2:455–58; [1884] 1982, 52, 116; 1904, 2:536–37). Spencer, then, may be interpreted as an indirect utilitarian in that his utilitarianism relies, not on calculations of the utility of particular rules or acts, but instead on the efficiency of spontaneous ordering processes, including social evolution (Gray 1986, 107).Indirect utilitarianism is the idea that we should select for their utility-generating consequences social systems or broad processes as opposed to specific rules (as in rule utilitarianism) or actions (as in act utilitarianism). Spencer is an indirect utilitarian in his advocacy of evolutionary social development to facilitate utility-generating consequences. He calls his indirect utilitarianism “rational utilitarianism,” meaning by the qualifier “rational” that it takes account of the constraints on our knowledge of individual actions and preferences (Spencer [1897] 1982, 2:260).
Spencer contends that social evolution tends toward an ideal society that he calls the “social state.” The most general rules of the social state, he says, can be rationally discovered and used to evaluate real societies (Spencer [1897] 1982, 1:303–05). The “social state” combines maximum individual freedom with maximum utility for each member of the society (Spencer, [1850] 1970, 62). The “social state” is based solely on voluntary agreement and is a stateless society. The stateless society in which maximum freedom is combined with maximum well-being is for Spencer the end toward which social evolution is oriented.
Spencer’s treatment of the “social state” changed over time. In his first book, Social Statics, Spencer argues that “government is essentially immoral” (Spencer, [1850] 1970, 186) because its coercive basis is so at odds with the voluntary nature of the “social state.” In the 1877 second preface to Social Statics, Spencer presents the disclaimer that in writing the book he had not sufficiently recognized “the transitional nature of all political institutions, and the consequent relative goodness of some arrangements which have no claims to absolute goodness” (Spencer, [1850] 1970, xi). He goes on to attribute his newfound relativism to the anthropological information he acquired in preparing The Principles of Sociology. In his last major work, The Principles of Ethics, Spencer places a good deal of weight on his distinction between “absolute and relative ethics.” The “adaptation of humanity to the social state” (Spencer [1897] 1982, 1:303) has not yet been completed, so humanity is not ready for its great freedom. In the meantime people will have to submit to the state and its commands because they are still not good enough to be free (Spencer [1897] 1982, 1:287–308). Spencer’s acceptance of “relative ethics,” of things as they are, follows from his claim that social evolution is moving in the direction of the “social state.” For Spencer our destiny is perfect liberty, but we must be willing to wait for some unspecified period of time to claim that liberty. His view leads to a conservative quietism that has been noted by others (Taylor 1992, 167–75; Burrow 1966, 184–87).
II. HAYEK ON SOCIAL EVOLUTION AND ETHICS Hayek’s theory of social evolution is similar in several ways to Spencer’s. Like Spencer, he relies on an evolutionary psychology and a theory of group selection and individual feedback to explain social evolution. Further, he distinguishes taxis, or societies in which planned order predominates, from cosmos, or societies in which unplanned or spontaneous order predominates. Like Spencer, he regards the growth of government in the advanced industrial states as a threat to spontaneous order and to personal freedom, and to social evolution as a type of spontaneous order. Key features of his thought that are shared with Spencer (discussed in part III below) are his view that social evolution is progressive in generating larger and growing societies and that socialism, as the transformation of cosmos into taxis, is a result of bad ideas and policies rather than the mass societies that he sees as the products of social evolution.
Social Evolution
Hayek’s psychology is important to understanding his social theory, which places great emphasis on the limited powers of human reason. In a manner surprisingly similar to Spencer’s, Hayek’s psychology is a kind of Kantian subjectivism with an evolutionary twist. Mental phenomena are “representations of the external environment” (Hayek 1952, 121). Mental experiences are distinguished and related to one another by the classification of stimuli through connections between neurons, and mental experiences derive their attributes from the “following” through which they travel in the nervous system (Hayek 1952, 61–64). Objective differences in the physical world are translated into subjective differences through the physiological following established by classification (Hayek 1952, 119). The classificatory structure evolves as the “system of connexions is acquired in the course of the development of the species and the individual by a kind of ‘experience’ or ‘learning’” (Hayek 1952, 53). The system contains perceptual and behavioral patterns that are tested through action, and the results “select and confirm those which are useful as adaptations to typical characteristics of its environment” (Hayek 1979, 42). It is probably impossible to determine how much of this system is inherited, and how much is the product of individual experience (Hayek 1952, 102). The structure becomes more complex through experience as new classes form and new relations among classes are established. The emerging complexity adds to the cognitive “map” that enables the individual to interact successfully with the environment (Hayek 1952, 109–12).
Hayek maintains that the mind’s mechanism for adaptive learning places insuperable limitations on the human capacity for knowledge. The central nervous system is a hierarchical structure in which the formation of new connections on lower levels is governed by those already present on higher ones, so the system of classification must contain “a part of our knowledge which, although it is the result of experience, cannot be controlled by experience” (Hayek 1952, 169). These include “supra-conscious” connections that guide all mental activity and of which the individual is never aware (Hayek 1967, 61; 1979, 45). Thought operates through connections that are beyond awareness and cannot be altered because they are the basis of the classificatory scheme that makes thought possible; evolutionary psychology thus reveals “the limited powers of our reason” (Hayek 1973, 33).
It is because of our lack of knowledge, Hayek argues, that we rely upon rules. For Hayek, all human action is “rule-guided.” We need not “know” a rule, in the sense that we are able to explain it, but we may nevertheless “know” the rule in the sense that we can follow it. We can be said to know a rule, furthermore, in that we can recognize whether the conduct of others conforms to the rule (Hayek 1967, 43–45; 1960, 22–25). We can therefore learn to obey such rules without having them explained to us because we can learn them by imitating the conduct of those around us (Hayek 1973, 17–18; 1988, 21–23). Knowledge of rules of conduct can contain tacit elements, so it is clear why Hayek maintains that such knowledge is acquired by imitation rather than explicit instruction by another: knowledge that is not articulate cannot be imparted through explicit instruction. Our ability to use tacit knowledge enables us to use more total knowledge, since more information may be embodied in that tacit knowledge than in what we can know explicitly.
Rules of conduct serve to adjust our behavior to an environment about which we have imperfect knowledge. Some rules will be better attuned to the environment than others, and the less adapted ones are displaced through a process of natural selection:
[I]n social evolution, the decisive factor is not the selection of the physical or inheritable properties of the individuals but the selection by imitation of successful institutions and habits. Though this operates also through the success of individuals and groups, what emerges is not an inheritable attribute of individuals, but ideas and skills—in short, the whole cultural inheritance which is passed on by learning and imitation. (Hayek 1960, 59)
Hayek's conception of social evolution thus incorporates the transmission of acquired characteristics—here through imitation—and the Darwinian theory of natural selection (Hayek 1979, 155–58; 1988, 23–28). The process operates as groups following different rules pursue their ends, testing their rules against the environment. Those rules that are better adapted to prevailing conditions will make those who act according to them more productive than those who follow less adapted rules. The rules followed by the more productive group will become the ones most widely followed, as the more productive group will grow larger due to its productivity, and as others seek to emulate the success they observe in them (Hayek 1979, 80; 1988, 70, 122–27).
Even after certain rules emerge and become dominant in an area, those who follow them need not understand the process through which they developed: “The group may have persisted only because its members have developed and transmitted ways of doing things which made the group as a whole more effective than others; but the reason why certain things are done in certain ways no member of the group needs to know” (Hayek 1973, 80). Thus “[c]ulture is neither natural nor artificial, neither genetically transmitted nor rationally designed” (Hayek 1979, 155). This is a clear difference with Spencer, for whom cultural adaptations were genetically transmitted. Hayek maintains that we should “view morals, not as innate instincts but as learnt traditions” (1988, 155), and that “[w]hat has made men good is neither nature nor reason but tradition” (1979, 160). He nonetheless recognizes, like Spencer, that organized violence may play a role in group selection because “the displacement of one group by another, and one set of practices by another, has often been bloody” (Hayek 1988, 121).
Spontaneous Order
Hayek distinguishes orders that are intentionally created, such as organizations, from orders that are emergent or evolved, which are instances of “spontaneous order” (Hayek 1973, 36–38). An intentionally created order must be structured in such a way that its creator or creators can be aware of the activities of all its parts, but a spontaneous order, not the product of intentional design, can be so complex that no one is aware of the activities of all its parts or even of all the rules that guide those activities (Hayek 1967, 66–72). A spontaneous order may also be “abstract.” In a spontaneous market order, for example, the individuals involved may not know most of the relationships that exist among them (Hayek 1973, 38). Spontaneous orders are “purpose independent.” Only orders that have been intentionally created can be said to have a purpose. So far as the spontaneous order is concerned, the aims of its components are irrelevant. The components’ “rule-guided” activity sustains the order, but the order itself is a by-product of the pursuit of the aims of the individuals within it (Hayek 1976, 1–6; 1988, 75–83).
Although spontaneous order is useful because it allows for order beyond the capabilities of design, people have less control over it than over intentionally created orders such as organizations. They cannot deliberately determine what will happen to particular components of a spontaneous order without tampering with and disrupting the order (Hayek 1967, 23–24; 1973, 41–42). Social evolution, as a type of spontaneous order, permits a society to use information efficiently in the emergence of the social rules (Hayek 1960, 56–67). Hayek regards social evolution as being itself a spontaneous process, referring to “our traditional, spontaneously evolved morals” (Hayek 1988, 134). Spontaneous order, as in the market, efficiently transmits information about the present and expected future, while social evolution transmits information about what rules have been tried and naturally selected over others in the past.
Hayek contrasts spontaneous order with planned order, and he uses the terms cosmos and taxis to refer to each, respectively. A planned order, or taxis, is governed by rules that are consciously designed to serve a specific purpose, and as a result there are limits on the kinds of things it can do. A designed order can achieve only a limited level of complexity, because the activities of each individual in the organization must be known to and regulated by some other individual. Consequently, a made order can make use of only a limited amount of information in coordinating the activities of its members. Since it is designed for some specific purpose, the number of ends that can be pursued by it are limited, and the goals of each member of the order are subordinate to the overall goals of the organization (Hayek 1952, 141–52; 1978, 77–106; 1988, 75–88).
Cosmos, or spontaneous order, on the other hand, is abstract, complex, and purpose independent. The emergence and reproduction of an order of social norms makes it possible for individuals to pursue ends that they have chosen, because the order is produced and preserved by behavior which everyone can to some extent predict. Everyone can plan for themselves based on their justified expectations about the behavior of others. Expectations about others’ conduct can be justified insofar as a society is governed by an effective order of social norms, one function of which is to lend stability and predictability to society, which enables individuals to make plans based in part on what they know about others around them. The purpose-independent nature of a spontaneous order means that it can become complex in that it can include an unlimited number of individual ends and plans that can be based on an unlimited amount of information. As far as a society’s general social order is concerned, cosmos is superior to taxis because of the amount of information that can be utilized in it. The greater the amount of usable information in a society, the greater the amount of want satisfaction can be generated by that society (Hayek 1960, 22–27; 1976, 107–32).
The state has a limited role in spontaneous social order. Its function is to “provide an effective external framework within which self-generating orders can form” (Hayek 1979, 140). Hayek’s criteria for the rule of law, that laws be general, abstract rules that are equally applied (Hayek 1960, 149–54), is intended to limit government’s ability to interfere with spontaneous social processes. Hayek has been interpreted as holding a Burkean conception of government as being itself the result of a kind of spontaneous evolution (Buchanan 1975, 183n13; Brennan and Buchanan 1985, 9–10). The limited basis for such a view is found in Hayek’s support for the common law, through which he seeks to show how the body of a society’s law may be viewed as being, in part, a product of evolution. In fact, however, Hayek’s own work on constitutional design, which includes an “ideal constitution,” makes clear that he views theory as helpful to understanding how consciously-designed governmental structures may facilitate the emergence of spontaneous order and cultural evolution (Hayek 1979).
Hayek's theory of cultural evolution might be described in part as the transformation of taxis into cosmos. Hayek notes that primitive groups resemble taxis in that the rules of such societies are oriented toward the achievement of a particular goal and might strictly regiment the members: “In its primitive form the little band did indeed possess what is still attractive to so many people: a unitary purpose, or a common hierarchy of ends, and a deliberate sharing of means according to a common view of individual merits” (Hayek 1978, 59). The emergence of private property and market exchange in some groups made these groups more productive, and these groups superseded those following older rules. As institutions supporting commerce grew, taxis was displaced by cosmos (Hayek 1988, 29–47). The driving force behind evolution in Hayek’s account is rules that conduce to the production of wealth, and, in turn, the size of the population that the group can sustain.
For Hayek, socialism is the epitome of taxis, in which the state is responsible for planning production and distribution. It is not only central planning but calls for “distributive justice” that pose a grave threat to spontaneous order and individual freedom. If government is to achieve a pattern of distribution, it must intervene in persons’ plans and lives to obtain the desired result. Government direction of the economic life of societies is destructive of personal freedom and spontaneous social order (Hayek 1976, 80–84). Further, the redistribution of wealth to promote material equality runs counter to the individual feedback requirements of social evolution, since the natural selection of practices presupposes differential success, so “the imposition of egalitarianism must stop further evolution” (Hayek 1979, 172). As Spencer saw in socialism the reemergence of the imposed order characteristic of militant societies in late nineteenth-century Europe, so also Hayek saw the threatened destruction of spontaneous social order and its replacement by the planned order of taxis as the end result of government growth throughout the twentieth century.
Social Evolution and Ethics
Hayek is an indirect utilitarian (Gray 1986, 59–60; Hardin 1988, 14, 78), as was Spencer. He argues that utilitarianism that calls for the deliberate choice of actions or rules on the basis of their purported utility-generating properties is a form of “constructivism” and has the same problem as others, namely that it requires knowledge which cannot be collected by anyone (Hayek 1976, 115–18). His argument is directed against “rule” and “act” versions of utilitarianism. Rules operate as part of a system of rules, and therefore generate utility only as parts of a system of rules. For that reason it is a mistake to evaluate a discrete rule on the basis of its utilitarian qualities (Hayek 1976, 18–20). In a large and complex society it is not practically possible to acquire the information needed to assess the outcomes resulting from the use of a specific rule: “Each person has his own peculiar order for ranking the ends that he pursues. These individual rankings can be known to few, if any, others, and are hardly known fully even by the person himself” (Hayek 1988, 95). Hayek’s critique of utilitarianism may be summarized as follows: “The trouble with the whole utilitarian approach is that, as a theory professing to account for a phenomenon which consists of a body of rules, it completely eliminates the factor which makes rules necessary, namely our ignorance” (Hayek 1976, 20).
Hayek nonetheless defends social evolution on utilitarian grounds. Social evolution, according to Hayek, is a process through which the rules of a society adapt to accommodate increasing population size and complexity of social relationships. Changes in rules that expand the scope of the division of labor and market exchange bring about a more efficient use of information concerning the employment of productive resources. As a result of increased productivity, the society produces a greater amount of wealth. As a greater amount of wealth is produced, the society is able to maintain a larger population. The larger population means more complexity and the further development of the division of labor, market exchange, productivity, and wealth (Hayek 1988, 126–34). Thus, for Hayek, social evolution generates increasing size and complexity in a society. He is not concerned solely with population size, as Gray (1986, 141) believes. Hayek contends that the increasingly efficient use of information brought about by social evolution ensures that:
the material equivalent of any given individual share will be as large as it can possibly be made. In other words, while the share of each … will be determined partly by skill and partly by chance, the content of the share which is allocated to him by that mixed game of chance and skill will be a true maximum. (Hayek 1976, 119)
In Hayek's account of social evolution, then, societies advance in terms of population size, and the average level of want satisfaction will be as great as can be at a given moment. For Hayek, social evolution generates institutions that lead to increasing aggregate utility in a society, with the average level as high as it can be at a given time.
III. THE NATION-STATE AND SOCIAL EVOLUTION Spencer and Hayek conceive of social evolution as a progressive process that produces larger societies. There are good reasons to disagree with them. Evolution is a type of explanation that simply refers to the unplanned emergence of order suited to its environment and has no inherent direction (Mises [1957] 1985, 367–70). While some of its nineteenth-century adherents, such as Spencer, Benjamin Kidd (1906), and Walter Bagehot (1906), regarded social evolution as progressive, albeit in very different ways,Kidd argued that social evolution involved the spread of religiously inspired altruism, and Bagehot argued that evolution produced rational deliberation over moral and political matters. Darwin ([1871] 2013) himself and other theorists such as William Graham Sumner ([ca. 1900–06] 1992) and T. H. Huxley ([1894] 1997) absolutely denied that there was any association between evolution and progress. Spencer and Hayek are wrong to identify social evolution as progressive, and they are wrong to include the nation-state in their understanding of social evolution. In this section, I show why social norms that promote voluntary cooperation are likely to break down in the mass societies created by states, resulting in the very government growth Spencer and Hayek warned against.
Evolution Is Adaptation, Not “Progress”
A “liberal” evolutionism is a theory of the emergence of voluntary cooperation but has no internal criterion of “progress.” Darwin’s ([1859] 1968, 115) theory of biological natural selection is elegant: where there is scarcity, there is a “struggle for existence.” Organisms that produce the largest number of offspring that reach adulthood and reproduce carry those traits that enable them to survive in their environment. Those that fail to reproduce occasion the gradual disappearance of their unique traits. The traits represented in the larger number become the dominant traits. Darwin ([1871] 2013, 56) argues that among social animals, which include human beings, there is a “moral sense” that is oriented toward group survival. In animals other than human beings, it is instinctive. In human beings, that moral sense involves restraints on our conduct toward others that tend toward group survival, even if it is not thought of that way. Darwin argues that as human societies grow larger (beyond the small group), humans extend these moral sentiments to a larger sphere of persons. His thinking here is definitely influenced by the Scottish Enlightenment theorists, such as David Hume and Adam Smith, who maintained that this moral sense gives rise to conventions that promote cooperation among people.Darwin, as well as Hayek, was influenced by the Scottish Enlightenment theorists, especially their conception of a moral sense. See Marciano (2007). Hayek sees the “emergence of the twin concepts of the formations of spontaneous order and of selective evolution” (Hayek 1988, 146) in the social theory of David Hume (Hayek 1967, 106–21) and Bernard Mandeville (Hayek 1978, 249–66). For the influence of Hume, Smith, and Ferguson on the development of the theories of spontaneous order and social evolution, see also Hamowy (1987). These nevertheless remain distinct. That is, biological evolution, where it does not involve social behavior, is indeed based upon the “struggle for existence.” Social evolution, on the other hand, tends to reduce that struggle within the group. Thus, as “Darwin’s Bulldog” T. H. Huxley maintained, social evolution works against the “struggle for existence” ([1894] 1997, 299–300).
What can be distilled from theorists of social evolution such as Darwin, Spencer, Hayek, and others, is that social evolution has the following characteristics. First, conventions emerge through individual adaptation and spread through a group through learning and imitation. This does not entail material benefits for each individual following a social rule. In some instances this will clearly be the case, though in some types of learned behavior, such as altruistic behavior and adherence to nonrational rules of conduct that involve a sense of rightness and self-restraint, there is no discernable material payoff to the individual following the rule. Second, rules that have spread through a group persist because they enhance the survival chances of the group following them and thus continue to carry the social rule forward. This kind of logic offers a functional account of the persistence of social rules among groups but does not explain their emergence in the first place.
Where individual conduct is selected because it enhances individual welfare, individual learning and imitation are straightforward: people follow a practice because it is rational to do so to attain their goals. This selection does not require that the behavior enhance group survival chances or increase the attainment of ends by the group as a whole, nor does it imply that the behavior will do these things. If, for example, conditions make dishonesty, theft, promise breaking, and the like rational in terms of individual welfare, those behaviors can be expected to become dominant among the group, because they have a better payoff for the individual than do behaviors that enhance group welfare.
Consequently, the real problem is to explain the emergence of behaviors that enhance group welfare or, barring that, the conditions under which such rules are more likely to emerge. We can easily imagine conditions that are inimical to the establishment and persistence of rules that tend to promote group welfare. The familiar prisoner’s dilemma game (see, e.g., McCarty and Meirowitz, 2007, 87–88) offers a useful illustration. Let Row and Column be individuals with ordinal preference rankings A > B > C > D. Each has choices available to follow a rule of cooperative self-restraint (cooperate) or one of advantage taking (defect), with payoffs as follows:
There is a unique Nash equilibrium where both players defect because neither player can improve his payoff by changing strategy when the other player defects. If the players are rational, they reach this suboptimal outcome (C, C), but both would be better off, realizing the optimal outcome (B, B), if they chose to cooperate.
The theory of social evolution predicts that rules facilitating cooperation that emerge among a group will persist because they enhance group welfare. Thus, social evolution hypothesizes that a rule of cooperation will persist if it emerges among the players. We do not know why such a rule would emerge. Perhaps they have adopted a philosophical or religious conviction that it is right to cooperate when others are willing to do so. What matters for the theory of social evolution is that if they adopt such a rule, the rule will persist among them where they interact with each other because it enhances group welfare.
Key to this result, though, is that the individuals are able to identify one another as persons who follow the beneficial practice. Otherwise, they should expect other rational persons they encounter to defect and do likewise themselves, leading to the predicted and suboptimal equilibrium outcome. Where the group is small enough that the individuals composing it interact repeatedly and can identify cooperators, a rule of cooperation may persist. James Buchanan (1978) and Robert Axelrod (1984) argue precisely this. Axelrod showed in computer simulations of the iterated prisoner’s dilemma game that a mixed strategy of “tit for tat,” which is to cooperate on the first interaction with other players and thereafter follow the other player’s choice on the last interaction, emerged as an “evolutionary stable strategy” in competition with strategies of always cooperating or always defecting. Buchanan, Axelrod, and others demonstrate that when group size exceeds that which enables individuals to identify fellow cooperators, a pure strategy of defection becomes dominant.
Cultural Evolution and Group Size
Spencer and Hayek rely upon group selection with individual feedback mechanisms to explain social evolution. But as shown in the preceding section, the emergence and stability of the kinds of cooperative practices (i.e., cultural or moral rules) that Spencer and Hayek have in mind require that individuals interact repeatedly with either the same individuals or others who share adherence to the same cultural or moral rules. This, in turn, requires that groups be relatively small in size (and, as discussed below, be partially isolated from each other in territory). Viktor Vanberg (2014, 42–46) offers a useful distinction between “conditioned” and “unconditioned” spontaneous order. “Conditioned” spontaneous order emerges in the context of a framework of rules that imposes some constraints on individual choice and conduct, such as the market. “Unconditioned” spontaneous order emerges in the absence of such constraints through a “blind” process of variation and selection; biological and cultural evolution serve as examples.The idea of conditions for spontaneous order is also reflected in Jasay’s distinction between “first-order” and “second-order” orders, where the “second-order” consists of principles or rules, which may or may not be themselves products of an evolutionary development, that require enforcement for the emergence of a “first-order” spontaneous order. (Jasay 1994, 51–52). Hayek’s lack of clarity about what can be properly designed in an otherwise spontaneous order is a common objection to his work. See, e.g., Kukathas (1989, 103–04). Since the market requires known conditions to flourish as a spontaneous order, Vanberg rightly asks about cultural evolution whether “‘suitable’ framing conditions are required for its ‘beneficial’ operation” (Vanberg 2014, 48). While it is not my task here to fully specify the conditions for social evolution that would have the efficiency properties that Spencer and Hayek have in mind, theoretical work to identify such conditions is needed to determine whether the “evolutionary” liberalism they championed is a viable enterprise. Indeed, it is a common criticism of Hayek that he fails to specify such conditions (See, e.g., Witt 1994, 178–89). I argue in the following that one such condition—group size—has important implications for institutional design if cultural evolution is to generate the socially useful results that Spencer and Hayek believe it does.
Rule following that promotes cooperation demands self-restrained behavior toward others. If such self-restrained behavior is to persist, individuals must be able to avoid being taken advantage of by uncooperative individuals. Cooperative individuals can avoid being taken advantage of if they know who is unlikely to cooperate, and they are more likely to be able to make accurate predictions about others’ behavior in a smaller group than a larger one (Taylor 1987; Axelrod 1984). When the group is too large for individuals to be confident in their expectations of spontaneous cooperation from others, coercion becomes necessary to ensure rule following (Olson, 1971, 45; Hardin 1982, 185–200; Ullman-Margalit 1977, 22–47). A significant implication of this analysis is that “the spontaneous order which we call society,” as Hayek puts it, will not spontaneously “form” beyond the size that permits individuals to know what to expect from each other. In other words, a society that is a spontaneous order will be a relatively small one.
Much research on cultural evolution has focused on the emergence of altruistic behavior, which presents the question of how individuals who practice altruism avoid being exploited by others who do not. Spencer himself analyzed the emergence of altruism in evolutionary terms (Spencer [1897] 1982, 1:271–85). Altruism is useful for analytic purposes, because it involves a self-restraint that characterizes adherence to moral rules that regulate our interaction with others by imposing constraints on our alternative courses of action toward them. For this reason, analysis of how altruism may emerge and remain stable helps explain how social rules of the kind Hayek and Spencer have in mind could emerge and persist.
Group size and partial isolation by territory are key variables in the emergence of altruism by group selection, because individuals must interact predominantly with others who share the same behavior in order for altruism to become stable (Smith 1964, 1145–47). More recent research reaffirms that small group size and isolation are key conditions in the evolution of altruistic behavior (Cooper and Wallace 2004, 316). Research employing individual selection in the form of behavior responding to collective action problems likewise concludes that group size is a key factor in the emergence and persistence of cooperative behavior. In a large group in which individuals do not know the strategies employed by others (cooperation or egoism), egoism will emerge as the dominant strategy and drive out cooperation (Ostrom 2000, 145).
Hayek and Spencer contend that social evolution is a process of increasing group size and complexity to sustain a larger population and a higher standard of living. Rules of conduct are adaptations that facilitate the increase in population and complexity of relations within a group. Clearly, if group selection requires a small group size to enable members to avoid the problem of free ridership that exploits constrained choice or altruistic behavior, group selection cannot explain the emergence of new practices that benefit the group as it grows to an unlimited size. In a group that is large enough, new rules will cease to emerge, and traditional rules will decay and disappear.
The technological and economic advance affected by social modernization in mass societies leads to the gradual disappearance of easily identifiable social subgroups (Almond and Powell 1966, 24–25; Huntington 1968, 30–35). Further, the emergence of mass societies produced “the anonymous individual—less powerfully socialized for moral response, and inhabiting new social contexts in which the old moral and personal prescriptions failed to apply, and liberated in considerable measure from self-control of the old kind” (Wilson 1985, 324). These phenomena make the theory of rule selection by group less plausible as our shared expectations about others’ conduct diminish and as partially isolated groups following different rules disappear. As a group becomes larger and more complex, the evolutionary process that Spencer and Hayek envision should begin to lose the efficiency properties that they attribute to it. Thus, while Spencer and Hayek argue that social evolution tends toward the development of larger, more complex societies, it appears instead that social evolution with the efficiency properties they predict will work among smaller groups rather than increasingly large societies.
The Extended Order of the Market Is Not a Group
When Spencer and Hayek discuss the increasing size and complexity of social order generated by social evolution, they naturally have in mind the modernization that emerged in Europe over centuries and took off rapidly with the Industrial Revolution. As this process unfolded, productive capacity and population grew. Population pressure required that there be more trade beyond the boundaries of small communities, and the emergence of larger urban centers supported the development of manufacturing and finance. Population pressure spurred on innovative production techniques, making possible the support of larger populations at a higher standard of living than ever before in human history. When Spencer and Hayek wrote of the development of modern market societies, they clearly visualized the historical process as it unfolded in the nation-states that were present in Europe from the seventeenth century on, and the benefits they saw in this process involve the increasing standard of living and political liberalization that have characterized that period.
Since what Hayek calls the “extended order” (1988, 6) of market cooperation grew up in the environment of nation-states, it is unsurprising that observers would regard the larger populations that the emergence of modern economies supported as groups which are specifically the populations of nation-states. David Rose (2011) views the cultural and moral background of market economies as a means by which free ridership on the trustworthiness of others in the large group context is overcome. This cultural and moral background, he argues, enables large groups with greater productive capacity than smaller groups to sustain institutions that support private property and markets. Rose is right about the necessity for a cultural and moral background of keeping agreements, trustworthiness, and the like as essential to the preservation of market economies. But the extended order of market cooperation is not a group. In fact, it is the willingness of persons to engage in economic transactions with people who are not members of their own communities that gives rise to the extended order and makes it possible. The increasing population supported by market relations of increasing complexity is not a group, but many groups, and it is also not a state. We should not conceive of the extended order of market cooperation as in any sense coterminous with the territorial jurisdiction of states. When Hayek and Spencer refer to the increasing size and complexity of society as a concomitant of social evolution, they do in fact seem to be thinking in terms of modern states. Insofar as they are thinking of modern states, one reason they are wrong is that they refer to the extension of the market order, which does not necessarily involve recognizable social groups.
Persons who engage in trade with one another do not, by virtue of that fact alone, form a group. A social group will include economic interaction, but it includes much more besides. The predominant theories through which sociologists understand the concept of a “group” are social identity theory and self-categorization theory, both of which maintain that a group of people is an aggregation who think of themselves as a group or are characterized by others as a group (Turner 1999). Market relations do not generally involve groups in this sense. If I am a vendor of flooring material, for example, I do not think of myself and my wholesalers, distributors, and customers as a “group,” because while there is a functional linkage that connects me with the others, we never form anything like a group. I might think of a trade association to which I and other vendors of flooring material belong as a group, but that is not a group engaged in market activity in any ordinary sense. In fact, a trade association is more likely to be engaged in political actions than in economic transactions as its principal activity. It is in part because of the impersonal nature of market transactions that they are able to assume the level of complexity and abstractness that Hayek and Spencer correctly attribute to them.
Identity and other commonalities in groups do not preclude the increasing size and complexity of the extended order of cooperation. People who have nothing else in common with one another can engage in cooperation on a limited scope for the sake of mutual benefit such as voluntary exchange. Thus, for example, a business engages in importing goods from another country for resale, and they purchase goods from trading partners with whom they have no other social relationship than that specific, narrow relationship of exchange. If either of them decides that they do not trust the other as a trading partner, they can quit doing business with them and they can turn to someone else. In this way, the discipline of the market can operate in the extended order among people who do not share values with each other beyond rational self-interest. This extended order is different than a group, because these persons do not do anything other than engage in limited, narrow types of voluntary exchange for their own mutual benefit. They are not (or need not be) neighbors, do not engage in more intimate forms of social relations beyond trade, and do not engage in collective action with one another. If they have any of the foregoing in common it may be entirely accidental, and mutual benefit rather than group identity or self-categorization is the basis of the market relationship. The market order offers the advantages that it does precisely because the emergence of its spontaneous order of trade relations is not dependent on the existence of a group, and that is why it can grow increasingly large and complex, as Hayek and Spencer observe.
The extended order of cooperation can be facilitated by small groups with a culture that promotes cooperation within the group and which incidentally gives rise to the kinds of moral values that make persons trustworthy in market transactions with people outside their communities (Rose 2011 refers to these values). Such communities are, or can be, the building blocks of the extended order of cooperation. Large empires are not only unnecessary, but, as I argue in the following sections, they undermine the moral culture that can facilitate the extended order of market cooperation.
Social practices that support trade among persons who have little in common with one another culturally emerge to support mutually beneficial exchange relationships. Peter Leeson (2014) notes that the familiar example of the Law Merchant facilitated international trade beginning in the Middle Ages and enabled persons who differed culturally and in other ways to engage in trade without government regulation. Leeson also describes interesting and often colorful examples of how persons with facially antagonistic interests, such as herders and reivers along the Anglo-Scottish border from the late Middle Ages through the early modern period, who developed a system of customary law to resolve disputes.Leeson (2014, 48–50) notes that a moral sense of honor was important to upholding the customary Law of the Marches. It is noteworthy in connection with Leeson’s observation about the efficacy of a sense of honor in upholding the system of customary law that a common “culture of honor” in which one’s own reputation was highly valued was present among the herdsmen of the border region between northern England and Scotland (Brown and Osterman, 2012, 222–24). This shows how a regime of evolved rules that perform a narrow and specific kind of social function can emerge without governmental involvement, and it also shows that social norms can emerge and persist among networks that do not constitute geographically defined societies. He also describes how European traders in nineteenth-century Africa were able to develop conventions that facilitated mutually beneficial exchange such as, for example, the emergence of credit transactions to make trade more profitable than banditry for indigenous peoples. Mutually beneficial trade does not require the existence of a group with a common culture. Trade relations are of a narrow and specific type. They do not include something like self-governance among a community for an indefinite period of time. Communities do that, but the extended order of market cooperation does not require much depth of social relations, which is what makes the extended order possible. It is the great achievement of markets that they extend across groups and do not require a large group in the sociological sense to operate.
The extended order of market cooperation is not a group, so it would be a mistake to conflate the development of the extended order of the market with the growth in size of states. States seek to preserve themselves by increasing their assets of power, which they can do by a variety of means, some of which involve increasing their territory to obtain control of human and material resources (Morgenthau 1985, 122–40). A principal factor in the increasing size of states historically has been advances in military technology; whether the increasing growth of states contributes to economic development depends upon factors other than sheer size, such as how the state protects property rights or seeks to redistribute wealth (North 1981, 64, 96–97, 143–57). States increase their size by different means and for different reasons than the expansion of the spontaneous emergence of cooperation among people for purposes such as trade that extends across different groups. Influencing trade or controlling trade routes have often been means by which states seek to increase national power, including by controlling territory through imperialism, but this kind of state action is the antithesis of spontaneous market order.
The State and Cultural Disintegration
The optimism about progress in the nineteenth century was replaced by a sociological pessimism in the twentieth, and I tie this narrative together with the string of evolutionary theory, which hypothesizes that voluntary cooperation will diminish among groups that are too large for evolved rules that support such cooperation to persist. Into this vacuum steps the coercive power of the state, and there is a general tendency for that power to grow and become more centralized. There is a direct line from Oppenheimer (1922) to Nisbet ([1953] 2010) showing how the modern state causes intermediate social structures to deteriorate. Oppenheimer (1922, v) is clear that the state, which exists to expropriate and control wealth, deliberately seeks to dominate such structures in a manner that will weaken them. Nisbet emphasizes how the state supplants intermediate social structures, such as the family and religious bodies, in providing for order through centralized coercion rather than decentralized socialization. The aristocratic warrior class that created the nation-state through war and conquest (Oppenheimer 1922) established the large territories that were a fertile ground for the emergence of large industrial concerns in the first century of the Industrial Revolution. It is not principally the extension of the division of labor and development of the money economy, which Weber ([1905] 2002; [1915] 1947) and Simmel ([1907] 1990), for example, argued were responsible for the emergence of larger industries and growing territories, but the state in the first instance that preceded these large production units and territories. The advent of these large enterprises with bureaucratized, routinized innovation and production undermined the social esteem of entrepreneurship and the value of freedom of contract and private property (Schumpeter [1942] 2008). Schumpeter argued that capitalism undermines its own foundations in favor of socialism as it had previously undermined those of feudalism.Schumpeter attributes this in part to capitalism’s creation of an intellectual class that has social criticism as its occupation. Hayek (1949) presents a similar argument. Analytically, we can distinguish between social norms that facilitate cooperation and norms that are not in some obvious way linked to cooperative behavior. The latter often seem to be linked instead to group identity or cohesion, or to be linked instead with different social phenomena such as religious faith. Social norms that do not have some obvious beneficial purpose are most vulnerable to rationalist criticism. Because social norms exist as elements of cultural complexes of norms, it is not clear that we can either distinguish in practice between cooperation-generating norms and other categories of norms, and it is not clear that one could, as a practical matter, abstract only those norms that facilitate cooperation from a cultural complex and shed the rest to produce a new and improved social order. It is in part for these reasons that traditional conservatives (e.g., Kirk 1986, 8–9) counsel against such efforts. There is a tension in Hayek’s thought between his admiration for the socially liberalizing tendency of the “Great Society,” in which social norms diminish in scope (1979, 54–55), and his emphasis on the tacit and nonrational nature of social rules. It is arguable, even in Hayek’s antirationalistic approach to understanding social norms, that those which clearly have as their function to facilitate cooperation may be the tip of an iceberg of underlying social rules, practices, and values, and that removing some of the underlying pieces may cause the whole to collapse like a house of cards. The impact of rationalist criticism is not the principal focus of this essay, but clearly, as Weber and others have suggested, its impact has been great. It is relevant here because it is a part of the process set into motion by large societies that make traditional social rules vulnerable. But capitalism does not do this alone. The large nation-state created by the precapitalist aristocracy set the stage for the social and economic conditions that favor the emergence of socialism.“Nation-state” is a somewhat inconvenient term used here to describe the very large territorial jurisdictions we observe throughout the world today, and in which governments seek to create large groups that identify with the nation-state, follow (to a large extent) one legal regime of rules, and engage in collective action as a national group. “Nation-state” is an inconvenient term, because there are, in fact, nation-states with relatively small populations, such as the states in the Balkans and the Baltic states. One cannot identify with mathematical precision when a society is too large for social conventions that facilitate cooperation to persist, so one cannot identify with such precision when a state is too large in that sense. There is, in fact, a tendency for states to occupy as much territory and control as much population as they can, so states tend to grow as large as circumstances and military power permit. Nevertheless, the argument presented in this essay is not of itself a normative argument against the state full stop. It could readily form part of such an argument, but it could also form part of an argument for small states, confederations of small states, or the like. That is an issue to address on another occasion.
The state changes the environment in which people live, and people adapt to that environment in a way that erodes traditional, evolved constraints on behavior. It establishes a territory determined by political power rather than by voluntary cooperation. While formal analysis of social evolution demonstrates that voluntary cooperation emerges only where groups are small enough that individuals can identify those who will cooperate (and those who will not) and refuse to cooperate with those who will not cooperate with them, the scope of the territory the state creates is as large as the state can hold. Where this territory is larger than the scope that voluntary cooperation can support, voluntary cooperation becomes less viable as a self-perpetuating means by which individuals can survive and achieve their goals and by which societies can sustain themselves. Norms of conduct once enforced by communities through noncooperation with those who do not observe evolved norms weaken and disappear, and these are replaced by coercive rules enforced by the state. Where voluntary cooperation diminishes, political power and coercion become more necessary to provide order in society. The state, initially established as an instrument of domination and exploitation, makes itself “necessary” to ensure order. Thus modernity is the experience of diminishing shared norms and increasing state power. The state, established everywhere to dominate and exploit persons, thus makes itself necessary to the perpetuation of a society it has created by means of power.
Intermediate social structures such as family, religious bodies, civic groups, fraternal organizations, and less formal social groups play an important role in preserving and transmitting values and social norms, and such structures are in themselves important sources of social order. Tocqueville recognized in American society of the early nineteenth century how civic associations accomplished all manner of collective purposes without governmental involvement: “Everywhere that, at the head of a new undertaking, you see the government in France and a great lord in England, count on it that you will perceive an association in the United States.” (Tocqueville [1835] 1951, 2:106). But as societies grow larger and more complex, the capacity of voluntary association diminishes and the state progressively replaces voluntary association with political power:
It is easy to foresee that the time is approaching when a man by himself alone will be less and less in a state to produce the things that are the most common and the most necessary to his life. The task of the social power will therefore constantly increase, and its very efforts will make it vaster each day. The more it puts itself in place of associations, the more particular persons, losing the idea of associating with each other, will need it to come to their aid: these are causes and effects that generate each other without rest. (Tocqueville [1835] 1951, 2:108)
Voluntary associations weaken and decay with the rise of mass societies created by nation-states. As these social structures deteriorate, the function they perform ceases to operate as before. This means that they cannot reliably perform their former role as preservers and transmitters of values, and the anonymity of mass society becomes more and more the predominant mode of life, particularly in urban areas. As voluntarily association weakens, the state steps in, as Tocqueville, Oppenheimer, Nisbet, and others have expected, and seizes control of functions once performed by smaller groups.
These intermediate social structures represent and constitute “social capital” in that they are repositories of values and evolved social rules (Putnam 2000, 19–26). As social capital diminishes, behaviors such as altruism and attitudes such as trust diminish as well. Shared values can mediate and prevent social conflict, but the disappearing social capital of mass society means that one should expect more conflict among individuals and groups competing for political and other advantages over each other. Altruism that promotes cooperation diminishes, and trust that inhibits conflict diminishes, and the result is more conflict and less cooperation.
These are called “intermediate” social structures, because they create a buffer between the individual and the state (Nisbet 1986, 21–22). As these weaken and disappear, with the resulting increase in social conflict and diminishing voluntary cooperation, the state exerts more power directly over individuals to produce the order lacking from evolved and natural structures. The state, by creating an environment in which intermediate social structures decay, makes itself more “necessary” in that the state must impose order where the emerged order supported by intermediate social structures deteriorates along with those structures.
The specific functions performed by intermediate social structures are to transmit social rules and to establish networks among individuals in which relationships involving reciprocity and trust can emerge and persist. It is in such networks that social rules are enforced through cooperation and noncooperation. Traditional rules that facilitate cooperation are not, as Hayek recognized, followed because individuals realize that they conduce to greater aggregate productivity and wealth. People follow such rules because they have been taught them by example and through training by the intermediate social groups in which they grow up and reach maturity. Families, religious bodies, and formal and informal social groups are the schools of morality in which traditional rules are transmitted through generations, and the enforcement of traditional rules through cooperation and noncooperation is a part of their transmission and persistence.
States create nationalism. They do this in part by reducing or eliminating the social functions performed by smaller, more local groups and communities. A national identity based largely on myth and abstract symbols replaces more concrete identities and attachments to intermediate social structures that individuals knew and interacted with. The extension of the territory of the effective social unit beyond that in which people can know those they interact with is a reason this happens. Nisbet ([1953] 2010) argued that nationalism is what emerged as a substitute for the identity, attachments, and social functions performed by local communities, families, and churches before the advent and rapid growth of the nation-state. Nations are constructs. They are constructs because they are (poor) substitutes for the foregoing. Nation-states have supplanted the economic and security functions performed by those social structures without performing the essential social functions of transmitting values and providing identity, roles, and meaning to the lives of persons. The result is the mass society that Durkheim ([1897] 1951) analyzed, in which anomic individuals are connected to nothing and lack a rational basis for conforming to social rules. This means that the state makes itself more “necessary” to provide the order that the civil society that it has destroyed once provided.
The evolutionary social theories of Hayek and Spencer are accounts of large-scale social change. Each is principally concerned with types of societies and is intent on showing why market-oriented societies displace alternative modes of social organization due to their capacity to promote economic development and sustain larger populations with better standards of living. Each is also really a sketch of how social evolution works, because both fail to devote attention to how social norms preserve and replicate themselves within societies. Hayek (1989, 136–37) mentions religion as a factor but does not regard religious institutions as important in social evolution. He does discuss how the nuclear family is important regarding the accumulation of property (1989, 137) but does not discuss its place in transmitting values. He recognizes that the growth of the “extended order" brings on the disappearance of traditional social groups, and he wants government to occupy much of the social space left by this disappearance. He says, for example, that social welfare programs are necessary because: “as a result of the dissolution of the ties of the local community, and of the development of a highly mobile open society, an increasing number of people are no longer closely associated with particular groups whose help and support they can count upon in the case of misfortune (1979, 54). Spencer, very much the nineteenth-century utilitarian, places no emphasis on religion or family, nor does he view intermediate social structures of any kind as important in preserving or transmitting values and norms to future generations. Both have seen the forest but missed the trees. Neither theorist has a theory of social evolution that explains how social norms are preserved and transmitted over time. Because of this, their theories of social evolution are incomplete. A theory of social evolution that explains how the free societies they have in mind will replicate the norms that make them possible must explain how these norms preserve and replicate themselves among people. This Spencer and Hayek fail to do.
CONCLUSION There are striking similarities between Spencer’s and Hayek’s theories of social evolution. Comparing their work side by side, we can see the outlines of a type of defense of classical liberalism that incorporates social evolution. There is a significant flaw in Spencer and Hayek’s view that social evolution produces ever-larger societies, because the evolutionary process they describe is not likely to function in the large, mass societies which they envision as its product. In fact, that process is likely to break down, precipitating the growth of government that further erodes and destroys evolved norms and social institutions. A “conditioned” evolution consistent with thought will not include the nation-state. Left open here is the question of whether a libertarian society that will persist must be stateless or whether small states on the model of classical liberals from Montesquieu to the Antifederalists could remain free societies in the modern world, because that requires addressing additional ethical and political issues beyond the scope of this paper. One thing is clear, though: a libertarian society that remains free in the modern world will be a small society.
ABSTRACT: This essay aims to introduce the Austrian community to the metaphysical principles of political life first discovered by Aristotle and subsequently clarified by Thomas Aquinas. I begin by contrasting the Aristotelian perspective on social cooperation to that of mainstream post-Cartesian political philosophy with its emphasis on willful consent. I then describe the Aristotelian notion of the common good as the metaphysical principle of political life. From the existence of a diversity of political communities, I demonstrate that that each community needs to have a political authority. I then briefly examine the political ideas of Mises and Rothbard in light of the foregoing, noting where they are compatible with and where they diverge from Aristotelian-Thomistic politics. Finally, I offer some take-home considerations showing how Aristotelian political principles can bring a fresh perspective on issues of concern to the Austrian community, namely, an opposition to the “welfare-warfare state.”
Keywords: Aristotle, metaphysics, political philosophy, austrian economics Michel Accad (draccad@draccad.com), MD, is a physician in San Francisco.
This essay aims to introduce the Austrian community to the metaphysical principles of political life first discovered by Aristotle and subsequently clarified by Thomas Aquinas. This introduction will hopefully provide the reader with an alternative framework of political philosophy which is radically different from the political liberalism of the last three hundred years yet compatible with the principles and methods on which the edifice of Austrian school economics is built. As a preamble, however, I wish to briefly highlight the points of commonality between Aristotle’s general scientific approach and that taken by the Austrians in their economic theory. As Smith (1990) and Gordon (1994) have noted, there is a strong Aristotelian influence on the development of Austrian economics that goes back to Carl Menger and that has implicitly informed the thought of Ludwig von Mises and his followers, even if Mises himself was unaware of that influence.
We can identify distinctly Aristotelian principles in the economic thought of the Austrian school. First is causal realism. The Austrians—if not explicitly, at least implicitly—seem to agree with Aristotle that there is a mind-independent reality, an extramental world accessible via the senses and intelligible to the human mind. For the Austrians, as for Aristotle, cause and effect relationships are real and discoverable through the proper use of reason. Like Aristotle, the Austrians trust in the general reliability of sense knowledge and in the conformity of reason to reality. Because of this, they have been able to elaborate an economic science in systematic fashion, starting from first principles. Such was the approach taken by Menger and later followed by Mises and Murray N. Rothbard in the establishment of Austrian economics.
Second, having no qualms about interpreting human action as teleological, the Austrian school has separated itself from the mainstream of modern philosophy and science and has been criticized for being a throwback to Scholasticism. It is easy to see why: Mises’s idea that humans act in order “to satisfy a felt uneasiness” brings to mind the Scholastic dictum that every agent acts for an end and, more generally, Aristotle’s notion that humans are self-perfecting beings actualizing their active potencies. Teleological realism is a critically important Aristotelian principle and also a foundational concept in Austrian economics.This statement must be qualified given that there is, at least in Mises’s writings, an ambivalence about teleological realism. That ambivalence will be taken up later in this essay.
Despite these points of commonality, there is an important difference between the general philosophical approach taken by Aristotle and the method of Austrian economics—at least as formalized by Mises. Mises insisted in sharply separating the study of human action and the physical sciences by the so-called methodological dualism (Mises 1998, 17). This separation makes perfect sense insofar as the physical sciences, as practiced in modern times, rest on mechanistic presuppositions which are seemingly incompatible with teleology. For Aristotle, however, such a methodological separation would seem unnecessary and counterproductive, as it uproots man from his greater cosmological context: a natural world which is also pervaded with teleology and governed by fundamental principles that also apply to human action. As we shall now see, it is in the domain of political philosophy that this divergence is most consequential.
HUMAN REASON AND SOCIAL COOPERATION A major difference between the Aristotelian or Scholastic world view, on the one hand, and the modern liberal world view, on the other, concerns the emphasis that modern philosophers typically place on man’s power of reason. In the aftermath of the mind-body dualism introduced by René Descartes, post-Cartesian political philosophers have, by and large, considered an action to be a human action if it involves the exercise of man’s rational capacities. Following Thomas Hobbes, they have tended to discount nonrational action as being merely animal and mechanistic. It is the will of man which is the prime consideration.
Modern political theories have generally focused on the willful consent of the individual as a principle of cooperation in human society: a society is human, because its individual members have consented to living together in certain ways and for certain reasons. The diversity of modern political theories, then, stems from divergences of views about what it is that the individual is (or should be) consenting to and what the reasons are that inform his consent.
For Aristotle, however, man is a unitary being. When Aristotle remarks that man is a rational animal, he does not emphasize man’s rationality at the expense of his animality even though, of course, the power of reason is man’s highest faculty and is unique to him. Human nature, for Aristotle, is at once animal and rational. So, while most modern political philosophers acknowledge that man is entirely dependent on social cooperation, man’s dependence on others is, for Aristotle, part of his nature. This means that man’s social character is as much a part of his animality as it is of his rationality.
Like other social animals, man depends on the specialized work of other members of his species to satisfy his essential needs for food, shelter, safety, the care of the young, and the maintenance of the species. Therefore, man is dependent on the division of labor in much the same way that the bee is dependent on it. Human social cooperation per se need not, in Aristotle’s view, invoke principles other than those at work in the animal kingdom.
Where man’s rationality comes into play, of course, is in regard to the particular character that the human society takes: it is because of man’s power of speech, his ability to reason about means and ends, and his capacity to make moral judgments, that human societies acquire their unique structures which are fitting for the perfection of a rational animal. Still, it is not man’s rationality that is the cause of his being a social being.
For Aristotle, the utter dependence of man on social cooperation and on the division of labor means that in a formal sense, a society of men must be prior to the individual even if, in a material sense, the individual must be prior to society. There can be no individual man without a society, and there can be no society without individual men. The coincident and mutual causality between the two is in keeping with other Aristotelian metaphysical principles, such as the mutual and coincident causality of act and potency that explains being and becoming.
Aristotle will not get distracted by mechanistic or evolutionary questions about how the world came to be that way. For some animal species, sociality is an unambiguous part of their nature. We do not ask ourselves: “How do individual ants come to form a colony?” The ant species is simply “colony forming.” Likewise, we shouldn’t bother asking ourselves how individual men and women come to form human societies. Man is a social animal. If the individual man is radically dependent on social cooperation and on the division of labor, then nature must somehow “supply” society along with man. The causal principle by which Aristotle explains such a cooperation will be clarified next.
THE ARISTOTELIAN COMMON GOOD If man’s reason is not the cause of social cooperation, what accounts for the existence of societies? As a causal realist, Aristotle will not settle for brute facts. The existence of societies must be explained, and their principles deduced through careful reasoning. Although even a modest review of Aristotelian metaphysics is clearly beyond the scope of this paper, I will attempt to introduce here some of the concepts that are relevant to political theory.
The Nature of Things
In the ancient Aristotelian-Scholastic cosmology—rejected by Descartes and the Enlightenment philosophers—each existing thing has a nature, an intrinsic principle of motion, incumbent upon a thing’s essence. A cat behaves as a cat because of the cat’s nature, and likewise a rosebush and a human being. Each is a living organism, and each behaves in a certain way in accordance with its essence. Even a stone is, by nature, inclined to move “to the center” of the universe, that is, the center of the earth.It is tempting to completely discard Aristotelian cosmology as outmoded, but the reader should be mindful that Einstein’s theory of general relativity, while not endorsing the ancient cosmology, can rehabilitate the concept of natural motion in inanimate matter. This view is to be contrasted with the atomistic world view—ancient or modern—whereby material beings are mechanical. Under that framework, movement comes not from within but is imparted by external forces of nature, which move parts in a mechanical way.
Descartes famously believed that all animals are mere automatons whose purposeful movement is an illusion. He made an exception for man, whom he endowed with a separate soul that controls the purely mechanical body. This “ghost in the machine” view still pervades the popular imagination but also much of modern social and political philosophy, at least to the extent mentioned earlier: if human nature is to be considered, it is considered only in so far as it consists of willful actions. The modern political philosopher has generally remained agnostic or ambivalent about how man’s embodied rationality relates to the realm of causes and effects, which rule the rest of the natural world. And, after Charles Darwin, he may even deny that there is such a thing as a human nature, viewing man’s actions as simply the mechanical products of a mindless historical process of evolution.
The Good of Things
If we accept the ancient realist’s position that natural things are endowed with their own intrinsic nature and that such a nature is a principle of motion, causing the individual to act in certain ways, Aristotle points out that the actions of living things are intelligible precisely because they are directed toward recognizable ends.
As we noted earlier, the dictum is: every agent acts for an end. The rosebush digs roots for the end of fetching water and nutrients. It develops leaves for the end of catching sunlight. The cat snuggles in the blanket for the end of getting warm. In the Aristotelian world view, teleology pervades the natural world and is not confined to the conscious willfulness of man.
Focusing our attention on that which the agent pursues, we come to our concept of interest: the good. A good is what elicits an inclination or a desire in a subject. If a subject acts upon the inclination elicited by a good, then that good specifies the end, or final cause, of the action, i.e., “that for the sake of which” the action is done.
For a rosebush, water and minerals in the soil are goods, and the sunlight in the surrounding space is a good: the rosebush digs roots for the sake of obtaining water and minerals, and it develops green leaves for the sake of catching the surrounding sunlight. For a cat, a serving of cat food, a blanket in winter, and catnip sprinkled on a scratching pad are all goods. The cat will move toward the bowl for the sake of the food, snuggle in the blanket for the sake of its warmth, and claw at the catnip-sprinkled scratching pad for the sake of the enjoyment it provides. For man, a glass of wine with dinner, an afternoon at the sports arena, a university education, are goods. All of these goods elicit an inclination in their subject, which may be followed by an action toward the good, the end of the action.
In the Aristotelian perspective, the goodness of a good resides in the good itself, i.e., in reality. In other words, a good is not good by virtue of a subject determining it to be good but is good in itself. Again, Aristotle comes to that conclusion by observing the similarities of action between natural beings. Clearly, the water is not good for the rosebush because the rosebush deems it to be so. The rosebush is obviously mindless. Likewise, an education is not good for Lisa by virtue of Lisa determining it to be so, but it is desired by Lisa because she apprehends it and judges it to be good in itself. Of course, Lisa could be mistaken and judge as good things that are not. Still, the goodness of an object is in the object itself and is not determined by the mind of the subject.Later in this essay a distinction will be drawn between the mind-independent reality of the good and its subjective valuation by an actor.
Goods need not be material substances. As mentioned, an education is a good, health is a good, friendship is a good, etc. But, to repeat, a good considered in terms of the inclination it elicits in a subject has the character of an end, or final cause, and is a metaphysical principle of an action, i.e., one not reducible to the material aspects of reality.
Singular Goods and Common GoodsThe most authoritative contemporary treatment of the Aristotelian-Thomistic conception of the common good was provided by De Koninck (1943), and De Koninck’s work on the subject has recently been examined by Guilebeau (2016). This section draws from those two sources.
From the examples we have listed above, we can see that certain goods are proper to each nature. Catnip is a good proper to cats but not to snakes. Likewise, a university education is a proper good for humans and not for cats. Each nature, each natural kind, responds, desires, has inclinations for goods that are proper to its species.
Among proper goods, we must now distinguish singular goods from common goods. A singular good is a good that extends its goodness to only one individual member of a species. A common good, on the other hand, extends its goodness to many members of the species at once, and it is shared at once among many without exhausting itself. The inexhaustible extension to many is what philosophically defines the term “common.”
Of the examples given above, the following are singular goods: the water in the soil is a singular good for the rosebush nearby. The catnip on the scratching pad and the blanket on the bed are singular goods for the household cat. The health that I desire for myself is my singular good. If I desire health for you, then I vicariously desire a singular good for you. These singular goods extend their goodness to only one individual at a time.
Now, it is true that many of these goods may be shared by more than one individual, and perhaps even by many individuals: the water in the soil can be shared by many rosebushes; the blanket could be shared by the cat and the owner, a chocolate cake can be shared among two, three, or twelve people. Still, none of these are common goods, properly speaking, because when they extend their goodness to many, their goodness is diminished. They exhaust themselves. They are not true common goods but are instead aggregates of singular goods.
A common good—by definition—is a good that extends itself to a community without exhausting itself. It is what causes a community to be a community. It is that which inclines individuals to act as a part of a community and not simply as a multiplicity of individuals. As Aristotle says in the opening line of the Politics, “Every state is a community, and every community is established with a view to some [common] good.”
The concept of a common good is easy to grasp when it pertains to voluntary communities: the game of soccer is the common good of the Liverpool Football Club; the production and sale of bricks is the common good of the ACME Brick Company, and the teaching and dissemination of Austrian economics is the common good of the Mises Institute. It is for the sake of the game of soccer that the Liverpool FC team members are united as a team, for the sake of making and selling bricks that the owners and employees of ACME are united as a company, and for the sake of disseminating a specific economic theory that the students, faculty, and administrators of the Mises Institute are united as an institute.
The Political Common Good
In the examples of voluntary association just given, the concrete common goods that bring together the employees of the brick company, the members of the soccer team, and the students and faculty of the educational institution are self-evident and of no great philosophical interest. Precisely because the association is voluntary, the common good is apprehended by the mind of men and can be easily defined or articulated in more or less concrete terms: “making bricks,” “playing soccer,” “disseminating Austrian economics.”
In contrast, the common good of their political communityI use the general term “political community” to refer to society at large, no matter its degree of development, and will avoid using the more specific terms of “tribe,” “polis,” or “nation,” each indicative of a particular kind of political community. The term also includes so-called stateless societies, so long as it is recognized that those are not necessarily devoid of an ultimate political authority (see below). (which, as we have seen, is not established on a voluntary basis, but is formed by human nature) is not a concrete good that can be specifically described. Rather, the political common good is inferred from the existence of the political community. It is the metaphysical principle that explains the existence of the political community—if one wishes to remain faithful to the principles of causal realism.
The political common good is inferred as follows: we observe that human beings live in political communities—tribes, cities, nations—by nature (as shown in the first section above). Since only individuals act, and since each agent acts for an end, if we observe individuals acting in political communities, we infer that a good must be present to incline them to act thus. Otherwise, the community or the acts of living communally would be unintelligible and the principles of causal realism violated. That good is the principle and cause of a community being a community. It is the political common good, as understood by Aristotle, by Aquinas, and by medieval and contemporary philosophers who follow the principles of causal realism outlined by Aristotle and Aquinas.This essay focuses on the political common good, the good of the political community. Apart from the political common good, the other natural common good recognized by Aristotle and the Scholastics is the common good of the family, which, like the political community, is another natural order in the framework of human existence.
The Primacy of the Common Good over the Singular Good
We should note that the political common good is necessarily “greater” than the singular good: it is not only a good for each individual, but it is a good that inexhaustibly communicates itself to all individuals of the political community. It is a greater good because it exerts a greater effect.
De Koninck (1943) explains the greater effect of the common good as follows:
The common good is greater not because it includes the singular good of all the singulars; in that case it would not have the unity of the common good which comes from a certain kind of universality in the latter, but would merely be a collection, and only materially better than the singular good. The common good is better for each of the particulars which participate in it, insofar as it is communicable to the other particulars; communicability is the very reason for its perfection…. That does not mean that the others are the reason for the love which the common good itself merits; on the contrary, in this formal relationship it is the others which are lovable insofar as they are able to participate in this common good.
The greater effect of the common good explains why individuals can be seen to spontaneously give up their own singular goods—and even their lives—for the promotion or defense of the common good, such as the soldier who willingly enrolls in the armed forces to fight an enemy who he believes threatens his beloved country. The sacrifice of the individual for the community can only be explained if the common good elicits a greater inclination toward it as compared to the singular good.Mises’s analysis of the self-sacrifice of the individual for the country is compatible with this view: “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…. War carried on pro aris et focis 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” (1951, 402).
At the same time, the greater love for the common good does not subjugate the individual. In the view of Aristotle and of the Scholastics, man’s self-perfecting pursuit of goods necessarily points to an ultimate good: his happiness. All goods are, in a sense, instrumental and ordered to the pursuit of that ultimate good. As a social animal who depends on the division of labor, man’s pursuit of happiness proceeds from the pursuit of singular goods but also from the desire for, and pursuit of, the greater common good. Both the singular goods and the common good order him to his ultimate happiness and the two are not in conflict with one another.
Contrast with the Modern Understanding of the Common Good
The foregoing Aristotelian understanding of the common good as a teleological principle of social life stands in sharp contrast to the modern understanding of the term.
In modern political philosophy, the concept of the common good refers either to aggregates of singular goods or to concrete shared interests not unlike the voluntary common good of a business enterprise. This is readily seen in a recent entry in the Stanford Encyclopedia of Philosophy that defines the common good as “facilities … that the members of a community provide to all members in order to fulfill a relational obligation they all have to care for certain interests that they have in common” (emphasis mine).Stanford Encyclopedia of Philosophy, s.v. “The Common Good,” by Waheed Hussain, Feb. 26, 2018, https://plato.stanford.edu/archives/spr2018/entries/common-good/. The examples of facilities given include the road systems, public parks, police protection, courts, public schools, cultural institutions, civil liberties, clean air, and national defense.
These are clearly concrete goods (e.g., the roads) or specific interests (e.g., the right to free expression), in keeping with the idea that human political societies are formed through willful, rational cooperation. In such a framework of understanding, there is no distinction in kind between the political association and the various examples of private associations we mentioned earlier, such as the soccer team, the firm, or the educational institution. The distinction is merely one of scope, wherein the political society is a voluntary association that concerns all members of the community.
Seeing the common good as essentially an aggregate of singular goods, the modern political philosopher since Hobbes sees an inherent conflict in the social life of man: the common good compels the individual to give up something he would otherwise pursue. It places limits on the individual’s liberty and, therefore, is a paradoxical good that has the character of a necessary evil rather than a true good that orients the individual toward his flourishing. The political philosopher’s goal, then is to come up with rules of political life that minimize that conflict.
No Common Good According to Mises and Rothbard?
Before closing this section, we should note that the concept of the common good is conspicuously absent in the work of Mises and Rothbard. It does not figure in the indices of Mises’s treatises that address political questions, such as Human Action, Liberalism, or Socialism, nor does it receive any attention in the works of political theory of Murray Rothbard.
This lack of attention likely stems from the fact that economic theory may dispute the value of the common good in its modern conception. If the common good is a “set of facilities” that are shared among many and, therefore, nothing more than an aggregate of singular goods, there is no need to give it any special consideration. Its optimal distribution will be achieved by normal market processes and exchanges. Furthermore, if the common good is a set of concrete “shared interests,” the subjective theory of value would prescribe that people be allowed to sort themselves into communities of shared beliefs and values. Government intervention in the name of the common good is superfluous or worse.
Still, the concerns of Rothbard and Mises in political theory are similar to those of Hobbes and of most modern political philosophers: the minimization of conflict. Rothbard believed conflict would be minimized by the absence of government while Mises believed it could only be achieved under the coercive action of the state.“[P]eaceful human cooperation … cannot exist without a social apparatus of coercion and compulsion, i.e., without a government. The evils of violence, robbery, and murder can be prevented only by an institution that itself, whenever needed, resorts to the very methods of acting for the prevention of which it is established” (Mises 1992, 97).
MANY POLITICAL COMMUNITIES, MANY COMMON GOODS Having established that the political community exists by virtue of a political common good, and having distinguished the Aristotelian understanding of that common good from the modern liberal perspective on it, we now reflect on a fact of observation: the human race exists as a diversity of distinct political communities, not a single one. The human race is not ordered to a universal political common good. Rather, a diversity of coexisting political communities populates the world, each ordered to its own common good.
What accounts for the diversity of political common goods in human life? Here again, Aristotle would begin by looking to the animal world for the answer: there is one species of black ants but many black ant colonies. What accounts for this multiplicity? When an ant colony outgrows its anthill or when conditions are adverse, one or more new queens are produced, and a part of the colony may either swarm or “bud” away to find a more suitable habitat. If successful, a new colony is formed. Similar phenomena occur among bees and among other “eusocial” animals, such as wasps, certain species of mole rats, and certain crustaceans.
Whatever the mechanism of multiplication may be, the lesson to be drawn is that societies of animals—of which human societies are a typeE. O. Wilson, one of the most prominent contemporary evolutionary biologists has recently classed humans among the “eusocial species” of the planet, a noteworthy return to the Aristotelian view. Wilson’s position has caused controversy among biologists who, like Mises (vide infra), are ambivalent about relating man’s sociability to the sociability of animals. See, for example, Angier (2012).—naturally emerge from preexisting societies depending on territorial considerations which regulate the size of the community to optimize its flourishing and self-sufficiency.While modern political communities are rarely de facto self-sufficient and may rely largely on trade with other communities, potential self-sufficiency is a necessary and real aspect of any political community. It is precisely because a political community is at least potentially self-sufficient and therefore “one thing” that we can distinguish one political community from another. Social cooperation is cooperation in a certain place at a certain time. The material world is not immediately sustaining but its raw resources must be worked and developed through the division of labor. For ants as for men, the transformation of those resources into “capital goods” necessarily confines the division of labor to a given territory.
Given the natural propensity of living species to grow in size and number, the limitations imposed on a given community by a given territory is one important mechanism by which communities divide from one another, leading to a multiplication and diversity of populations segregated according to territorial considerations: at this point in time and under these current conditions, this ant colony thrives on this anthill, and that ant colony on that one; this human tribe lives in these pastures, and that human community dwells in that city on that riverbank.
Because human societies are societies of rational animals who possess creative imagination, the multiplication of human societies also produces a great diversification in the mode or manner of existence over time. What distinguishes one ant colony from another is simply its location, size, and whatever accidental features are dictated by the habitat. Human societies, on the other hand, are further diversified in their language, culture, political organization, moral norms, religions, etc.
The Political Common Good Is Prior to the Language, Culture, Religion, and Political Organization of a Political Community
Based on the metaphysical considerations given earlier in this essay, it should be apparent that the political common good must be ontologically prior to the language, culture, religion, and political organization of a community, even if language, culture, religion, or political ideology may temporally preexist the formation of the community. Linguistic, religious, cultural, or ideological affinity can explain the distinctive characteristics of a political community, but they cannot explain its being a political community as such.
Of course, shared cultural values, shared religion, and a shared language can be the impetus for forming a new political community in a new (and hopefully unclaimed) territory, or may be criteria by which a community chooses to include certain members and exclude others. But culture, religion, and language cannot be the reason a community is an actual political community.
If the “Catalan people” choose to secede from Spain and succeed in living together as a Catalan nation, their political common good will be distinct from the Catalan language and culture. To show this, consider that, for example, the Catalan language could, over time, cease to be spoken among the Catalan people without the integrity of the community suffering a loss. Also, any Catalan-speaking person may choose to leave the Catalan nation or to not join it to begin with. The Catalan language itself cannot be the cause of being of the Catalan nation.
Likewise, a community’s political organization and its dominant ideology cannot be the cause of its being a political community. The political community of Russia was organized as a monarchy for centuries but abruptly became a Communist nation in 1917 and, equally abruptly, changed into a constitutional democracy in 1991. Despite the dramatic changes in political organization, the same nation remained through the change. That sameness implies a sameness in the political common good that orders the Russian nation. That the political common good can persist despite dramatic changes in language or in religious, cultural, or political organization shows that the political common good is “prior” to all these attributes of a political community.
To be clear, however, this priority is not a priority in time, but an ontological priority. Common goods do not exist in themselves, “out there in the world,” waiting to be pursued by a people. A common good is a metaphysical principle that emerges in a historical context, under specific conditions, when a community succeeds in becoming self-sufficient. Nevertheless, the common good is a real teleological principle, distinct from its material principles, from its people, and from the cultural and ideological attributes that it brings to a community. It is not Clovis, his Frankish followers, their beliefs, and the territory they occupied that caused France to be a nation. But it is Clovis, his Frankish followers, their beliefs, and the territory they occupied that made the nation that emerged become “France” and not another nation.
The Necessity of a Political Authority
Because political communities are diverse, the question of how to distinguish a member of the community from an outsider arises. That distinction, of course, is essential to preserve the integrity of any given political community.
In animal societies, the distinction is made on a strictly material basis and, therefore, can be entirely decentralized. For example, an intruder ant which threatens the integrity of a colony may be detected based on a pheromone and be immediately attacked by any member of the colony, even one not specifically functioning as a guardian. The remarkably versatile life of ants is astonishingly decentralized with respect to authority, causing Aristotle to point out that each ant is “its own ruler.”
In human political communities, in contrast, information about the membership of a given human being cannot be communicated by material factors alone. Even though one ordinarily becomes a member of a political community by birth, no political community is established on a strict genetic or biological basis. Even the most primitive tribes are apt to include outsiders, for example, by marriage. Besides, when communities are large enough, there may not be any practical way for one person to know the genealogy of another.
To belong to a human political community obviously involves a degree of personal choice: I may choose to relinquish my membership in the American political community to become, say, Mexican. Making the choice effective, however, is clearly not up to me. I am effectively a Mexican only once I am deemed to be so by the Mexican community as a whole. Otherwise, disagreement among Mexicans on my status would threaten the integrity of the political community. But agreement among Mexicans cannot possibly come about through their individual free choices. Such unanimity would be highly unlikely or highly precarious. Rather, the need for establishing my status as a Mexican for Mexico as a whole necessitates an authority to ultimately decide and thereby communicate for all Mexicans whether or not I belong to their political community.
The fundamental need for all who engage in communal life to be informed—implicitly or explicitly—of the “membership status” of any given individual justifies the existence of a political authority to adjudicate this matter when the situation demands it. In primitive tribes, that authority may be confined to a single ruler or a council of individuals. In more developed societies, it is most often seen to take the form of an institution: the state.
But note that this justification for a political authority leads us to conceive of its primary function in a very specific way: the political authority is not primarily the person or institution holding “a territorial monopoly on the use of violence” for the purpose of achieving peace and security—the common understanding of the state in modern political theory. Rather, the political authority revealed to be necessary by Aristotelian metaphysical principles is primarily the person or institution to whose judgment the community must necessarily submit in matters regarding the ultimate identification of individuals as members of the community or as outsiders.
GRECO-AUSTRIAN CONFLICT? Since I began this essay with remarks on the Aristotelian roots of Austrian economics, I will now briefly comment on the political philosophy of Ludwig von Mises and Murray Rothbard in light of the preceding considerations. To be clear, the following comments cannot amount to a nuanced analysis of either man’s political thought. I will simply contrast a few of their salient ideas to those of Aristotle.
Both men, it appears, espoused a view of the nation as a natural community whose explanation transcends atomistic and mechanistic principles and does not come into being by any social contract. According to Salerno (2019, 8), Mises believed that “the nation has a fundamental and relatively permanent being independent of the transient state (or states) which may govern it at any given time,” causing him to view the nation as “an organic entity.”
Likewise, Salerno (2019, 9) draws attention to the following comment in Rothbard (1994):
Contemporary libertarians often assume, mistakenly, that individuals are bound to each other only by the nexus of market exchange. They forget that everyone is necessarily born into a family, a language, and a culture. Every person is born into one or several overlapping communities, usually including an ethnic group, with specific values, cultures, religious beliefs, and traditions. He is generally born into a “country.” He is always born into a specific historical context of time and place, meaning neighborhood and land area.
While those comments by Mises and Rothbard suggest compatibility with Aristotelian political principles, there are also striking dissimilarities.
Rothbard, for example, grounded much of his political ethics in John Locke’s theory of property. With its emphasis on the importance of “self-ownership,” that theory borrows heavily from post-Cartesian ideas in which the willful consent of man is central. For example, in his Anatomy of the State, Rothbard declared:
Man is born naked into the world, and needing to use his mind to learn how to take the resources given him by nature, and to transform them … into shapes and forms and places where the resources can be used for the satisfaction of his wants and the advancement of his standard of living. The only way by which man can do this is by the use of his mind and energy to transform resources … and to exchange these products for products created by others. (2009, 13, emphasis mine)
That passage, in contrast to the previous one, would place Rothbard in the modern liberal tradition of considering political communities as formed through the willful actions of individual human beings.
Mises’s views in regard to the genesis of human societies are also somewhat ambiguous. On the one hand, he emphatically rejects the Lockean idea of the isolated individual. As Salerno (1990) has remarked, the isolated human being is for Mises either fictional or metaphorical: “[M]an as man is necessarily a social animal. Some sort of social cooperation is an essential characteristic of his nature” (1985, 252).
At the same time, Mises rejects outright any metaphysical explanation for the political community and sees no explanation for it outside of the action of individuals:
Individual man is born into a socially organized environment. In this sense alone we may accept the saying that society is—logically or historically—antecedent to the individual. In every other sense this dictum is either empty or nonsensical. The individual lives and acts within society. But society is nothing but the combination of individuals for cooperative effort. It exists nowhere else than in the actions of individual men. It is a delusion to search for it outside the actions of individuals. To speak of a society’s autonomous and independent existence, of its life, its soul, and its actions is a metaphor which can easily lead to crass error. (1998, 143, emphasis mine)
Instead, Mises proposes evolutionary explanations for the origins of political communities in which human reason takes pride of place, and he rejects any political theory that adopts the animal society as an explanatory model:
The principle of the division of labor is one of the great basic principles of cosmic becoming and evolutionary change. The biologists were right in borrowing the concept of the division of labor from social philosophy and in adapting it to their field of investigation. There is division of labor between the various parts of any living organism. There are, furthermore, organic entities composed of collaborating animal individuals; it is customary to call metaphorically such aggregations of the ants and bees “animal societies.” But one must never forget that the characteristic feature of human society is purposeful cooperation; society is an outcome of human action, i.e., of a conscious aiming at the attainment of ends. No such element is present, as far as we can ascertain, in the processes which have resulted in the emergence of the structure-function systems of plant and animal bodies and in the operation of the societies of ants, bees, and hornets. Human society is an intellectual and spiritual phenomenon. It is the outcome of a purposeful utilization of a universal law determining cosmic becoming, viz., the higher productivity of the division of labor. (1998, 144–45, emphasis mine)
These comments place Mises in opposition to Aristotle who, as we mentioned earlier, saw teleology as pervading the entire natural world and considered the analogy between societies of men and societies of bees to be real and proportionate, rather than imperfect or metaphorical. Mises, in contrast, sees teleology only in the willful consciousness of man: “Reason and experience show us two separate realms: the external world of physical, chemical, and physiological phenomena and the internal world of thought, feeling, valuation, and purposeful action” (1998, 18).
What’s more, Mises seems to have rejected metaphysics wholesale, stating in Human Action that: “In the present state of our knowledge, the fundamental statements of positivism, monism, and panphysicalism are mere metaphysical postulates devoid of any scientific foundation” (1998, 17–18). But the lack of a specific reference to Aristotelian metaphysics in that statement, however, is noteworthy. To what extent was Mises familiar with Aristotelian first principles?
In the one passage of Human Action that mentions Aristotle, Mises criticizes the ancient philosopher for believing that value inhered in the good:
An inveterate fallacy asserted that things and services exchanged are of equal value. Value was considered as objective, as an intrinsic quality inherent in things and not merely as the expression of various people’s eagerness to acquire them. People, it was assumed first established the magnitude of value proper to goods and services by an act of measurement and then proceeded to barter them against quantities of goods and services of the same amount of value. This fallacy frustrated Aristotle’s approach to economic problems and, for almost two thousand years, the reasoning of all those for whom Aristotle’s opinions were authoritative. (Mises 1998, 204, emphasis mine)
Mises may have correctly criticized Aristotle’s primitive economics, but we should highlight the fact that the Aristotelian objective reality of metaphysical goodness does not entail that valuation itself should be objective.
Clarifying that point is not simply of arcane interest. Consider the positivist criticism of Austrian economics according to which a statement such as “an actor will always choose his most valued end” is a definitional statement, or a tautology. That criticism may be valid if the goodness of a thing is entirely subjective and determined by the actor. If the goodness of a thing does not pertain to the thing itself, to its extramental reality, but is only a psychological determination made by the choosing actor, then the positivists would be correct: “most valued” would simply mean what the acting person chooses. If such is the foundation of Austrian economics, it could not add new knowledge about the world.
By locating the goodness of a thing in the thing itself, Aristotelian metaphysics refutes the charge of tautology: the actor sees various goods in the world, subjectively ranks them at any moment in time, and chooses means to pursue the most valued ends at that particular time and place. The key element is to recognize that goodness is in the things themselves. The valuation, then, reveals the subjective, personal preference of the actor for one good over another. The revelatory character of the action allows the statement “an actor will always choose his most valued end” to be the premise for a deductive economic theory, and economics need not be reduced to identifying relationships between actors and goods solely by empirical, i.e., statistical, inference.
As Gordon (1994), Hoppe (2007), and others have noted, there is a strong Kantian influence on Mises, evident in his frequent use of Kantian terminology. His conceiving of the “external world of physical, chemical, and physiological phenomena” as a separate realm from the “internal world of thought, feeling, valuation, and purposeful action” raises a question about his stance on realism. But too strong a subjectivist view of the goodness of things could jeopardize the causal-realist claims of Austrian economics.
According to Hoppe (2007, 19), however, that need not be so: by adding to Kantian philosophy the a priori category of human action, Mises built a “bridge to reality” and allowed Austrian economics to escape from the Kantian idealism into which it might otherwise find itself. If that is the case, then Mises may not have been as far from Aristotle as he might have thought, especially since it is difficult to conceive of human action independently of sense knowledge.A similar conclusion was reached by Warren Orbaugh in an unpublished paper presented at the Mises Institute’s Austrian Scholars Conference in 2011, “Whether Mises’s Use of “a Priori” Is Kantian or Aristotelian,” a recording of which is available at https://mises.org/library/whether-mises%E2%80%99s-use-priori-kantian-or-aristotelian.
SUMMARY AND TAKE-HOME CONSIDERATIONS To summarize this introduction to Aristotelian principles of political life, we began by noting that human political communities exist not by the will of man, or by his power of reason, but by his nature as a social animal: man essentially depends on others and on the division of labor, and therefore social life is as natural to him as it is to bees and ants.
Aristotelian causal realism appeals to a plurality of causes to adequately explain the natural world: material, formal, efficient, and final (teleological). As part of the natural world, man is a teleological being whose actions are ordered toward ends. The teleological cause that orders the communal life of man is the political common good.
The understanding of the common good as a metaphysical principle with the character of a final cause is in stark contrast with the contemporary conception of the common good as an aggregate stock of “facilities” or as “shared interests.” The mechanistic assumptions that underlie the modern concept of the common good are unrealistic and fail to provide a causal explanation for the communal behavior of man.
Human political communities, as well as animal societies, are diversified: there is not one universal ant colony, nor is there one universal human society. The diversity of political communities implies that the division of labor and economic exchanges between members of a community are privileged as compared to the division of labor and economic exchanges that could occur between communities. This privileging implies the need for a mechanism to distinguish members of one community from others. In human societies, this mechanism involves rational judgment and is an operation of individuals or institutions: the political authority.
In this essay we have seen that Aristotelian teleological realism, which forms the foundation of Austrian economics, can also form the foundation of a true political science. The basic political principles summarized in the preceding pages are not prescriptive in and of themselves but may be prescriptive insofar as we understand real principles to be “laws of nature” that must be respected or else disregarded at great peril. Political life—life in society—is not an end but a means by which individual human beings flourish and attain their happiness. The better we understand and respect the principles of political life, the better the chance of finding happiness.
By rejecting the Lockean homesteading principle and by providing a justification for a formal political authority, the political realism of Aristotle may disappoint some members of the Austrian community who wish to pursue the ideals of anarcho-capitalism and the project of a purely voluntary society. I hope the Aristotelian principles will not be dismissed simply because they lead to a conclusion that is not desired.
At the same time, the justification for the state offered by Aristotelian metaphysics need not lead one to be resigned to coexistence with an aggressor, as was Mises’s view,“[P]eaceful human cooperation … cannot exist without a social apparatus of coercion and compulsion, i.e., without a government. The evils of violence, robbery, and murder can be prevented only by an institution that itself, whenever needed, resorts to the very methods of acting for the prevention of which it is established (Mises 1992, 97) so long as we conceive of aggression (and violence) in its Aristotelian sense, as going against the nature and the good of things.
Understood properly, the State’s only purpose should be the promotion of the common good of its community, a good that is naturally desired by all its members. It is only when the state deviates from this function—as it is apt to do when the community adopts a faulty understanding of the common good—that it is liable to act as an aggressor. Quoting Aquinas, De Koninck (1997, 36) highlights the importance of distinguishing the common good from the singular good to avoid tyranny:
[O]ne can love the common good in two ways. One can love it to possess it, and one can love it for its conservation and its diffusion. In effect, one can say: I prefer the common good because its possession is for me a greater good. But this is not a love of the common good as common good. It is a love which identifies the common good with the good of the singular person considered as such. “To love the good of a city in order to appropriate it and possess it for oneself is not what the good political man does; for thus it is that the tyrant, too, loves the good of the city, in order to dominate it, which is to love oneself more than the city; in effect it is for himself that the tyrant desires this good, and not for the city.”
The appropriation of the common good for one’s own possession brings to mind Rothbard’s depiction of the state as “a gang of thieves writ large.”
The political metaphysics sketched in this essay can also provide a principled opposition to the “warfare-welfare state.” First, political common goods are real principles, and political communities are natural orders that must be respected precisely because they are real. Therefore, imperialism and universalism are necessarily violations of those natural orders. Second, as we have seen, the political common good is not a treasury of singular goods to be taken from some and doled out to others under specious pretexts or based on a poorly conceived notion of social justice. With a realist’s understanding of the common good, the disastrous social policies adopted by all liberal democracies over the last two centuries would not have been enacted. As De Koninck puts it (again quoting Aquinas):
A society constituted by persons who love their private good above the common good, or who identify the common good with the private good, is a society not of free men, but of tyrants—“and thus the entire people becomes like one tyrant”—who lead each other by force, in which the ultimate head is no one other than the most clever and strong among the tyrants, the subjects being merely frustrated tyrants.
The political common good is a metaphysical principle that ultimately serves the happiness of individual man. Like all principles of nature, it must be pondered carefully. Clearly, this essay could only tangentially introduce the reader to Aristotelian metaphysics. Those unfamiliar with it will undoubtedly question many of the points we have made in passing: In what way does Aristotelianism provide an alternative to both Cartesian mind-body dualism and materialistic monism? What are the exact principles of causal realism, and how does Aristotle justify them as self-evident? What are the reasoning steps that allow the philosopher to proceed from first principles to a coherent anthropology?
Those questions are of utmost importance, and I hope that this essay will spur interest in the thought of Aristotle and Aquinas. The philosophical foundations they have provided can serve the gamut of scientific inquiry about man, from the physical sciences to the social sciences, acknowledging a fact that should be obvious to all: man is at once a rational being and a physical being.
Menger, Böhm-Bawerk, Mises, Hayek, Rothbard, and present-day contributors to Austrian economics have built a wonderful edifice of knowledge about the rules that govern the exchange of singular goods in society: economic science in the Austrian tradition. Perhaps it could be bolstered by being placed on a deeper anthropological foundation, one that more completely considers man in all his dimensions—physical, animal, rational, and political.
Steven B. Smith in Reclaiming Patriotism in an Age of Extremes (Yale University Press, 2021) gives us an excellent example of a fallacious way of arguing. Once we see how Smith, a Yale political science and philosophy professor who should know better, falls into this pattern, we will get a clear idea of what the fallacy is and how to avoid it.
The fallacy misapplies a well-known contention of Aristotle. He famously said that a virtue is a mean between two extremes. In the Nicomachean Ethics, he says:
If virtue, like nature, is more exact and better than any art, it follows that virtue also must aim at the mean—virtue of course meaning moral virtue or excellence; for it has to do with passions and actions, and it is these that admit of excess and deficiency and the mean. For instance, it is possible to feel fear, confidence, desire, anger, pity, and generally to be affected pleasantly and painfully, either too much or too little, in either case wrongly; but to be thus affected at the right times, and on the right occasions, and towards the right persons, and with the right object, and in the right fashion, is the mean course and the best course, and these are characteristics of virtue. And in the same way our outward acts also admit of excess and deficiency, and the mean or due amount.
Virtue, then, has to deal with feelings or passions and with outward acts, in which excess is wrong and deficiency also is blamed, but the mean amount is praised and is right—both of which are characteristics of virtue.
Suppose that Aristotle is right about this. It does not follow that the correct position on any contested issue lies intermediate between two other positions that have been characterized as extreme, but many people argue in just this way. For instance, you often come across claims that both capitalism and socialism must be rejected in favor of a mixed economy that lies between these two equally “extreme” views.
Steven Smith argues in just the way I have criticized. His fundamental thesis is that both nationalism and cosmopolitanism must be rejected. Instead, we should support the intermediate position, “patriotism.” He says,
I want to consider nationalism and cosmopolitanism as the two extremes—the pathologies, as it were—to which patriotism is prone. Nationalism is an excess of patriotism that holds an absolute attachment to one’s own way of life—one’s country, one’s cause, one’s state—as unconditionally good and superior to others…. At the other end of the spectrum, cosmopolitanism exhibits a deficiency of patriotism. Contemporary cosmopolitanism is a feature of the age of globalization, which is turning us all into “citizens of the world” living in open societies with increasingly porous borders. (pp. 196–97)
What is wrong with this? At first reading, it sounds perfectly all right. Indeed, Smith’s statement appears to be an instance of the tautology, “For any x, one should have the correct degree of attachment for x.” But what is the correct degree of attachment you should have to your country? Is it the degree found in those whom Smith classifies as patriots, less than the degree found among his nationalists and greater than the degree found among the cosmopolitans? That follows neither from Aristotle’s doctrine of the mean nor from the tautology just given. Is the correct degree the same as the degree of attachment you should have to your way of life and your cause? Smith’s statement seems to equate these, but prima facie they are different. And what about the state? What if we owe it no loyalty at all? Smith has excluded this by definitional fiat.
Our confidence is Smith’s judgment does not increase when we descend to the details. Loyalty is for Smith of prime importance, and a key to what he means by this is buried in an endnote. He tells us that the “most important—and now virtually forgotten—work [about loyalty] remains Josiah Royce, The Philosophy of Loyalty” (p. 206, chap. 1, note 2). In that book, Royce praises the sacrificial devotion of the Japanese samurai warriors, imbued with the spirit of Bushido. It is precisely the spirit of self-sacrificial devotion that interests Smith. He is a follower of Leo Strauss, and like many, though not all, Straussians, he asks this question: How can people be led to embrace the state as their highest political value now that the ancient polis (city-state) is no more? In the ancient city, political and religious loyalty were inseparable, but the rise and growth of Christianity has ended this. What can replace it?
Smith finds his answer in the thought and deeds of Abraham Lincoln.
American patriotism … is a form of civic faith, or what Abraham Lincoln, the best reader of our constitutional tradition, called “the political religion of the nation.”… For Lincoln, the Declaration of Independence and the Constitution were sacred texts, and Washington and Jefferson were like the Hebrew prophets who led their people out of the house of bondage and into the Promised Land. (p. 103)
In contrast to nationalism, based on “blood and soil,” patriotism as Smith conceives it is “based on the promise of equality, inclusivity, and tolerance” (p. 105). He spells out these sonorities in a way that makes clear he is no friend of a free society in the style of Mises and Rothbard. True enough, he tells us that “American patriotism is special, if not unique, for recognizing the value of the individual and of individual achievement. We do not insist on the subordination of the individual to the state or to the collective will of society” (p. 198). But barely more than a page later, he says, “Some form of required national service would greatly improve our current moral environment, where people want to contribute but may not know how” (p. 200).
Smith thinks that
Progressivism can take credit for a host of notable accomplishments, including the passage of the Sixteenth Amendment … which created a national income tax … the establishment of the Labor Department and the protection of workers’ rights; Social Security; and the founding of the Tennessee Valley Authority, an enormous national public works project. (p. 23; a passage about the Nineteenth Amendment has been omitted from this quotation)
We can get along very well without Smith’s civil religion and without a “limited government” that includes the New Deal. If Smith wishes to dress up his political opinions by calling them “patriotism,” that is up to him, but we should not be deceived by what he has done.
Samuel Clemens was an old-style liberal of the 19th century sort who believed in economic liberty and warned about the depredations of state power. The failure of many critics to understand the old liberal perspective may be part of the reason his political outlook is so widely misunderstood. His liberalism is woven into the fabric of his most famous works: The Prince and the Pauper and his series of stories involving Tom Sawyer and Huckleberry Finn.
This paper, I examine aspects of Orwell’s political thought as expressed in Nineteen Eighty-four. I focus on the novel as an exploration of the logic of the conception of the modern state as a teleocracy or managerial enterprise, a concept which was elaborated by the political philosopher Michael Oakeshott. I first provide a summary of Oakeshott’s historical account of the emergence of two competing visions of modern morality and the modern state, the individualistic and nomocratic versus the collectivist and teleocratic. I then offer an interpretation of Nineteen Eighty-four within the context of Oakeshott’s historical claims. I suggest that Orwell’s despair is the result of the inherent contradiction between his explicit commitment to moral individualism on the one hand and his more ambiguous commitment to understanding the state as a teleocracy on the other.
Holcombe (2004) has written an interesting and challenging but ultimately fallacious essay on government. In his view, this institution is “unnecessary, but inevitable.” I heartily agree with the former contention, but adamantly reject the latter. Worse is the implication for him of the supposed inevitability of the state: since it will come about in any case, we men of good will should strive to set one up ourselves in cases where this has not yet come about, so that our version of it may serve to stave off a later and more virulent strain of it. Says Holcombe (2004, 326): “If people create their own government preemptively, they can design a government that may be less predatory than the one that outside aggressors otherwise would impose on them.” This is akin to the cowpox smallpox technique. Infect the patient with the former, which is a mild strain, so that his white blood cells can create antibodies to fight it off; then, when the stronger smallpox attacked, the defenses would already be set up, and strengthened, able to fight off the disease.
Democracy is only acceptable when the outcome is what the ruling class wants. Fortunately, the federal courts are always handy to overturn the results of free elections.
Original Article: "The Ruling Class Only Cares about Democracy When It Helps Them"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Advocates for vaccine passports are a bit like abusive husbands. They say they want to be nice to you. But you keep screwing up and refusing to take your vaccines. So now you're forcing them to keep you locked down forever.
Original Article: "Vaccine Passports Are Just a Way for the Regime to Expand Its Power"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Do huge wealth redistribution schemes like Biden's new plan actually make people better off? Some people will get a net benefit. How how numerous are they? How many millions will take a net loss? The government has no idea.
Original Article: "The Fundamental Economic Problem with Biden's Rescue Plan"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Since January there has been a concerted effort by Democrat leaders, former deep state officials, and America’s most despicable neoconservatives to push the Biden administration to utilize the power of the federal government against the supporters of Donald Trump.
Original Article: "The American Right is the New Target of Washington's "War on Terror""
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
One day, the Institute publishes an article criticizing Republicans. The Left cheers, but the Rights denounces us. The next day we criticize Democrats and the Right cheers while the Left is enraged. Yet our position is always consistently against the state.
Original Article: "The Enemy Is Always the State"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Justice is specific, not general. It is individual, not cosmic.
Original Article: "George Floyd and Generalized Justice"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Ryan McMaken joins the show for a lengthy discussion of Rothbard's brief but devastating essay Anatomy of the State. This book demands that readers understand the stark nature of government, without fairy tales or niceties. It applies the same lens to public and private criminality. It challenges every myth surrounding politics and statecraft, ranging from "the government is us" to judicial review. It explains how the state maintains legitimacy, how it expands, how it deals with other states, and ultimately how it works to prevent domestic threats to its power. And it still serves as the baseline analysis for understanding state power, nearly 50 years after Rothbard helped create a burgeoning anarcho-capitalist movement. Anatomy of the State is a book that everyone, from anarchist to statist, needs to read and consider.
Read Rothbard's Anatomy of the State at Mises.org/AnatomyBook
"Private companies" that openly deplatform, impoverish, and unperson dissident voices are waging a war of attrition
Original Article: "What Clarence Thomas Gets Wrong about Big Tech"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Not only could the state use the UBI as an instrument of social control; we have every reason to think those in charge of the state would exercise their power for bad motives.
Original Article: "UBI and the Road to Serfdom"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Listen to the Audio Mises Wire version of this article.
Many people think that a universal basic income (UBI) would be a good substitute for the welfare state. Under this proposal, each person resident in a country would receive a guaranteed income, sufficient to live at a modest level. People would get the money unconditionally. Unlike welfare payments, the UBI would not be lessened if people earned money in addition to the amount it provided, and, because it is not means tested—absolutely everyone gets it, even billionaires—it requires no complex bureaucracy to administer.
The UBI would cost a great deal of money, but its defenders claim that since it is a substitute for the welfare state, we would also save the vast amounts of money now required for financing welfare programs. Further, if our economy continues to grow, at some point the UBI will become affordable. Charles Murray, for example, in a short book published a number of years ago, says of his version of the UBI, “I began this thought experiment by asking you to ignore that the Plan was politically impossible today. I end proposing that something like the Plan is politically inevitable—not next year, but sometime…. Real per capita GNP has grown with remarkable fidelity to an exponential growth equation for more than a century" (In Our Hands, AEI Press, 2006, p. 125).
The critics of the UBI aren’t convinced and still claim the program would be too costly to implement. In a recent book, Universal Basic Income – For and Against (Rational Rise Press, 2019). Antony Sammeroff offers a very able account of this controversy and many other issues connected with the UBI. He gives an especially good analysis of the argument that automation is liable to make so many people unemployable that a UBI will be needed to provide for them. But what I’d like to discuss this week is another argument that Sammeroff deploys to great effect against the UBI.
The UBI, Sammeroff reminds us, is a government program, and we ought always to view the state as an enemy of liberty. It is precisely the feature of the UBI that its supporters emphasize, its universal coverage, which would enable to state to exercise tyrannical control. Sammeroff says,
Now a Basic Income Guarantee may begin universal, but as the years wear on and it proves expensive to grant, corners may be cut to ensure its continuance. Hardly anyone will object to the UBI being withdrawn from criminals, for example. And then perhaps for anti-social behavior. Petty crimes, like littering the street, might lead people to receive a penalty against their UBI. A few might moan that this is the beginning of a government social-engineering program, but to most people it will seem like quite a sensible and reasonable measure…. Clipping people’s Basic Income will soon seem the most sensible and appropriate response to many crimes and misdemeanors. (p.148–49)
Not only could the state use the UBI as an instrument of social control; we have every reason to think those in charge of the state would exercise their power for bad motives.
This is the same class of people [who] launched a permanent war in the Middle East wasting trillions of dollars and destroying millions of lives. They bailed out the banks from the public purse and gave themselves raises after telling the rest of the nation that we had to tighten our belts. They have robbed the young of the opportunity to own a home by sending house prices through the roof, and mean to leave them a nation in ruinous debt. (p.147)
Sammeroff’s argument here is consistent with the contention of Hayek’s Road to Serfdom, summarized in the title of chapter 10, “Why the Worst Get on Top,” but it is not quite the same. Hayek argues that rulers will very likely be bad, but Sammeroff’s point is not dependent on this thesis. His claim is rather that the evidence shows that our present rulers are bad and will remain so. Thus they can be expected to abuse the UBI program.
Sammeroff strengthens his case that the UBI poses a threat of tyranny by using an admission from Charles Murray, who, as mentioned above, is a pioneering advocate of the program. He acknowledges that the UBI would require people to have a “universal passport” and “known bank account.” Making the most of these admissions, Sameroff says,
I don’t think it’s unrealistic to imagine that people may soon be forced to accept a mandatory Government ID Card in order to claim their Basic Income. Before long they will be asked to show it in order to get into government buildings. Then at the airport to get on a plane. Then simply to board a train or a bus. Then to post a package. Then to get into a bar. Then a restaurant. Before long every public place will ask you to show your ID card…. you will be expected to produce it in order to vote, and before long not voting may result in a fine as well…. Just as states freeze the assets of suspected fraudsters, they will soon be freezing the “known bank account” of political dissenters. By the time they come for those with radical ideas about freedom from government tyranny there will be precious few left to speak out for us. (pp. 151–52)
One might object to this that the state is capable of demanding a government ID card and controlling people’s bank accounts without the UBI, but why give the government an excuse to perpetrate such horrors on us? Sammeroff notes that it is the poor, supposedly those who would gain the most from the UBI, who would be most vulnerable to its abuse:
Certainly, the poor, who depend solely on their handouts to survive, will quickly become very cautious of what they say and do. But even reasonably affluent people will think twice before risking the money. The UBI institutionalizes the state as patron, and citizen as ward. Before long we may arrive in a frightening era where payments and penalties are used to mould us into compliant little drones. The utopian dream will have descended into a tyrannical nightmare. (p. 152)
Friedrich Hayek’s The Road to Serfdom was a bestseller when it was published in 1944, and it has remained ever since one of the classic works in the literature of liberty. Many people, though, find it hard to understand. After Glenn Beck featured the book on his television show in 2010, resulting in a surge in demand for it, one noted speaker at Mises Institute events told me he found the book dense and difficult, and he predicted that Hayek’s new readers would soon turn away from the book in bafflement.
I’d like to discuss this week a helpful way of grasping the central argument of Hayek’s book found in Jeremy Shearmur’s book Hayek and After: Hayekian Liberalism as a Research Programme (Routledge, 1996). According to Shearmur, Hayek began as a socialist, and throughout his life retained much sympathy for socialist values. His dedication of The Road to Serfdom to "the socialists of all parties" by no means was insincere. But he came to believe that the ends of socialism could not be realized by socialist means, and he deemed it his duty to convey this view to a wide public.
Why does socialism inevitably fail to achieve the ends of prosperity, justice, and happiness it professes? The main answer will come as no surprise to readers of mises.org: economic calculation is not possible in a socialist economy. Ludwig von Mises's argument to this effect overthrew Hayek's own commitment to socialism; and after he became aware of Mises's argument, he regarded market prices as essential to a functioning economic system.
Hayek saw that an analogous argument could be extended to the political sphere. Just as the socialist planner has no means to measure economic projects on a common monetary scale to judge their efficiency, the planner cannot combine the conflicting preferences of individuals into a coherent set of goals. Shearmur says,
Hayek argued that a planning authority will need to make decisions among various alternative ways in which resources could be utilized, and he claims that "there are within wide limits no grounds on which one person could convince another that one decision is more reasonable than the other."
What then can the planner do? Hayek suggests that the planner will attempt to impose his own set of priorities on society, and then he asks, "Isn’t this a very good brief characterization of tyranny?" The bulk of The Road to Serfdom consists of an account of how Nazism arose from ideas common in the German socialist movement; and Hayek shows in careful detail that the attempt to plan society negates freedom.
Hayek's analysis rests on a controversial premise. For his argument to work, it must not be the case that reason dictates a common set of values that most people readily grasp. If it does, then the planner may avoid the dilemma in which Hayek endeavors to place him. Since almost everyone will, if reasonable, agree on values, the planner need not impose his own preferences on an unwilling populace.
By the way, Hayek's argument, contrary to my mistaken belief for many years, does not depend on the assumption that there are no objective values. These can coexist on entirely good terms with his argument so long as people cannot readily grasp them or so long as the objective values most people can grasp do not suffice to resolve disputed social questions. Failing this, preferences will still conflict without hope of resolution.
If Shearmur’s account of Hayek's argument in The Road to Serfdom is correct, Hayek seems to have fulfilled the task he set himself. He aims to show that socialism subverts the values at which it ostensibly aims, and he appears to have done so. Should we then declare the Hayekian research program a success?
Not so fast, Shearmur says. Hayek has not shown that the unhampered free market is required by sound political theory. Socialism, we have seen, is out; but what about the welfare state? Isn’t it possible, for all Hayek's argument has shown, to proceed with Social Security, Medicare, antitrust, safety regulation, and other varieties of interventionism? Do these measures demand the unified scale of values that Hayek maintains leads to serfdom? Why do they require more than the concurrence of a democratic majority to institute?
If Hayek's program is to be declared a success, then, he needs to finish the job. He must extend his argument so that it applies to welfarism, in addition to full-scale socialism. Or must he? As Shearmur recognizes, a problem confronts his analysis. He thinks that Hayek's argument is incomplete because it does not by itself lead to support for the free market. But this assumes that Hayek was trying to defend an unhampered market: if he wasn’t, Hayek’s argument does not fail on his own terms.
As Shearmur acknowledges, Hayek did not in fact support the free market to the extent that Mises did.
Hayek is not an advocate of laissez-faire; he is not averse to government playing a considerable role; for example, in the area of the provision of public goods, in assisting with the smooth running of the market order, and also in meeting welfare needs…. In the light of the active role that he gives to government in The Road to Serfdom, one might wonder about the extent to which he can be described as a classical liberal there.
But in spite of his early sympathy for socialist values, Hayek became considerably more of a classical liberal later in his life; if a "rule of law" of the type he favored were put into effect, much of the contemporary welfare state would have to be dismantled.
In his effort to defend a more or less classical liberal society, Hayek increasingly turned to evolutionary considerations. Spontaneous orders, not governed by a conscious plan, can support larger populations than alternative forms of social organization. They will thus tend to supplant their more interventionist rivals, and they fully deserve to do so.
In his analysis of Hayek's evolutionist thought, Shearmur makes some very useful points. Hayek rightly calls the free market a spontaneous order, in the sense that no central plan controls its operation. But it does not follow that the market has to be established by a process of evolution, or that it is somehow better if it is. "At a theoretical level, it is also clear that Hayek's conservative enthusiasm for things evolved cannot be sustained." The products of evolution may be either good or bad, a commonplace Hayek often overlooked.
Furthermore, Hayek's method of judging societies has little to recommend it. Why should the society that can support the most people be held the most valuable? Shearmur amusingly terms this criterion "Hayek's revision of Bentham (from the Greatest Happiness of the Greatest Number to The Greatest Number)."
Readers who want comprehensive arguments against interventionism need to read Mises and Rothbard, instead of following Hayek into the morass of evolutionary speculation. Fortunately, Hayek’s bold and original argument against socialism does not depend on his evolutionary argument about human progress.
Donald Devine is a legend in Washington, DC conservative circles, where he gained fame wrestling civil service bloat as head of Reagan's Office of Personnel Management. His new book The Enduring Tension: Capitalism and the Moral Order starts with Schumpter's creative destruction and asks the tough question: can capitalism alone hold America together? Channeling Hayek, Devine argues that markets are critical but not sufficient. Free and equal individualism requires a mythos and a logos, a moral order rooted in God, morality, law, or tradition—otherwise we devolve into warring factions. Bureaucratic, centralized, and unworkable government perversely encourages these factions as America rejects its federalist structure and Thomist underpinnings. This is a challenging and far-ranging book, and an excellent one for readers concerned with the tension between Locke's liberty and politically engineered license.
Find The Enduring Tension: Capitalism and the Moral Order at Mises.org/DevineBook
I’d like to consider some criticisms of anarcho-capitalist theories of property acquisition raised by Jesse Spafford in his article “Social Anarchism and the Rejection of Private Property,” included in The Routledge Handbook of Anarchy and Anarchist Thought, edited by Gary Chartier and Chad Van Schoelandt (Routledge, 2021). Spafford, a research fellow at Trinity College Dublin, is a “social anarchist,” who rejects private property rights.
Spafford appeals to a plausible moral intuition shared by most people, certainly including anarcho-capitalists. By “intuition,” I don’t mean a hunch or guess but rather a judgment about a case, not based on an explicit moral theory. An often-cited example of such as intuition is “torturing babies for fun is wrong.” Philosophers who use appeals to moral intuitions start with intuitions that seem plausible and try to draw controversial conclusions from them. Other philosophers reject this procedure as too subjective and unsystematic.
The plausible intuition that Spafford starts from is that the use or threat of force requires justification. Suppose that you think that smoking is bad for people and on that basis use force to prevent people you know from smoking. To most of us, it seems to that you aren’t justified in doing this. The anarcho-capitalist philosopher Michael Huemer uses examples like this to bring into question the legitimacy and authority of the state. If you can’t do this, why is it all right for the state to do it? What is the difference?
Spafford suggests that arguments like Huemer’s can be used to bring private property rights into question. If you have a property right in something, you have the right to exclude anyone else from using it without your permission. If you use force against someone to exclude them, why isn’t this wrong? Spafford offers this example:
Consider the case of a cruise ship that docks at a previously undiscovered island. The passengers are excited to spend the day exploring the island, but, before they have a chance to disembark, one passenger runs to the end of the gangplank and declares, Sorry, but I have decided that this island is for my personal use only! I forbid any of you from setting foot on it—unless, of course, you pay me $50 and take off your shoes before getting off the boat. When the first passenger in line ignores this edict and walks onto the island, the declaration-issuer’s friends rush over and seize the “trespasser” and begin binding her wrists and ankles. She struggles a bit, but after they spray sunscreen in her eyes, she stops resisting and is carried back onto the ship and locked in one of the cabins until she agrees to stay off the island.
Isn’t it reasonable to think that the passenger does not have the right to appropriate the island and exclude others? If so, where does this leave property rights?
The answer to this is obvious, and Spafford anticipates this answer; but I do not think he is able to counter it. Defenders of property will say that the passenger hasn’t met the correct conditions for acquiring property. If the ship had docked on an island that someone owned, why wouldn’t the owner have had the right to force the passengers to leave the island?
Stafford answers that the standard Lockean accounts of property acquisition don’t work. He uses some examples from the philosopher Ed Feser, who at one time held a Lockean view:
According to Feser, a person gains rights over previously unowned natural resources by either (a) gaining control of or (b) sufficiently modifying those resources. Thus, a homesteader who tills the soil of some unowned patch of land or builds a sizeable fence around its perimeter would thereby come to own that land. However, consideration of other cases casts doubt on Feser’s proposal. Consider, for example, the case of a person who deliberately starts a wildfire that scorches an entire forest, blackening thousands of acres of trees and earth. Suppose that a hiker then tries to enter the forest to survey the damage. May the fire-starter have the hiker imprisoned or threaten to shoot her if she does not leave the burned area? Surely not. Thus, the mere modification of land and objects seems insufficient to render coercive.
But, if we agree with Spafford that burning down the forest doesn’t establish ownership of it, this hardly invalidates all claims that doing something to unowned resources is sufficient for acquiring them. Spafford will then demand to know what are the conditions that do result in property acquisition, and specifying them is no easy task. All I claim here, though, is that Spafford hasn’t given us a general reason to doubt that there are legitimate ways to acquire property. What, for example, is wrong with owning your house or your car?
Spafford deploys a bad argument against property rights. He says,
Note that the use of force to control some resource is only necessary if non-coercive forms of control prove inadequate—i.e., one has not established control of the resource through non-coercive means alone. In other words, even if one grants that the non-coercive control of resources entails the permissibility of coercive control of those resources, any use of coercion entails the absence of such non-coercive control. Thus, there can be no instance of coercive exclusion that is permissible in virtue of there being prior non-coercive control of the resource.
This argument has at least two things wrong with it. If you use force against someone who is trying to take your car away from you, it is trivially true that you aren’t while you are struggling with the thief in control of the car. But the relevant fact is that you gained ownership of the car without coercion. Spafford has wrongly carried over intuitions from a case where someone claims ownership while pushing other claimants away to all cases of initial acquisition of property.
A second problem with the argument is that a right to exclude others from using your property does not entail that at every moment while you have this right you are exercising it by coercing others. Your right to exclude means that it is permissible for you to exclude others, not that you are actually excluding them. Spafford has trouble seeing the distinction between your right to something and the activities you engage in in exercising that right. In another example, he says, discussing a case in which a mechanic has worked on your car, that while the work is being done, you have waived your exclusion right over the car. This isn’t correct. The mechanic is using the car with your permission, but you haven’t waived any of your rights. You can tell him at any time to stop work on the car.
Spafford faces a problem that confronts many critics of Lockean appropriation. What is the justification for his own account of the morally proper use of resources? He assumes without argument that people have an equal right to use all resources, so long as they respect the equal rights of others. He is firmly committed to this position, and at one point, he says something incredible. He first suggests that some social anarchists would allow certain kinds of coercive exclusion of others from resource use. He says,
Consider the case of two castaways stranded on an island lush with peanut plants. One castaway is allergic to peanuts but good at catching fish, whereas the other lacks the arm strength and coordination needed to catch fish. The net result of these differences is that the two are able to live equally good lives, one fishing and sleeping on the beach while the other forages for food inland. However, suppose that one day the allergic castaway begins clearcutting the densest area of peanut plants so that she has a place to play soccer. Further, suppose that the destruction of these plants would impose a great hardship on the uncoordinated castaway, as she would then have to spend many more tedious and difficult hours each day foraging for the scarce peanuts that remain. Given these stipulations, would it be permissible for the uncoordinated castaway to use coercion to prevent the allergic castaway from destroying the plants on which her quality of life depends? Some egalitarian anarchists might answer in the affirmative, contending that the permissibility of the coercion is grounded in the fact that it is necessary to ensure that the uncoordinated castaway doesn’t live a worse life than her companion (due to no fault of her own).
He now gets to the incredible part. He says,
Some social anarchists might reject the intuition that coercion is permissible in the peanut case. Given this rejection, they would insist that the coercive control of resources is always impermissible, except when it has been consented to by the victim or, perhaps, when such control is necessary to avoid some sort of moral catastrophe. This position imposes stricter limits on what forms society can permissibly take. Specifically, it would sanction only two forms of resource management, each with its own drawbacks, but both of which avoid the coercion that is omnipresent in regimes of private property (and that persists in a more limited form in the egalitarian anarchist society).
(I don’t think it’s necessary for our purposes to describe these two forms.)
A society where the division of labor is subject to a constant threat of interference would be vastly less productive than a market economy. But never mind this—equal access to all resources must be preserved!
The historian Quinn Slobodian presents us in his article “Perfect Capitalism, Imperfect Humans: Race, Migration, and the Limits of Ludwig von Mises’s Globalism,” Contemporary European History (2018), with a surprising interpretation of Ludwig von Mises. According to Slobodian, Mises was a racist who favored colonial wars of subjugation to open the world to trade. In this week’s article, I’d like to look at how Slobodian reaches this conclusion.
The article begins with a quotation from Omnipotent Government: “How can we expect that the Hindus, the worshippers of the cow, should grasp the theories of Ricardo and of Bentham?” Doesn’t this suggest that Mises regarded Hindus as inferior, unable to comprehend a product of abstract Western thought? But if we look at the quotation in its context, it is apparent that this isn’t what Mises says. The sentence that Slobodian quotes is part of a discussion in which Mises claims that most people are unable to understand their own long-term interests, if doing so requires extended logical thought. Free trade is in everyone’s interest, but most people don’t realize this:
But will all men rightly understand their own interests? What if they do not? This is the weak point in the liberal plea for a free world of peaceful coöperation. The realization of the liberal plan is impossible because—at least for our time—people lack the mental ability to absorb the principles of sound economics. Most men are too dull to follow complicated chains of reasoning. Liberalism failed because the intellectual capacities of the immense majority were insufficient for the task of comprehension.
After he says this, Mises makes the remark that Slobodian highlights, as part of this passage:
It is hopeless to expect a change in the near future. Men are sometimes not even able to see the simplest and most obvious facts. Nothing ought to be easier to understand than victory or defeat on the battlefield. And yet scores of millions of Germans are firmly convinced that it was not the Allies but Germany that was victorious in the first World War. No German nationalist ever admitted that the German Army was defeated at the Marne both in 1914 and 1918. If such things are possible with the Germans, how can we expect that the Hindus, the worshipers of the cow, should grasp the theories of Ricardo and of Bentham?
Slobodian thus transforms Mises’s general skepticism about the ability of the masses to follow economic reasoning into contempt for Hindus.
Slobodian later in the article says this:
When necessary, the opening of world markets had to be achieved through violence. “Though one can think only with shudders of the fearful mass murders that prepared the basis for many of the colonial settlements flourishing today,” he wrote in a book published a year after the First World War, the net gain made it all worthwhile; in the end, “all other pages of world history were also written in blood.”
It is once more instructive to look up the passage that Slobodian quotes, which is from Nation, State, and Economy.
That nations favored by fate possess wide territories of settlement could provide no cogent grounds for adopting another policy. It is true that those colonies were not taken with smooth talk, and one can think only with shudders and anger of the fearful mass murders that prepared the basis for many of the colonial settlements flourishing today. But all other pages of world history were also written in blood, and nothing is more stupid than efforts to justify today's imperialism, with all of its brutalities, by reference to atrocities of generations long since gone. It must be recognized that the time for expeditions of conquest is past, that today it is at least no longer acceptable to use force on peoples of the white race. Whoever wanted to contradict this principle of modern political world law, an expression of the liberal ideas of the time of the Enlightenment, would have to set himself against all other nations of the world. It was a fateful error to want to undertake a new partition of the earth with cannons and armored ships.
Thus, Mises is saying just the opposite of what Slobodian attributes to him. He is not saying, “Yes, there were horrible massacres under imperialism, but these were justified to open the world to trade, because, after all, ‘the pages of world history are written in blood.’” He is saying that people after World War I who favor imperialism should not use the excuse that the pages of history were written in blood to justify wars of expansion.
Matters do not improve as the article goes on. Slobodian says,
Empire was credited not only with increasing cumulative prosperity but with creating world society itself. As he [Mises] wrote in 1922, “the opening up of the backward regions of the Near and Far East, of Africa and America, cleared the way for a world-wide economic community, so that shortly before the World War we were in sight of realizing the dream of an ecumenical society.”
Once more Slobodian does not let us down. If you look at the context of the quotation, it first seems that Slobodian for once has it right. Mises says,
We have seen that it is always an advantage to widen the range of workers in a society that divides labour, so that even a more efficient people may have an interest in co-operating with a less efficient. This is what so often drives nations of a high social development to expand their field of economic activity by absorbing hitherto inaccessible territories. The opening up of the backward regions of the Near and Far East, of Africa and America, cleared the way for a world-wide economic community, so that shortly before the World War we were in sight of realizing the dream of an ecumenical society. Has the war merely interrupted this development for a brief period or has it utterly destroyed it? Is it conceivable that this development can cease, that society can even retrogress?
But unfortunately for Slobodian, he has fallen into a common trap. Mises sometimes sets forth at length a position he is going to criticize, and readers must be careful not to take Mises to be defending the view he in fact opposes.
This is exactly what has happened in the present instance. The passage Slobodian quotes occurs in a section called “Social Regression.” Mises in it opposes the view that trends inevitably continue. He says, “The death of a nation is social retrogression, the decline from the division of labour to self-sufficiency. The social organism disintegrates into the cells from which it began. Man remains, but society dies. There is no evidence that social evolution must move steadily upwards in a straight line. Social standstill and social retrogression are historical facts which we cannot ignore.” Mises is thus saying that whether we have an ecumenical society based on free trade depends on people’s attitudes. The opening of the world to trade does not “create world society itself.”
If Slobodan’s understanding of Mises is correct, Mises endorsed an immoral policy of conquest if the result was to extend the scope of the market. Slobodian says, “Mises’s utilitarian logic excused militaristic means for global ends. As his biographer [Guido Hülsmann] put it, Mises felt that ‘science had to deal with the world as it is, not as it should be.’ He attributed this to the influence of Max Weber … ” If you look at the passage quoted from Mises: The Last Knight of Liberalism, you will discover something that by this time should not surprise you. The passage says nothing at all about conquest to extend the scope of the market. Here is the passage:
Max Weber’s work had alerted him to the necessity of discarding normative questions from scientific analysis. Science had to deal with the world as it is, not as it should be. Mises was therefore not interested in whether utilitarianism should guide politics, but in its application: is the policy under consideration suitable to attain the proposed end? This, he saw, was the kind of question that could be answered objectively. Any other approach risked entanglement in normative questions.
Slobodian’s animus against Mises has distorted his presentation, and the considerable research he has undertaken is as a result a largely a wasted effort. Readers cannot trust what he says.
Our great friend Daniel Lacalle joins the show from Madrid to discuss the post-Covid economy from the framework of his newest book, Freedom or Equality. Real human cooperation happens via markets and property, not government or central bank edicts. Socially beneficial behavior needs the right incentives—without prices and profits, we have no way to measure merit or benefit.
If leaders are serious about economic recovery after lockdowns, they need to dispense with authoritarian controls and let markets work. Lacalle considers interest rates, inequality, stakeholder theory, global debt, and much more in this powerful discussion of today's economic reality.
Find Freedom or Equality: The Key to Prosperity Through Social Capitalism at Mises.org/DLbook
Leo Strauss is one of the most influential political philosophers of the twentieth century, and like him or not, we need to understand his ideas. Murray Rothbard, by the way, had a mixed verdict on Strauss. He says, for example,
[H]is work exhibits one great virtue and one great defect: the virtue is that he is in the forefront of the fight to restore and resurrect political philosophy from the interment given it by modern positivists and adherents of scientism—in short, that he wants to restore values and political ethics to the study of politics. This is surely a virtue indeed. The great defect is that Strauss, while favoring what he considers to be the classical and Christian concepts of natural law, is bitterly opposed to the seventeenth- and eighteenth-century conceptions of Locke and the rationalists, particularly to their “abstract,” “deductive” championing of the natural rights of the individual: liberty, property, etc.
Some of his followers try to give a Straussian account of American history, in particular what they call our “founding,” and I’d like to discuss some of the problems that arise for them when they try to do so. Strauss makes a fundamental distinction between “ancient” and “modern” political philosophy. The ancients, in particular the Greeks, are concerned with the city-state. They believe that politics should “aim high” and inculcate virtue in citizens to the extent this is possible. Modern political philosophy begins with Machiavelli and Hobbes; it abandons the teaching of virtue in favor of the “low but solid” pursuit of self-interest. (You might ask, What about medieval political philosophy? Strauss has a lot to say about it, but I won’t go into that here)
Like Rothbard, Strauss argues that John Locke’s thought is essential to the American Revolution and the new government that arose after that revolution. This presents an apparent difficulty for him. The American Revolution is modern and not ancient; but isn’t Locke a defender of natural law? Strauss says that appearances are deceiving. In fact, for Strauss, careful reading is necessary to understand what Locke and other major figures are really saying, and sometimes his readings are of labyrinthine complexity. Locke professes belief in Christianity, but he is in fact a secret atheist, and his “natural law” is really utilitarianism. His “state of nature” is similar to that of Hobbes. This interpretation is anticapitalist in inspiration. The free market replaces the pursuit of virtue with the desire for unlimited acquisition, and it comes as no surprise that Strauss reviews favorably the Canadian Marxist C.B. Macpherson’s book The Political Theory of Possessive Individualism: Hobbes to Locke.
For some of Strauss’s followers, the so-called East Coast Straussians, such as Harvey Mansfield, Thomas Pangle, and Walter Berns, this is the correct account of America’s founding. America is Hobbesian or Lockean in essence. For those Straussians in this camp, a division now arises. Some, such as the Georgetown political theorist Patrick Deneen, think that America’s low founding incurably taints us. The Lockean American system, and with it the capitalist market economy, needs to be replaced.
Most of the East Coast Straussians adopt a different outlook. True, the American system ranks beneath the ancient city-state. But, guided by wise statesmen, the American people can be brought to virtue, or at least a close approximation to it. Walter Berns is a good representative of this position. Berns thinks he can solve a fundamental problem of modern America, and wait till you hear what that problem is. People in America aren’t willing to sacrifice their lives to the state. They are too much devoted to their own selfish interests. To overcome this dire state of affairs, we need to establish a "civil religion" in the guise of patriotism.
Berns acknowledges that America was founded on individual rights, but he thinks there is a difficulty with overemphasis on Lockean rights to life, liberty, and property. No doubt, these have their proper place, and it is not a small one. But "patriotism means love of country and implies a readiness to sacrifice for it, to fight for it, perhaps even to give one's life for it. But, aside from the legendary Spartans, why should anyone be willing to do this? … why should self-interested men believe it in their interest to give their lives for the idea or promise of their country?” (Quotations are from Berns’s book, Making Patriots [2006].)
Things were different in the ancient world. In classical Athens, no conflicting loyalties stood between the citizen and his city: "Athenians were enjoined to be lovers of Athens because they were Athens—in a way, by loving their city, they loved themselves—and because, by gaining an empire, Athens provided them with the means by which they gained fame and glory."
By no means does Berns seek to restore the ancient city. Since the rise of Christianity, allegiance no longer can be undivided. The soul of the religious believer does not belong exclusively to the political community, and the great mistake of the French Revolution was its futile attempt to uproot the church and restore the ancient ways. The founders of the American Republic avoided this trap.
But Berns now asks an odd question. If Christianity cannot be eliminated, how can as much as possible of the unity of the ancient city be restored? His answer—and it is not a bad one given his premise—is that religion must be rigidly confined to the private sphere. In that way, the state may proceed toward its great tasks unhindered by the scruples of believers. Though believers may practice their faith unmolested, they must realize that private conscience must always bow before the law. Berns is on this issue a thoroughgoing Hobbesian. He proposes to replace devotion to religion with a cult of Lincoln, whom he terms our “national poet.” By thinking about him and his works, we too will be willing to die for our country.
The “West Coast Straussians,” foremost among them Harry Jaffa, agree with the devotion to Lincoln, and in fact Jaffa is the high priest of the cult. But Jaffa thinks that Locke isn’t really a modern; he was in fact a good Aristotelian. The American founding is a return to the best features of ancient thought, updated to fit modern conditions. But doesn’t this put him at odds with what Strauss says about Locke? The solution is simple. Jaffa and his followers apply Straussian methods of close reading to Strauss himself, so that he too ends up as in Jaffa’s camp. If you find all this confusing, so do I.
How would a reset of the mass mind come to pass that would allow for the many elements of the Great Reset to be put into place—without mass rebellion, that is? This is the function of ideology.
Original Article: "The Great Reset, Part V: Woke Ideology"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Normally we discuss books on The Human Action Podcast, but this new academic paper by Professor Philipp Bagus is too important to ignore. "COVID-19 and the Political Economy of Mass Hysteria" is the one journal article you need to read this year. In only about ten pages it makes the devastating case that perverse political incentives—along with a nexus of state-connected media and scientists—combine to create and amplify "public health" hysteria. Echoing Hoppe and public choice theory, Bagus explains how politicians enjoy asymmetric rewards for exaggerating risks and creating fear. The result is gross policy errors we will all pay for over many decades. Don't miss this show!
Read Dr. Bagus's paper at Mises.org/BagusPaper And read Jeff Deist's summary of the paper at Mises.org/DeistBagus Find Deep Freeze: Iceland's Economic Collapse online at Mises.org/DeepFreeze Find The Tragedy of the Euro online at Mises.org/TragedyEuro
Raghuram Rajan has written a surprising book. Now teaching finance at the University of Chicago, he is an international bureaucrat in good standing, and not a minor one at that; he was chief economist of the International Monetary Fund. Yet far from calling for an increase in “global governance,” as one might expect from someone with his background, he wants to strengthen the local, “proximate,” community.
“If more powers are delegated from the state to the local community level,” he tells us, “a community can shape its own future better, and will have more control over it. Some communities will have a specific ethnic concentration, and community culture will gravitate toward that ethnic group’s culture…. A strong local community could satisfy people’s need to live in a cohesive social structure with others of the same culture or religion…. None of this implies exclusion [but]—having monocultures that satisfy the tastes of those who want monocultures is as important as having multicultures.”
The problem with “populist nationalism,” then, is not that its advocates prefer national sovereignty to control by internationally minded elites. They are right to do so, given human nature as it is, and the leaders of the European Union neglected this truth to their cost. “The problem was that no one asked their people how much more Europe they wanted, and how much sovereignty they were willing to give up…. The process of integration was, therefore, profoundly undemocratic…. Ultimately, though, integration succeeds only when there is deep social empathy between people.” But if national sovereignty is better than rule by technocrats, still better is the local community.
Rajan’s defense of the local community is part of the ambitious theory of history suggested by his book’s subtitle. As he sees it, there must be a balance among the market, the state, and the local community. Each is dangerous if unchecked by the other two. In fact, though, the alleged dangers of the market stem largely, if not entirely, from “crony capitalism,” the partnership of the state and business interests to exploit consumers. Why not drastically limit the power of the state to block this unholy alliance rather than trust a strong state to limit the market?
The author’s failure to support the free market fully stems from an assumption that emerges in his history of capitalism in Europe and America. That account is well worth studying, and Rajan’s discussions of the end of feudalism and the rise of the gentry are especially good, though our confidence is a bit shaken by his calling Henri Pirenne, the greatest of all Belgian historians, French.
But matters take a turn for the worse when he reaches the rise of capitalism itself, and here, I regret to say, he has taken on board a controversial Marxist dogma. He rejects Marxist economics, which he calls “mostly wrong,” but he calls Marx “one of the greatest social thinkers of modern times.” It is a particular dogma that he has taken over from Marx and also, in his telling, from Adam Smith, that leads him to advocate a state strong enough to rein in the market. “The inexorable political tendency of a free, unfettered, unregulated market was for the producers, after experiencing the rigors of competition, to attempt cartelization.” He cites as an example John D. Rockefeller’s control of oil refining in the United States through his Standard Oil Company and deems justified the suit against the company under the Sherman Anti-Trust Act, but he omits any discussion of the revisionist scholarship that indicates Rockefeller often got the worst of battles with competing refineries and that the lawsuit was not a measure to promote competition but rather an attempt to advance the interests of J.P. Morgan and his associates against their rivals. Of this, interested readers will find a full account in Murray Rothbard’s The Progressive Era. It would seem the better part of wisdom not to rely on the state to fight alleged monopolies on grounds of efficiency but instead to curtail the power of the state so that “crony capitalism” cannot gain a foothold.
Despite his wrong path on this issue, though, the book on the whole is excellent and Rajan makes many useful points. We hear much today about the danger that automation will drive massive numbers of people out of work. Rajan is appropriately skeptical. Automation, like past innovations, can bring some jobs to an end, but this frees up labor to go elsewhere. “Routine jobs have been automated out of existence for decades now, regardless of whether the jobs required skills or not. Banks had hundreds of thousands of cashiers taking in and paying out cash, as well as counting it at the end of the day…. Automated teller machines (ATMs) and cash-counting machines displaced them…. Yet, if anything, employment in banking has gone up as more, cheaper, bank branches are opened, and tellers morph into relationship managers advising retail customers on their loan options and their investment portfolios.”
Some of those most fearful of automation, and others as well, have proposed a universal basic income (UBI) that would free people of the need to work by grants of sufficient money to live a life of leisure. Rajan raises against this proposal a devastating objection: “UBI is an all-or-nothing scheme, and as such, suffers from the traditional difficulties associated with such a scheme. UBI essentially assumes that most people will not have a job, and there will be no point in them searching for one or attempting to retrain themselves since no new jobs will be possible. It is a counsel of despair not just for job seekers but also for job creators, because after UBI is implemented, any new job will have to be more attractive in pay and responsibilities than paid leisure, a difficult line to cross.”
Another important discussion in the book returns us to the local community. Some have objected on egalitarian grounds to programs that stress community control. Given the commanding importance for one’s future income and social status of going to the “right” university, with the Ivy League schools at the top, won’t people who are fairly well off but who cannot afford the top private schools move to neighborhoods with “good” public schools? By doing so, it is claimed, they give their children an unfair advantage over children from poor families, because these families cannot afford housing in the expensive neighborhoods.
Rajan, who is not without egalitarian sympathies, for the most part takes this to be a genuine problem that he is at pains to mitigate. But in one place, he challenges directly one of the key myths of our time. University education is vastly overrated, and many children would do better with less compulsory schooling: “Companies seem to be rating jobs as requiring higher credentials simply because schools are not teaching basic skills well…. International assessments seem to verify the low average quality of US schooling…. The harm done is worse than simply too much time spent by students who do not need degrees acquiring them at great expense, firms over-paying for qualifications they do not need, and a higher-education system that consumes enormous resources. It causes professions to inflate their own minimum credential requirements as they try to gain in prestige….”
Rajan does not pursue the full implications of this challenge, but that he mentions the issue at all is a testament to the wisdom of his book.
Raghuram Rajan has written a surprising book. Now teaching finance at the University of Chicago, he is an international bureaucrat in good standing, and not a minor one at that; he was chief economist of the International Monetary Fund. Yet far from calling for an increase in “global governance,” as one might expect from someone with his background, he wants to strengthen the local, “proximate,” community.
“If more powers are delegated from the state to the local community level,” he tells us, “a community can shape its own future better, and will have more control over it. Some communities will have a specific ethnic concentration, and community culture will gravitate toward that ethnic group’s culture…. A strong local community could satisfy people’s need to live in a cohesive social structure with others of the same culture or religion…. None of this implies exclusion [but]—having monocultures that satisfy the tastes of those who want monocultures is as important as having multicultures.”
The problem with “populist nationalism,” then, is not that its advocates prefer national sovereignty to control by internationally minded elites. They are right to do so, given human nature as it is, and the leaders of the European Union neglected this truth to their cost. “The problem was that no one asked their people how much more Europe they wanted, and how much sovereignty they were willing to give up…. The process of integration was, therefore, profoundly undemocratic…. Ultimately, though, integration succeeds only when there is deep social empathy between people.” But if national sovereignty is better than rule by technocrats, still better is the local community.
Rajan’s defense of the local community is part of the ambitious theory of history suggested by his book’s subtitle. As he sees it, there must be a balance among the market, the state, and the local community. Each is dangerous if unchecked by the other two. In fact, though, the alleged dangers of the market stem largely, if not entirely, from “crony capitalism,” the partnership of the state and business interests to exploit consumers. Why not drastically limit the power of the state to block this unholy alliance rather than trust a strong state to limit the market?
The author’s failure to support the free market fully stems from an assumption that emerges in his history of capitalism in Europe and America. That account is well worth studying, and Rajan’s discussions of the end of feudalism and the rise of the gentry are especially good, though our confidence is a bit shaken by his calling Henri Pirenne, the greatest of all Belgian historians, French.
But matters take a turn for the worse when he reaches the rise of capitalism itself, and here, I regret to say, he has taken on board a controversial Marxist dogma. He rejects Marxist economics, which he calls “mostly wrong,” but he calls Marx “one of the greatest social thinkers of modern times.” It is a particular dogma that he has taken over from Marx and also, in his telling, from Adam Smith, that leads him to advocate a state strong enough to rein in the market. “The inexorable political tendency of a free, unfettered, unregulated market was for the producers, after experiencing the rigors of competition, to attempt cartelization.” He cites as an example John D. Rockefeller’s control of oil refining in the United States through his Standard Oil Company and deems justified the suit against the company under the Sherman Anti-Trust Act, but he omits any discussion of the revisionist scholarship that indicates Rockefeller often got the worst of battles with competing refineries and that the lawsuit was not a measure to promote competition but rather an attempt to advance the interests of J.P. Morgan and his associates against their rivals. Of this, interested readers will find a full account in Murray Rothbard’s The Progressive Era. It would seem the better part of wisdom not to rely on the state to fight alleged monopolies on grounds of efficiency but instead to curtail the power of the state so that “crony capitalism” cannot gain a foothold.
Despite his wrong path on this issue, though, the book on the whole is excellent and Rajan makes many useful points. We hear much today about the danger that automation will drive massive numbers of people out of work. Rajan is appropriately skeptical. Automation, like past innovations, can bring some jobs to an end, but this frees up labor to go elsewhere. “Routine jobs have been automated out of existence for decades now, regardless of whether the jobs required skills or not. Banks had hundreds of thousands of cashiers taking in and paying out cash, as well as counting it at the end of the day…. Automated teller machines (ATMs) and cash-counting machines displaced them…. Yet, if anything, employment in banking has gone up as more, cheaper, bank branches are opened, and tellers morph into relationship managers advising retail customers on their loan options and their investment portfolios.”
Some of those most fearful of automation, and others as well, have proposed a universal basic income (UBI) that would free people of the need to work by grants of sufficient money to live a life of leisure. Rajan raises against this proposal a devastating objection: “UBI is an all-or-nothing scheme, and as such, suffers from the traditional difficulties associated with such a scheme. UBI essentially assumes that most people will not have a job, and there will be no point in them searching for one or attempting to retrain themselves since no new jobs will be possible. It is a counsel of despair not just for job seekers but also for job creators, because after UBI is implemented, any new job will have to be more attractive in pay and responsibilities than paid leisure, a difficult line to cross.”
Another important discussion in the book returns us to the local community. Some have objected on egalitarian grounds to programs that stress community control. Given the commanding importance for one’s future income and social status of going to the “right” university, with the Ivy League schools at the top, won’t people who are fairly well off but who cannot afford the top private schools move to neighborhoods with “good” public schools? By doing so, it is claimed, they give their children an unfair advantage over children from poor families, because these families cannot afford housing in the expensive neighborhoods.
Rajan, who is not without egalitarian sympathies, for the most part takes this to be a genuine problem that he is at pains to mitigate. But in one place, he challenges directly one of the key myths of our time. University education is vastly overrated, and many children would do better with less compulsory schooling: “Companies seem to be rating jobs as requiring higher credentials simply because schools are not teaching basic skills well…. International assessments seem to verify the low average quality of US schooling…. The harm done is worse than simply too much time spent by students who do not need degrees acquiring them at great expense, firms over-paying for qualifications they do not need, and a higher-education system that consumes enormous resources. It causes professions to inflate their own minimum credential requirements as they try to gain in prestige…”
Rajan does not pursue the full implications of this challenge, but that he mentions the issue at all is a testament to the wisdom of his book.
Trump would do well to ignore the Senate proceedings. There is no reason to participate in a show trial.
Original Article: "The Trump Political Show Trial"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Suddenly the champions of stakeholder theory, like the predictably despicable Washington Post, find themselves singing a new tune about vulture capitalists, deciding that hedge fund short sellers are now the good guys.
Original Article: "The GameStop Saga Unravels Stakeholder Theory"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Surprise! An audit of Pennsylvania's covid lockdowns reveals the process lacked any legal consistency or transparency. Yet Pennsylvania's health bureaucrats have used these arbitrary rules to crush the state's entrepreneurs.
Original Article: "Pennsylvania's Lockdown Rules Were Arbitrary, Inconsistent, and Political"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
In the United States, one can't so much as drive down the street or purchase cough syrup without government-issued identification. Yet federal courts consider it beyond the pale that voters confirm they are who they say they are.
Original Article: "Democrats Are Poised for a Federal Takeover of Elections in America"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Should skepticism of the 2020 election, fueled by a new administration's actions, finally convince 50+ million Trump supporters that the barbarians in the Beltway do not represent him, then Trump’s presidency will be—despite his own actions—the disruption that America’s elites truly feared.
Original Article: "Trump's Potential Legacy: 50 Million+ Enemies of the State"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
In the words of Ronald Reagan, here we go again.
Original Article: "Why They Hate Trump So Deeply"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
David Gornoski is joined by Jeff Deist who talks about Biden's slandering of half of America's population and the calls to "deprogram" Trump voters. Are the talking heads on TV demanding a monoculture? What exactly is meant by the terms "Big Lie," "Build Back Better," and "Great Reset?" Is there a coordinated push of these terms? Is there ever a possibility of a principle-driven media in our country? Listen to the show to find out and more.
Find more from David Gornoski on A Neighbor's Choice.
"These days most people tend to equate freedom with the possession of inalienable individual rights, rights that demarcate a private sphere no government may infringe on. But has this always been the case?"
Original Article: "What Does "Freedom" Mean? There Are Many Different Answers."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Democrats and anti-Trump GOP leaders are calling the Capitol riot a "coup" and "treason." This is in part because if Washington politicians can portray the riot as a grave threat, they can use the riot as an excuse to greatly expand federal power.
Additional Reading "There Is No Such Thing as Treason" by Ryan McMaken: Mises.org/RR_49_01
"The Capitol Riot Wasn’t a Coup. It Wasn't Even Close." by Ryan McMaken: Mises.org/RR_49_02
"The Truth about January 6, and Where We Should Go from Here" by Lew Rockwell: Mises.org/RR_49_03
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Coups are nearly always acts committed by elites against the sitting executive power using the tools of the elites. It's clear the elites want Trump gone, and Wednesday's riot was no coup.
Original Article: "The Capitol Riot Wasn’t a Coup. It Wasn't Even Close."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
If the FBI and the Pentagon have already demonstrated their officials are willing to break and bend rules to obstruct Trump, why believe the administrative class when they insist elections are free and fair and all above board?
Original Article: "Why Trump Voters Don't Trust the People Who Count the Votes"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The Marxist dialectic was purported to explain every development in Soviet society. But so much wishful thinking was required that eventually it all just became a subject for jokes.
Original Article: "The Problems with Marx's Dialectic"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Once upon a time, those in power were smart enough to recognize the importance of popular support. Now the arrogant behavior of those in power is sowing the seeds of true subversion of federal authority.
Original Article: "If Congress Were Genuinely Interested in Democracy, They Would Welcome an Election Commission"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The United States has gone through at least six "party systems." Populism, war, or economic crises usually trigger a change from one system to another. Ryan McMaken and Tho Bishop host Patrick Newman.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Jeff Deist, Ryan McMaken, and Tho Bishop discuss Wednesday's takeover of the US capitol building. What are the potential long term effects, and just how much of a double standard does the American media have?
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Machiavelli asserts that civil society can best flourish in the absence of government intrusion.
Original Article: "Feudalism and Cronyism in Machiavelli’s Italy"
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Expect more of the same in 2021. The Fed has no real plan. It is just lurching from one crisis to the next, hoping more easy money will buy some time. It's been doing this since 2008, and there's little chance it will stop now.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
We begin to understand the electoral college when we admit the United States is really supposed to be a collection of member states, and not a single unified nation. Abolishing the EC is likely to worsen national conflict and disunity.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Libertarians often wonder why socialism continues to be so popular, even though it has proved to be such a failure as a political ideology and as an economic system.
Original Article: "The Education of the Modern Socialist".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
The GOP is at its worst when it's run by the old Bush-Romney-Cheney faction that was in power before Trump. Will "Trumpism" endure, or will the party go back to its old warmongering, pro-establishment ways?
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Break It Up: Secession, Division, and the Secret History of America's Imperfect Unionby Richard KreitnerLittle, Brown, 2020viii + 486 pages
The extreme polarization in American politics today has led many people to ask: Is the United States too large? Don’t people who find the centralizing policies of the Leviathan state oppressive have the right to leave and govern themselves? Ron Paul thinks so. As Richard Kreitner notes, “Ron Paul called secession ‘a deeply American principle.’ For a country founded in the act of secession, Paul argued, there was ‘nothing treasonous or unpatriotic about wanting a federal government that is more responsive to the people it represents....If a people cannot secede from an oppressive government, they cannot be considered free.’”
Dr. Paul has many precursors for his view. As Kreitner observes, in 1863, the individualist anarchist Josiah Warren argued that “individuals were inherently sovereign; no government could legitimately wield power over them. ‘A state or a nation is a multitude of indestructible individualities, and cannot, by any possibility, be converted into anything else!’ Warren declared. He called for ‘a “Union” not only on paper, but rooted in the heart.’ As for the [Civil] war, Warren opposed slavery as the most extreme possible violation of individual sovereignty, but he could find no justification for forcing the South back into the Union. As he wrote, ‘There can be no secession from the freedom to secede!’”
You may wonder whether this position, held not only by Paul and Warren but by Ludwig von Mises and Murray Rothbard as well, is extreme within the context of American history. It is the great merit of Richard Kreitner’s excellent book to show that it isn’t. Kreitner, a writer for The Nation who has devoted five years of research to Break It Up, shows the remarkable extent to which disunity is the dominant theme in American history. He is by no means a supporter of the free market, and his own policy proposals, such as a call for action against “the coming climate chaos,” are best ignored. Nevertheless, his work is of great value to us. It covers American history from colonial times to the present, but I’ll concentrate on only a few items of particular interest.
Like Murray Rothbard, Kreitner notes that ratification of the Constitution was a veritable coup d’état against the American people. “Celebrated as the most profound debate in American history...the ratification struggle was hardly a fair fight. Throughout the contest, those who favored the Constitution resorted to deceit, censorship, and force. They suppressed critical pamphlets and accelerated votes to keep their predominantly rural opponents from scrutinizing the text....Ratification, though it occurred nearly two and a half centuries ago, remains the one time the Constitution was ever put to a vote. Even then, it barely squeaked to passage, and it did so thanks only to a scorched-earth campaign of violence, trickery, and threats.”
Despite these underhanded efforts, supporters of the new order gained only a limited result: “Though the Constitution itself was silent on secession, contemporaries clearly believed ratification could be withdrawn the same way it had been tendered: by popularly elected delegates voting at a statewide convention. No state would have joined the Union had its citizens not believed that such a right was necessarily implied.”
Indeed, the Constitution is best viewed as a “peace pact.” “I [Kreitner] have been influenced by ‘the unionist paradigm,’ which holds union to have been the central problem...of the American founding. Its urtext is David C. Henrickson’s Peace Pact: The Lost World of the American Founding...[it] suggests the Constitution is best considered a treaty among quasi-independent nations that prevented them from falling into a ghastly and brutal civil war. I only doubt, given that the war did come, how successful that diplomatic breakthrough really was.”
Kreitner ably shows that even zealous proponents of the Constitution sometimes abandoned their quest for national unity. “Ever since the Revolution, Gouverneur Morris had been a strong champion of national government, a close ally of Hamilton and Washington....Like most of his business-minded brethren, Morris saw ‘Mr. Madison’s War [of 1812] as hostile to Northern interests’....Morris preferred to break up the Union rather than surrender it to the South. ‘The Union, being the means of freedom, should be prized as such,’ he wrote in 1813 ‘but the end should not be sacrificed to the means.’ He thought Northerners should ‘examine the Question freely, whether it be...consistent with the Freedom of the Northern and Eastern States to continue in Union with the Owners of Slaves.’”
John Quincy Adams is rightly regarded as an ardent nationalist, but in 1839, “the former president had suggested to the New York Historical Society that it might someday be better for ‘the people of the disunited states, to part in friendship from each other, than to be held together by constraint.’”
The claim that the federal government exploits one section of the country to help others persisted, and it lay behind Southern opposition to Franklin Roosevelt’s New Deal. “In a 1937 book, Divided We Stand, Texas Historian Walter Prescott Webb attacked Roosevelt’s program as contributing to the massification of American life. Taking aim at everything from Wall Street finance to chain stores and industrial automation, Webb depicted Americans in the heartland as colonial subjects forced to pay tribute to coastal masters.”
The great anti-statist Albert Jay Nock emphasized another sort of sectional exploitation. “In a 1934 journal entry, Nock wrote that he had ‘asked several businessmen what actual good New England is getting out of membership in the Union, and they could not think of any, even though they tried hard. As for myself, I can think of none.’ Nock, however, was hardly a consistent advocate of Yankee nationalism: the only time he ever voted in a presidential election, he cast a write-in ballot for Jefferson Davis—on the principle, as he put it, that ‘if we can’t have a fine man who amounts to anything, by all means let’s have a first-class corpse.’ [!]”
One of the ways that states have endeavored to thwart the federal government is nullification of laws deemed unconstitutional. Kreitner, who throughout the book displays a pronounced anti-Southern bias, is sometimes unsympathetic to it, but he admits that it can be used to support freedom. Several of the Northern states nullified the Fugitive Slave Act of 1851, and on this occasion it was the Southern states that sought an increase in federal power. “A massive extension of federal power,...[it] preempted Northern states’ ‘personal-liberty laws,’ which granted accused runaways the right to a jury trial and other legal protections. For slavery’s sake, Southerners dropped all pretense of caring about state sovereignty and local control....Northerners were equally opportunistic in response. Once enthralled by Daniel Webster’s soaring odes to the glorious Union, many now took up the nullification doctrines he had denounced. After the fugitive-slave bill passed Congress, Northern states enacted even stronger personal-liberty laws, directly challenging the new statute. Vermont’s legislature extended the right of habeas corpus to accused runaways, essentially voiding the law in the state. Northern juries refused to convict citizens of disobeying the act. While a pro-Southern paper in Washington denounced the North’s embrace of ‘Nullification and Disunion,’ the poet John Greenleaf Whittier proudly called himself a ‘nullifier.’”
Kreitner concludes that secession is likely to grow in importance in our present dark times. “The twentyfirst century has seen an unmistakable resurgence of the idea of leaving or breaking up the United States—a kaleidoscopic array of separatist movements shaped by the conflicts and divisions of the past but manifested in new and potentially destabilizing ways. Earlier periods were defined by the ambitions of one or another region or the separatist impulses of this or that aggrieved minority. The new secessionism has appeared in multiple states at once, each pushing for departure from a Union that no longer functions. If the country as a whole is beyond saving, perhaps one’s own state is not.”
Those of us who wish to advance the ideas of Mises, Rothbard, and Ron Paul can take heart from this rich and detailed book.
[Excerpt from a talk by the same name delivered at the Mises Institute’s annual Supporters Summit, Jekyll Island, Georgia, October 9, 2020.]
I’d like to talk to you this afternoon about two classes of Americans, and it may not be the two classes you think of, but nonetheless, there are two distinct classes in America, and we have to break up, and we have to break up sooner rather than later.
A nation that believes in itself and its future, a nation that means to stress the sure feeling that its members are bound to one another not merely by accident of birth but also by the common possession of a culture that is valuable above all to each of them, would necessarily be able to remain unperturbed when it saw individual persons shift to other nations. A people conscious of its own worth would refrain from forcibly detaining those who wanted to move away and from forcibly incorporating into the national community those who were not joining it of their own free will. To let the attractive force of its own culture prove itself in free competition with other peoples—that alone is worthy of a proud nation, that alone would be true national and cultural policy. The means of power and of political rule were in no way necessary for that.
Ludwig von Mises wrote this about a hundred years ago and it rings absolutely as true today as the day he wrote it and it’s all about the idea of letting people go if they want to form a different political union or political entity. At the end he mentions true national and cultural policy. And so I would ask all of you today to consider: Is America a nation at this point? I would argue no. Is it even a country? Barely. Or is it, as Ilana Mercer calls it, Walmart with nukes? And that’s what America feels like very much today. It feels like we’re all living in one big federal subdivision, doesn’t it?
Last night I mentioned that about a hundred years ago in the interwar period Mises wrote his great trilogy, three books, remarkable books: Nation, State, and Economy first, then Socialism, then Liberalism, all within a ten-year span. These three remarkable books basically laid out a blueprint for both organizing society in a prosperous and peaceful way and also a warning in Socialism about how to destroy it. Turns out it’s a lot easier to destroy than build.
Mises lays out his conception of what a liberal nationhood might look like. It’s rooted in property, of course, and rigorous self-determination at home, and what this means is that he’s always stressing the right of secession, back then, for political, linguistic, ethnic, economic minorities. They always have the right to secede, and of course, coming out of the patchwork of the former Austro-Hungarian Empire and in Europe, he understood what it meant to be a linguistic minority in particular. So, for Mises, any kind of nation, any kind of real nationalism, liberal nationalism, requires laissez-faire at home, of course. It requires free trade with your neighbors, to avoid a tendency toward war and autarchy, and it requires a noninterventionist foreign policy to avoid war and empire.
When we think of these three books, we can only imagine what the West and what America might look like today if these books had been read and absorbed broadly at the time. If Western governments had been even somewhat reasonable, let’s say over the past century, consuming, let’s say, only 10 or 15 percent of private wealth in taxes, maintaining just somewhat reasonable currencies backed by gold, mostly staying out of education and banking and medicine, and most of all avoiding supernational wars and military entanglements. If governments had just been somewhat reasonable in the West, we might still live in a more gilded era, like Mises once enjoyed in Vienna, but with all the unimaginable benefits of our technology and material advances today.
The truth is that liberalism didn’t hold and we have to be honest with ourselves about it. It didn’t hold in the West, and it never took root in the full Misesian sense anywhere, at least not for long, and that’s why all of us are here today. If the world had listened to Mises even somewhat, if Western states had committed to the prescription of sound money, markets, peace, all of our libertarian anarcho-capitalist theory might have been completely unnecessary. We might be sitting here today just sort of grumbling about potholes and local property taxes and local schools. Instead, we’re here talking about the state as an existential threat to civilization. So, two very different scenarios. But again, the world didn’t listen to Mises; that’s why it got Rothbard and Hoppe, by the way.
One of the great progressive achievements of the last hundred years, which goes almost totally unremarked today, goes to the title of my talk: the degree to which the Imposers, we can call them, have been able to portray themselves as the Imposed Upon. It’s absolutely uncanny. We see it in every aspect of American society and every aspect of our politics today. We see it in the presidential election; we see it with the culture wars; we see it in academia in spades; we see it with Antifa in the streets. If we think about just the last hundred years since Mises wrote these three books—the past century in America—progressives of all stripes, of all political parties, I want to add, what have they given us? They’ve given us two world wars, quagmires in Korea and Vietnam, endless Middle East wars in Iraq, Afghanistan—Yemen maybe is coming soon, Iran, who knows? They imposed these enormous welfare schemes that Amity Shlaes has written so much about in the form of the New Deal and Great Society programs, which have ruined how many untold lives. They created all these alphabet soup federal agencies and departments to spy on us, tax us infinitely, regulate every aspect of our lives. And they built the military-industrial complex and the state media complex and the state education complex. They legislated violations of basic human property rights, which would absolutely shock our great grandfathers if they were alive, all with the courts nodding along in their acquiescence. And to pay for it all, they gave us central banking—the Federal Reserve System hatched up, schemed right here on this island, in November of 1910. What do they, the Imposers, call this? They call it liberalism. If you oppose it, they call you a reactionary.
To be a libertarian today is to be a reactionary against the state degradations and depredations and impositions of the twentieth century. The political class, either the Imposers themselves or their agents, what has the political class gotten us? Well, they managed to ruin peace, they managed to ruin diplomacy, money, banking, education, medicine, not to mention, along the way, culture, civility, and goodwill. And if you oppose the Imposers and the elites, they call you a populist for it. So, call me a populist.
All of this, of course, flows from the Imposers, from their positive rights worldview which animates them. It animates everything they do and that’s why they’re able to scream at Rand Paul, for example, for denying them healthcare. Once you accept a positive rights view of the world, then anyone who doesn’t go along with your program is taking from you, and this is how they see the world, the Imposers. If the twentieth century represents a triumph of liberalism, I’d hate to see illiberalism.
We all know what the Imposers have in store for us now in the fledgling twenty-first century. And I would add, as an aside, a good way to tell a Beltway person from a Rothbardian is to ask them the simple question of whether they consider the twentieth century in the West a triumph of liberalism or not. I think most Rothbardians would say it was not, and I think most Beltway types would say it was. They consider the twentieth century some sort of victory for liberalism.
So, what that got us, along with all of these other problems is, of course, a huge divide in society. What they’ve gotten us is an almost unbelievable and epic divide in society between the Imposers and the Imposed Upon. How divided are we and along what kind of lines?
This was a nice little vignette, which took place the other day on Twitter. We have Chris Hayes, from MSNBC, who says, Well, you know with covid, “the most responsible way to deal with all these people”—that sounds like Seinfeld, “those people”—“if we survive this, is some kind of truth and reconciliation commission.” Wow, that sounds fun. I suspect many of us in the room would be candidates for that. I don’t know if there’s boxcars outside. So he represents the progressive left in America today. And then along comes our friend from the neoconservative right, the great Bill Kristol, with whom we’ve all had enough but we always get more. I mean, this guy does not go away. He’s like when you take the fish oil capsule at seven in the morning, and then at noon, that’s Bill Kristol. So, he says, “How about truth and no reconciliation?”
The degree of open contempt and hatred that these lunatics have for us has in part been exposed by Trump and Trumpism. And to that extent we owe Trump a degree of gratitude for letting us see them for what they truly are. I would ask either one of these gentlemen: If you truly believe, let’s say, 40 percent of the United States is beyond redemption, irredeemable, what does that mean? What do you propose doing with them? Does that mean some sort of reeducation camp? Presumably it means that either you separate from them somehow or you vanquish them, and by vanquish, that could be economically, politically, or, in the horrific scenario which we’ve seen repeated throughout history, even physically.
The divide we have in this country today is not so simple as saying blue and red states or counties, Republicans and Democrats, or liberals and conservatives, or even by class. It’s a little more complicated than that. There’s a company out there called Survey Monkey, which took in a lot of data after the 2016 election between Hillary Clinton and Donald Trump. There was a big Washington Post story using this, and they grouped it in a bunch of very interesting ways. I wonder how many people in this room were aware of some of these divides in American culture.
Sadly, there’s a huge divide along racial lines in voting patterns. If only white people had voted in the 2016 election, Trump would have won forty-one states and if only nonwhite people had voted, Hillary Clinton would have won forty-seven states. I view this as basically a testament to the Democrat’s ability to sell some kind of sick victimhood and dependency and to the Republican’s failure to sell any sense of real ownership or opportunity or capitalism. But nonetheless, that’s the divide. It’s real.
How about union members? If only union member households—in other words, a household with at least one union member—had voted, Hillary Clinton would have won forty states. And if no union members, Donald Trump would have won thirty-seven.
When we get into religion, things get even more stark. What about households that claim that the inhabitants are either atheists or no particular religion? Hillary Clinton would have won at least forty-six states, if only nonreligious people had voted. How about if households which claim Protestant or Catholic membership would have been the sole voters? Trump would have won forty-five states. Evangelical voters only, Trump would have won forty-seven states. People who attend church weekly, Trump would have won forty-eight states. People who seldom or never attend church or synagogue, Hillary Clinton would have won forty-three states.
t strikes me as we go through some of these numbers that these divides are awfully hard to overcome politically. I’m not sure how you do that. How about unmarried people? Hillary Clinton would have won thirty-nine states if only unmarried people had voted. Trump would have won forty-three states if only married people had voted, another huge quiet cultural and political gap in this country.
You’ve heard a lot about urban versus rural voters; it’s a motif which keeps coming up again and again. For purposes of the Survey Monkey data, an urban county is one with greater than 530 voters per square mile and a rural county is one with fewer than ninety voters per square mile. Again, only urban counties vote, Hillary Clinton wins forty states. Only rural voters vote, Donald Trump wins forty-seven states.
The last stat I’ll throw out is gun-owning households. (I know that none of you own firearms, but there are people who do. They lock them up and just shoot deer with them. They don’t have Uzis, or modified weapons....And I know there’s no The last stat I’ll throw out is gun-owning households. (I know that none of you own firearms, but there are people who do. They lock them up and just shoot deer with them. They don’t have Uzis, or modified weapons....And I know there’s no weapons in this room today; I feel comfortable with that statement.) If only gun-owning households voted, Donald Trump wins forty-nine states. Guess which one he loses? The only one he loses is Bernie Sanders’s Vermont, because I think up there you just have a gun anyway just because you’re in Vermont but you vote for Bernie. So, if households with no firearms of any kind were the sole voters in America, Hillary Clinton also wins forty-nine states and guess which one she loses? West Virginia, another anomaly.
The point here is that these kinds of divides and problems cannot be neatly solved by politics, especially national politics, and if you think about them, they don’t cleave neatly along geographic lines. This isn’t the Mason-Dixon line. These kinds of divides exist in every state, they exist within counties. If you go to California, which we all think of as a deep blue state, then go twenty miles inland. You know what it is? It’s Trump flags, it’s country music, and it’s Mexican rancheros. That’s what it is. We don’t have the Mason-Dixon line in America in 2020. And more importantly, what we have to understand is: even if you could win some national election, if you could somehow get 51 percent of the voters to vote for a candidate like a Rand Paul, it doesn’t really matter, because hearts and minds haven’t changed. Politically vanquished people never really go away. This is what we have to understand; this is why we have to break up.
A couple of years ago, Bloomberg did some polling in the former Soviet Union, now Russia. There are millions of Russians, especially elderly Russians, who still absolutely pine for the Soviet days when they knew what their job was, they didn’t have to pay for their apartment, etc. Seventy percent of those people have overall a generally beneficial view about Stalin, in 2019. They view him as the great reformer who helped save their country from the Nazis, etc. In other words, despite all the historical examples that the twentieth century provided us, despite the fall and the collapse of the Soviet Union, despite all of the obvious benefits of capitalism, there is still a significant amount of nostalgia for the old system. Politically vanquished people don’t just go away. And the Hillary Clinton people thought that the deplorables were going to do just that. They thought they were dying, they thought they were aging out, and they thought there were fewer of them than there were, and that’s what happened in 2016 and that sent the entire country into basically some kind of psychosis, which we’re still suffering under today.
I know the concept of decentralization is one that’s obvious and clear to all of you. I know secession seems like a tough go, but I want to just throw out to you some happy facts, things that are happening slowly right under our noses, some very decentralist impulses which are at work. Of course, they have been absolutely intensified by the covid issue and by these terrible riots which have been roiling across the United States this summer and now into the fall. As it turns out, all crises happen to be local. What do I mean by that?
One beautiful thing about covid is that it has done further damage to our sort of credulousness when it comes to so-called authorities. Neither the UN nor the World Health Organization nor our own CDC has been able to project any sort of authority whatsoever amongst people. They have been able to drive no consensus. As a result, we’ve had vastly different approaches to covid across international lines and even within our fifty states, and even within some areas within various cities.
No central authority was able to sort of seize it and boss everyone around and tell everyone what to do. Of course, outlets like the New York Times tried to do that, but that’s just in the United States. It’s been absolutely fascinating to watch how places like Singapore and Hong Kong and Sweden have been relatively open and places like the province in China where it happened were drastically locked down. Some places like San Francisco have been drastically locked down, so there’ve been different approaches in this decentralized effort. And none of this is because people woke up one day and said ideologically, Wow, maybe we should try a more decentralized approach. No, it’s just what naturally happens in crises.
Even the vaunted Schengen Area Agreement in Europe, which allows free travel between the member countries, immediately broke down. All of a sudden, a German is a German again and a Frenchman is a Frenchman, and you can’t even drive across. I don’t think that Americans can drive or fly into Canada right now, even as we speak, with the liberal—supposedly liberal—Trudeau administration up there.
It turns out that when it comes to a crisis, things really get local very, very quickly. No matter who you are, even if you’re Bill Gates and you can buy ten vacation houses and go to New Zealand on your yacht, you have to be somewhere physically; you have to exist in an analog world, and that means you need calories, you need kilowatts of energy and air conditioning coming into your home or your abode, you might need some healthcare or some prescription drugs, and all of this becomes unavoidable in a crisis. You have to be somewhere. Even Jeff Bezos had a bunch of protestors surrounding his house, his swanky house in DC. Now I don’t know if he happened to be there at the time, but the point is even Jeff Bezos could conceivably be contained in his home by a mob that you can’t escape. This idea that we’re now on this sort of new global happy plane is being sorely tested, I think, by covid. I think that the idea of political globalism—the bad kind of globalism—is showing its strain. I think it’s cracking very badly.
Let’s talk about the great relocation that’s happening in America, this incredible movement of people out of cities. What’s the charm of a New York, a Manhattan, or a Chicago without the restaurants, and the theaters, and the food, and the museums? High rent, high crime, no fun? We find that a lot of younger people are starting to rethink things. I think this form of de facto secession away from these big cities, which tend to be very, very left-wing in orientation, is a wonderful development to see, because some of that political power that the big cities tend to hold is going to be attenuated. Atlanta tends to control Georgia; Nashville increasingly controls Tennessee. We see this in a lot of states. Las Vegas controls Nevada. But if people start to move away from these big cities, then some of that political power similarly is going to go with them.
This decentralist impulse is really the untold story of the twenty-first century: we see it in companies in the way they organize and manage their teams. Now we see all kinds of teleworking (which I think is a mixed bag, but nonetheless it’s happening, one way or another). Look at distribution systems, what used to be the old hub-and-spoke model of getting your products, like the JCPenney catalogue, or how you got a sweater forty years ago. We’re now looking at companies like Amazon that have a very decentralized system of spider webs. The distribution of goods and services is becoming radically decentralized.
How do we obtain information? It wasn’t that long ago, thirty years or so, you had to go to your local mall and they might have Milton Friedman’s Free to Choose or John Kenneth Galbraith’s Affluent Society. They didn’t have Rothbard. So, libraries and universities and professors were almost kind of like the new versions of monks. They were the literate ones, and you had to go to them to get information. But that’s no longer the case. You have something in your pocket the size of a deck of cards that has basically all of human history on it. That’s hugely decentralizing.
What we’re seeing right now in the education revolution is just absolutely phenomenal. Even before covid came along we had Khan Academy and all kinds of new platforms springing up. We had the student loan debt crisis. We had parents questioning the value of sending their kids to school for $40,000 a year so that they can get a degree which doesn’t get them a job and then when they come home after those four years they hate your guts. It turns out that that’s not such a good value proposition.
Money and banking itself is becoming increasingly decentralized. We have all kinds of payment gateways now. We have systems like PayPal, we have bitcoin, and so really it’s just that top layer of banking that is happening at major banks.
All of these things are happy facts and we ought to be celebrating and thinking about them when we consider the political landscape.
I’m not so sure that what matters for our immediate future is whether Trump or Biden wins. We all know what Biden is and what he will do. We don’t know what the hell Trump is or what he will do. That’s what it means to be Trump. But nonetheless, I think some of these impulses which are happening are inexorable. I’m not sure that even a Kamala Harris or a Joe Biden can stop them. We ought to celebrate that.
What’s interesting is that the one thing which still seems awfully centralized in our world is the political world. In other words, in all these other areas of life, all these things I’ve just been mentioning, decentralization is something that’s happening naturally, it’s happening by market force, it’s happening inexorably, and it’s happening by free choice of people. But the one area out of our lives where we still accept gross centralization, and all the inefficiencies it brings, is government.
Many things that used to be decided at the city level are now decided at the regional or the state level. Things that used to be decided at the state level, decided at the federal level—and then sometimes even at the international level. That’s really the political story of the twentieth century, the centralization of politics at higher and higher levels, which is of course antidemocratic, even though all of these people are telling us about our sacred democracy. Every level of government that’s further removed from you is attenuated by definition, is less democratic, because your input and your consent, so-called, is less and less meaningful. But I wonder if there aren’t even some hopeful signs when it comes to politics and the decentralization of political power.
At an event last fall in Vienna, Austria, Hans-Hermann Hoppe was on a panel, and one thing that struck me about what he said was, if you look at the nationalist impulses of the nineteenth and twentieth centuries, the patchwork of former Europe came together—if you think of Germany as all these principalities and regions, and Bavaria and Prussia, these areas came together. He said nationalism in the nineteenth and twentieth century was mostly a centralizing impulse. That’s what nationalism meant. When it becomes belligerent and spills over its borders, you get aggressive, you get Nazi Germany. But he said in the twenty-first century, from his perspective, nationalist movements tend to be decentralist. In other words, they’re moving away from this sort of global government model which we all thought was going to be our future in the late twentieth century.
Hoppe says, If we look at things like the Brexit vote, if we look at what’s happening in countries like Poland and Hungary, if we look at Catalonia—the Catalonian secession movement in Barcelona in the Catalonian region of Spain—these tend to be breakaway decentralist secessionist movements. That’s the difference between some of the national movements of today versus yesteryear. And I think this is coming soon to a city near you in the United States.
This kind of talk is really becoming reality. Ryan McMaken, who is the editor of mises.org, just wrote an article about how even the mainstream publications now are talking quite openly and seriously about secession, and I think that’s because on some level, nervously, they still think Trump could win. I think that’s what’s driving it.
There have been very serious people on both left and right, not wild-eyed radicals like me, who have been talking about this for the last several years. Frank Buckley, a law professor at George Mason University—oh, we can’t say that anymore, sorry; it’s GMU. It turns out George Mason had a slave or two. Buckley wrote a very serious book about what secession might look like just a year ago. And this is a sober conservative guy. Similarly, Angelo Codevilla, who writes for the Claremont Institute, a retired political science professor at Boston University, wrote an article back in 2016 called “The Cold Civil War.” You can find it at Claremont.org. Again, a very sober, serious conservative, the kind of guy who still uses the lexicon and things like statecraft; you know what I mean. And they’re talking about this. Similarly, people at places on the left, at places like the New Republic and The Nation, are talking about this like never before. Gavin Newsom, governor of California, has applied the term nation-state to his own state.
What happens in the fall, in a month, if somehow, some way Trump manages to win this election—I don’t know what that’s going to look like. I think we are going to see, first of all, an outpouring of grief and psychosis and outright violence from a significant portion of the country that we’re just not prepared for. But when that subsides, you’re going to simply see blue state governors saying, No, we’re walking away. The sanctuary-city talk will become more and more pronounced, and I think that’ll be a beautiful and helpful thing for this country.
Now, the flip side—and when I say who wins, I should say who’s actually installed in January; we don’t know anything about these ballots and postal delivery carriers dropping them in sewers or whatever it might be. But whoever wins—if Joe Biden and Kamala Harris are installed—I think what you’re going to see is nothing short of a new Reconstruction in America. I think you are going to see outright and open attempts, gleeful attempts in the media class to impose themselves on the red states and punish them. Not only for having the audacity to put Donald Trump in the White House instead of Hillary Clinton—who we all knew was going to win—but more importantly on a more macro level, for coming along and interrupting that arc of history that progressives believe in so deeply: that we’re always improving and that we’re always getting better, the past is always bad and retrograde. To have that upended by Trump is a sin which they still haven’t gotten over.
If Biden and Kamala Harris win, the sales tax deduction for state taxes will be immediately reintroduced so that those blue states can start deducting things again. I think you’ll see it in myriad ways. You will see sort of an outpouring, a collective outpouring from the Left that wants to use the state as sort of a laser focus, you know, to bludgeon us, the rest of us. And that, in turn, will cause the red state folks and the red state voters to be thinking very seriously about an exit strategy. I wish I could give you something more hopeful than that, because as I mentioned before, the problem here is that nothing goes along neat geographic lines. But the lines are there nonetheless, and we can’t ignore them.
I’ll close with this: Tom Woods, our friend who spoke earlier, he reminds us political arrangements exist to serve us, not the other way around. Who the hell said that we have to put up with all of this? Can we change ours without bloodshed? That’s the question of the twenty-first century. I think the question of the twentieth century was socialism versus property. I think the question of the twenty-first century is centralized versus decentralized. So, in postpersuasion America, where we seem to live, it’s not just a matter of intellectual error. There’s more to it than that. It’s not just about convincing academics and journalists and politicians that our cause is right and you should agree with us. Because it’s also about self-interest and power. They don’t see for themselves a path to greater self-interest and a path to greater power in the kind of society which all of us in this room would prefer to live in, and they’re not just going to let us have it without some effort on our part. And I hope very strongly that that path does not involve bloodshed.
There is reason for optimism: there is a decentralist impulse that is working its way across the world. It’s coming to America, and I think that is where we have to put our hopes and our efforts.
As notorious as the Democrat political machines are, the origins of vote fraud in America lie in the party of Lincoln.
Original Article: "The Origins of American Vote Fraud".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Murray Rothbard was enthusiastic about fighting for laissez-faire and freedom through both scholarship and political activism. He wasn't afraid to push freedom and free markets with everyone he could, including academics, politicians, the media, and the public.
Additional Resources "3 Reasons the Left Keeps Winning" by Ryan McMaken: Mises.org/RR_41_1
"Why GOP Loyalists and Candidates Keep Moving Left" by Ryan McMaken: Mises.org/RR_41_2
"Both Theory and Praxis: Rothbard's Plan for Laissez-Faire Activism" by Ryan McMaken: Mises.org/RR_41_3
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
Prop. 15’s attempt to undermine California Prop. 13’s property tax protections for businesses has apparently failed. Original Article: "California's Tax-Limiting Prop. 13 Survives Yet Another Attack".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Grand invocations that "I will unify us" are actually shorthand for "We mean to get our way, regardless of others' well-being and desire."
Original Article: "Talk of "Unity" Is Both Hypocritical and Delusional".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Election 2020 is the same as every other election, only the state’s mask of legitimacy is slipping.
Original Article: "Election 2020: Choking on the Political Red and Blue Pills".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
A panel featuring Jeff Deist, Daniel McAdams, and Tom Woods.
Presented at the Symposium with Ron Paul on Saturday, 7 November 2020, in Angleton, Texas.
Presented at the Symposium with Ron Paul on Saturday, 7 November 2020, in Angleton, Texas.
In a country of 330 million people, the idea that democracy produces outcomes that reflect "the consent of the governed… becomes entirely meaningless."
All of a sudden the tweets are gone, the Facebook is gone, the media is gone. Only crazy people are questioning the most pristine — the most perfect — election of all time.
Presented at the Symposium with Ron Paul on Saturday, 7 November 2020, in Angleton, Texas.
Let us continue to preach the truth of Liberty. Ideas have consequences, and unless we spread the ideas of freedom and free markets first, no election or politician will bring about the changes we want.
Presented at the Symposium with Ron Paul on Saturday, 7 November 2020, in Angleton, Texas.
What do the trends in the ballot counting suggest? Will the election end up in the courts? Tho Bishop joins A Neighbor's Choice to analyze the controversy surrounding the election. What will be Donald Trump’s next move? What lies in store for the pro-liberty, non-interventionist movement in case of a Biden win? Given Biden’s track record on waging wars and locking up non-violent offenders, things do not look promising.
Find more from David Gornoski on A Neighbor's Choice.
If democracy is so fundamental, shouldn’t we all have a vote in every place we set foot, from Sunbury, Alaska, to Monaco?
Original Article: "How I Survived Travel to a "Democracy" Where I Had No Vote".
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
The votes still aren't counted, but when it's all over, we'll still be in a country at war with itself over which half of the country gets to boss around the other half. Ryan McMaken and Tho Bishop discuss the failure of the pollsters, the imaginary Blue Wave, and the end of naive democracy.
Additional Resources "The Election Was a Tie. Now What?" by Ryan McMaken: Mises.org/RR_40_3
"Close Elections Force Us to Ask Unpleasant Questions about Democracy" by Ryan McMaken: Mises.org/RR_40_2
"Why Threats of Election Violence May Be Here to Stay" by Ryan McMaken: Mises.org/RR_40_1
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
A very close or contested election would remind us that elections do not demonstrate "the will of the people" and that national unity is founded on some very fragile myths.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "Close Elections Force Us to Ask Unpleasant Questions about Democracy".
"Countries threaten to split apart when their people seem hopelessly divided…. We’re less united today than we’ve been at any time since the Civil War."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "The Benefits of Secession Are Becoming Increasingly Obvious".
Why don't elections bring harmony and closure rather than ever greater political friction? Hans-Hermann Hoppe explained all of the fundamental problems with mass democracy more than 20 years ago in Democracy: The God That Failed.
Jeff Deist finishes his series on this devastating classic with a look at Hoppe's final chapters, critiquing conservatism, liberalism, and constitutionalism. Why do both conservatism and liberalism fail? (hint: democratic mechanisms). Liberalism is property, not majority rule, and all governments tend to attack rather than defend property over time. So what is the best way forward, combining a liberal economic program with the old conservative understanding of natural order? And how do we get there? Don't miss this discussion of Hoppe's most controversial and forward-looking book.
Use the code HAPOD for a discount on Democracy: The God That Failed from our bookstore: Mises.org/BuyHoppe
The Left recognizes the importance of education in forming Americans’ ideology. The Left takes a long-term view. The Left accepts partial victories.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "3 Reasons the Left Keeps Winning".
Why did Murray Rothbard embrace populism and why did he think it could work to limit the power of the state? In short, Rothbard believed that a small elite had seized the power of the state to fleece and oppress the majority. Rothbard was in part basing his ideas on the historical narrative of the Democratic populists of the nineteenth century who formed the party of sound money, low taxes, and decentralized power. This laissez-faire party also managed to win a lot of elections.
Be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
ABSTRACT: The central thesis of this article is that Plato’s philosophy is the foundation of Keynesian economics. First, Plato’s philosophy and his socialism are discussed and it is shown that Keynes was a disciple of his. Next, evidence is presented to show that Keynes advocated a brand of socialism that was virtually identical to Plato’s. Finally, the paper demonstrates the Platonic structure of Keynesian economics.
KEYWORDS: socialism, Plato, John Maynard Keynes
INTRODUCTION It is impossible to completely understand John Maynard Keynes (1883–1946) and his economics without understanding his early philosophical beliefs. His main intellectual interest as a young man was philosophy, not economics. And later, when he turned to economics, he developed Keynesian economics along the lines of his early philosophical beliefs. Robert Skidelsky (2009, 56) agrees that “his economic work was philosophically inspired.” Thus, as Rod O’Donnell (1996, 214) observes, “to understand Keynes’s economics fully, we must first take a step backwards and come to grips with his philosophy.”
Conventional accounts of Keynes’s intellectual development emphasize the role of his ethical master George Edward Moore (1873–1958). However, ethics is only one branch of philosophy, and any ethical theory must rest on the more fundamental branches of metaphysics and epistemology. Unfortunately, scholars have almost totally neglected these areas of Keynes’s thought. No doubt, this neglect has been convenient for his defenders. The protectors of the Keynesian faith are desperate to portray Keynes as one of history’s great liberals (Harrod 1951, 192; Skidelsky 1992, xv; 2009, 157). But his metaphysical and epistemological thought is totally incompatible with liberalism. In metaphysics and epistemology, Keynes’s master was the father of socialism: Plato (c. 428–347 BC). Those desperate to associate Keynes with liberalism have overblown Moore’s influence at the expense of Plato’s.
The central thesis of this article is that Plato’s philosophy is the foundation of Keynesian economics. The following section discusses Plato’s metaphysics, epistemology, and political philosophy. Section 2 provides evidence that Keynes was deeply influenced by Plato and adopted his metaphysics and epistemology. Section 3 examines the many similarities between Plato’s and Keynes’s political philosophies. Finally, section 4 illustrates the Platonism inherent in Keynesian economics through a reductio ad absurdum.
- PLATO’S PHILOSOPHY AND POLITICS Before Plato, the Greek philosopher Heraclitus (f. 504 BC) argued that humankind lives in a world of constant change. As Heraclitus exclaimed, “Everything is in flux and nothing is at rest” (Plato, Cratylus 402a). Although it may appear that something exists in an unchanging state, this is just a trick played on the mind by the unreliable senses. Given that everything is constantly changing, Heraclitus concluded that nothing can truly exist. But if everything is constantly changing, if nothing truly exists, then it is impossible to have any objective knowledge about reality. After all, it is impossible to know that which does not exist. As Karl Popper writes, “If all things are in continuous flux, then it is impossible to say anything definite about them. We can have no real knowledge of them” (Popper 1945, 23; Guthrie 1975, 32). Heraclitus’s theory of flux made him the father of the Sophists, the Greek philosophers who argued that it is impossible to have any objective knowledge of reality.
Plato’s goal was to refute the Sophists. He wanted to show that it is possible for human beings to have objective knowledge about reality. Of course, Plato could not deny that things change in this world. But to show that objective knowledge is possible, he felt compelled to show that there are some things that do not change.
Taking a cue from the Pythagoreans, Plato’s solution was to argue that there are two different realities. He posits “two kinds of existences, the visible and the invisible” (Phaedo 79a). The visible reality in which human beings live is Heraclitus’s world of flux. Beyond this visible and changing reality, there is an invisible reality that is completely devoid of change. This invisible and unchanging reality is Plato’s famous world of Forms. As Plato writes:
[The world of Forms] keeps its own form unchangingly, which has not been brought into being and is not destroyed, which neither receives into itself anything else from anywhere else, nor itself enters into anything else anywhere, is one thing. It is invisible—it cannot be perceived by the senses at all—and it is the role of understanding to study it. [The visible world] is that which shares the other’s name and resembles it. This thing can be perceived by the senses, and it has been begotten. It is constantly borne along, now coming to be in a certain place and then perishing out of it. (Timaeus 52a)Plato also expresses his theory of two realities with his Allegory of the Cave (Republic 514a–520d). The cave is Plato’s analogy for the visible world in which humans live, while the world outside the cave is his analogy for the world of Forms. See Copleston ([1946] 1993, 160) and Jones (1952, 114).
W. T. Jones summarizes Plato’s theory of two realities as follows:
According to Plato, reality is not exhausted by the world of sense perception. This world of sense perception is the world of physical objects in space and time; but besides this world, different from it but standing in intimate relation to it, is another world—nonphysical, nonspatial, nontemporal. This world Plato called the world of [Forms]….Plato believed that there is a world of Forms, over and beyond the sensible world, and that these forms are nonphysical, nonspatial, and nontemporal, yet very real. (Jones 1952, 103–04; Copleston [1946] 1993, 166; Guthrie 1975, 14, 330)
Plato maintained that it is impossible to obtain objective knowledge about the visible world. However, to Plato it is possible to have objective knowledge about the world of Forms. In fact, all objective knowledge is knowledge of the world of Forms (Copleston [1946] 1993, 149; Jones 1952, 105). This means that the world of Forms is the higher, truer reality. The visible reality in which humans live is merely a poor copy, or distorted reflection, of the perfect and immutable world of Forms.
Plato’s metaphysical theory of two realities created an epistemological problem: How do human beings, confined to this lower reality, acquire knowledge from the higher world of Forms? Enter Plato’s theory of the soul, or psychology. Plato argued that the soul exists in the world of Forms prior to birth:
If those realities we are always talking about exist, the Beautiful and the Good and all that kind of reality, and we refer all the things we perceive to that reality, discovering that it existed before and is ours, and we compare these things with it, then, just as they exist, so our soul must exist before we are born. (Phaedo 76d–e)
Since the soul existed in the true reality before birth, it contains all of the objective knowledge from the world of Forms. In contrast to Aristotle, who argued that the human mind is a blank slate (tabula rasa) at birth, Plato argued that human beings are born with innate knowledge from the world of Forms.
Again, Plato is faced with an epistemological problem: Why do most humans seem incapable of accessing the soul’s objective knowledge from the world of Forms? Plato’s solution is his theory of recollection. He argues that the process of being born into this reality causes humans to forget the soul’s objective knowledge from the world of Forms. To Plato, acquiring knowledge, or learning, involves remembering the knowledge we possessed while the soul existed in the world of Forms: “For us learning is no other than remembering. According to this, we must at some previous time have learned what we now remember. This is possible only if our soul existed somewhere before it took on this human shape” (Phaedo 72e–73a; Meno 81c–e). Clearly, Plato’s metaphysics requires his epistemology, and vice versa. Metaphysically, there are two realities, and epistemologically, learning in the lower reality means remembering objective knowledge from the higher reality. Frederick Copleston writes on Plato’s remembrance theory:
The [Forms] exist in their heaven….Plato’s way of speaking about the…[Forms] clearly supposes that they exist in a sphere apart [from the world of Forms]. Thus in the Phaedo he teaches that the soul existed before its union with the body in a transcendental realm, where it beheld the subsistent intelligible entities or [Forms]….The process of knowledge, or getting to know, consists essentially in recollection, in remembering the [Forms] which the soul once beheld clearly in its state of pre-existence. ([1946] 1993, 166; Guthrie 1975, 249, 329, 426)
The soul is Plato’s indispensable link between his metaphysics and epistemology. According to Plato, the soul consists of three parts (Republic 435b–42d; Phaedrus 246a–b; Copleston [1946] 1993, 208–10).Plato also expresses his theory of the three-part soul in his Myth of the Metals (Republic 412a–415c). The first part of the soul is the appetitive soul. This is the lowest part of the soul, and it drives the human desire for food, shelter, wealth, and the like. The second part of the soul is the spirited soul. It is the middle part of the soul, and it is driven by the passions or emotions. The spirited soul impels human beings to power and glory. Finally, the highest part of the soul is the rational soul, and it is driven by reason. According to Plato, every soul contains all three parts: appetitive, spirited, and rational. Importantly, however, the three parts are not equal in every person. One part of the soul tends to dominate each person. In most people the appetitive soul dominates, in some the spirited soul dominates, and in special cases the rational soul dominates.
Plato divides society into three separate classes: the producers at the bottom, the auxiliaries in the middle, and the guardians at the top. These three classes correspond to the three-part soul (Republic 441c; Jones 1952, 136–39). The producers are dominated by the appetitive soul, and the money motive is their defining characteristic. Just as the appetitive part of the soul is the lowest part of the soul, the producers are the detestable, money-motivated class at the bottom of society. The auxiliaries are the soldiers, and they are governed primarily by the spirited soul. Finally, the guardians are the philosophers. The guardians are the blessed class, the class whose souls are ruled by reason. Unfortunately, most human beings are dominated by the appetitive soul, and only a special few are dominated by the rational soul. Hence, most members of society are in the depraved producer class, while the blessed guardian class contains only a small number of natural elites (Republic 428e).
Plato’s division of society into three classes is the key to his politics. Based on his class theory, Plato holds that a nonviolent, spontaneous order is impossible. Since the masses, or producers, are dominated by the appetitive soul, social order must be imposed with systematic government violence. Generally, the ancient Greeks failed to understand how society can be organized nonviolently, or spontaneously, via the invisible hand. Like Plato, Heraclitus and the Sophists advocated violent methods of social organization. Heraclitus claims, “We must know that war is common to all and strife is justice” (Fragments 62). For the Sophists Callicles and Thrasymachus, “the superior should take by force what belongs to the inferior...the better should rule the worse” and “justice is nothing other than the advantage of the stronger” (Gorgias 488b; Republic 338c). Moreover, the depravity of the masses means that they must be barred from participation in politics; democracy is out of the question:
A mass of any people whatsoever would never be able to acquire this sort of expert knowledge and so govern a city with intelligence…we must look for that one constitution, the correct one, in relation to a small element in the population, few in number, or even a single individual. (Statesman 297b–c; Jones 1952, 146–47)Plato had personal reasons to reject democracy. He was born into a noble family that despised democracy. His uncle, Charmides, and his cousin, Critias, were members of the notorious Thirty Tyrants (Jones 1952, 92; Guthrie 1975, 11). This group attempted to abolish Athenian democracy in 404 BC. Plato’s contempt for democracy only intensified when Athenian democrats executed his master Socrates.
Naturally, Plato insists that the ruler must come from his own class, the guardians. Why? The producers are almost totally removed from the world of Forms. Consequently, they have no real objective knowledge of reality. The auxiliaries are superior to the money-motivated producers, but they are also too far removed from the world of Forms to rule. Only the guardians have an intimate connection with the world of Forms; only the philosophers have objective knowledge of what is true and good (Republic 476d–80a). Thus, Plato famously advocates the rule of the philosopher-king:
Until philosophers rule as kings or those who are now called kings and leading men genuinely and adequately philosophize, that is, until political power and philosophy entirely coincide, while the many natures who at present pursue either one exclusively are forcibly prevented from doing so, cities will have no rest from evils, Glaucon, nor, I think, will the human race. (Republic 473c–d)
What kind of economic system must the guardians impose? Plato’s ideal republic is a socialist, or communist, republic.As Ludwig von Mises writes, “There is no economic difference between socialism and communism. Both terms, socialism and communism, denote the same system of society’s economic organization, i.e., public control of all the means of production….The two terms, socialism and communism, are synonyms” ([1956] 2006, 38; [1922] 1981, 497; [1949] 1998, 259, 713). Also see note 20. As Copleston writes, “Plato expressly clings to communism as an ideal” ([1946] 1993, 235; Popper 1945, 40–41). Goldsworthy Lowes Dickinson, one of Keynes’s mentors, admits, “[Plato] was, in fact, a communist” (1931, 80; [1896] 1911, 96). Plato advocated a communist republic ruled by an elite philosopher-king.
Many interpreters attempt to moderate Plato by insisting that he only advocated communism for the guardians and auxiliaries. For example, Dickinson argues, “The communism of Plato…applied only to the guardians and soldiers, and not to the productive class on whom they depended” ([1896] 1911, 99). On the contrary, Plato advocates communism for all:
You’ll find the ideal society and state, and the best code of laws, where the old saying “friends’ property is genuinely shared” is put into practice as widely as possible throughout the entire state….[I]n such a state the notion of “private property” will have been by hook or by crook completely eliminated from life. Everything possible will have been done to throw into a sort of common pool even what is by nature “my own.” (Laws 739c, 877d–e; Republic 423e–24a)
Certainly, it would be impossible for the guardians and auxiliaries to live in communism without imposing socialism on the producers as well. The guardians and auxiliaries do not produce any goods, let alone the basic goods required for survival. To survive, the guardians would have to systematically pilfer goods and services from the producers. This would require the use of systematic government violence against the producers and their property.As Mises stressed, institutionalized violence against person and property is the essence of socialism: “Socialism is the expression of the principle of violence” ([1922] 1981, 320; Huerta de Soto [1992] 2010, 49, 84–85). Moreover, the guardians would have to exercise significant, if not complete, control over production. The guardians and auxiliaries require certain goods to rule the city-state and wage war, and the guardians would have to force producers to produce those goods in the right quantity and quality at specified times. In turn, this would require the guardians to control key raw materials and capital goods.
Socialism is defined as government control of production (Schumpeter [1942] 2006, 167). Undoubtedly, Plato’s ideal society would require extensive government control over production. As Jones writes, “Interference, or intervention, by the state is necessary, Plato held, in every aspect of life….[A]ll would be controlled and regulated from above” (1952, 149–50). And since people can only consume what is produced, government control of production also gives it control of consumption. In the end, Plato’s ideal republic would be a full-blown socialist republic.
All brands of socialism require government control over the size of the population. As Ludwig von Mises writes, “Without coercive regulation of the growth of population, a socialist community is inconceivable. A socialist community must be in a position to prevent the size of the population from mounting above or falling below certain definite limits” ([1922] 1981, 175). Like every consistent socialist, Plato advocates totalitarian controls on the size of the population:
[The guardians’] aim will be to keep the number of males as stable as they can, taking into account war, disease, and similar factors, so that the city will, as far as possible, become neither too big nor too small….And then, as the children are born, they’ll be taken over by the [government] officials appointed for the purpose…[T]hey’ll take the children of good parents to the nurses in charge of the rearing pen situated in a separate part of the city, but the children of inferior parents, or any child of the others that is born defective, they’ll hide in a secret and unknown place, as is appropriate….A woman is to bear children for the city from the age of twenty to the age of forty, a man from the time that he passes his peak as a runner until he reaches fifty-five. (Republic 460a–e)
In addition to the size of the population, Plato advocates government control over its quality. He holds that government must prohibit individuals from procreating with members of other classes: “The intermixing of [producers] with [auxiliaries] and [producers] with [guardians] that results will engender lack of likeness and unharmonious inequality” (Republic 546e–547a). He even recommends killing inferior children to promote the quality of the human race: “The best men must have sex with the best women as frequently as possible, while the opposite is true of the most inferior men and women…[I]f our herd is to be of the highest possible quality, the former’s offspring must be reared but not the latter’s” (Republic 459d; Adam [1902] 2010, 357–60; Popper 1945, 44). In short, Plato was an early father of eugenics (Taylor [1926] 1955, 275; Copleston [1946] 1993, 229).
Plato was a sexist who held that women are inferior to men.Plato allowed women to be guardians, and this has led some to argue he was a feminist. But as Gregory Vlastos says, “In his personal attitude to the women in his own contemporary Athens Plato is virulently anti-feminist” (1989, 116). On Plato’s anti-feminism, see Annas (1976) and Buchan (1999). He proclaims, “Do you know of anything practiced by human beings in which the male sex isn’t superior to the female in all these ways?…It’s true that one sex is much superior to the other in pretty well everything….In every way of life women are inferior to men” (Republic 455c–d, 388a, 431c, 557c, 563b, 605e). Plato’s sexism tainted his politics. As Dickinson notes, “Woman, in fact, was regarded as a means, not as an end; and was treated in a manner consonant with this view” ([1896] 1911, 169). Plato endorses common ownership, or communism, in women: “All these women are to belong in common to all the men…[N]one are to live privately with any man…[T]he children, too, are to be possessed in common, so that no parent will know his own offspring or any child his parent” (Republic 457d, 423e–24a).
Like all socialists, Plato despised money and the money, or profit, motive. For Plato, the love of money is detestable, and the producers “are by nature most insatiable for money” (Republic 442a). Plato wants individuals to remove themselves from earthly life and live in contemplation of the world of Forms (Phaedo 65a–66a). The money motive distracts the soul and prevents the producer from contemplating the higher reality: “The [producer] types pull the constitution towards money-making and the acquisition of land, houses, gold, and silver, while both the [guardians and auxiliaries]—not being poor, but by nature rich or rich in their souls—lead the constitution towards virtue” (Republic 547b). For guardians and auxiliaries, “it is unlawful to touch or handle gold or silver” (Republic 417a). He wanted to outlaw the producers from hoarding gold and silver: “No private person shall be allowed to possess any gold or silver, but only coinage for day-to-day dealings” (Laws 742a). Scorn for money and the profit motive has been a hallmark of socialist thought since Plato.
Plato’s ideal republic is a socialist republic ruled by a totalitarian dictator. As Popper (1945, 149) stresses, “Plato’s political programme is purely totalitarian.” Mises agrees: “Plato…elaborated a plan of totalitarianism” (1962, 120, 85–86).Some interpreters deny Plato’s totalitarianism. But C. C. W. Taylor writes, “It is…uncontroversial that the ideal state of the Republic is a totalitarian state. Where there is room for dispute is on the question of what kind of totalitarian state it is” ([1986] 1999, 282). Plato attempted three times to establish a totalitarian state in Syracuse (Jones 1952, 101). Further, as Popper writes, “[Plato’s] Academy was notorious for breeding tyrants” (1945, 229n25). At least eight of Plato’s students either became tyrants or attempted to become tyrants: Callippus of Syracuse, Chaeron of Pellene, Clearchus of Heraclea, Coriscus of Skepsis, Euagon of Lampsacus, Erastus of Skepsis, Hermias of Atarneus, and Timolaus of Cyzicus. And how did Plato justify the tyranny of the philosopher-king? With his metaphysics and epistemology. To Plato, the human race comprises three fundamentally different species, or animals. Most souls are cursed to domination by the depraved appetitive soul. Given the depravity of the masses, totalitarian socialism must be imposed to establish social order and usher in the utopia. And who must rule the socialist state? Absolute dictatorial power must belong only to the elite philosophers, those blessed few who are dominated by the superior, rational soul. All must submit to the omnipotent philosopher-king, for only he is endowed with the objective knowledge needed to establish the earthly utopia.
A mystic is a person who claims to obtain objective knowledge from a supernatural source. Clearly, Plato was a mystic: “That he was a theist, deeply religious and with more than a touch of mysticism in him, no one would deny” (Guthrie 1978, 33; Dickinson 1931, 76, 194). His metaphysical theory of the world of Forms is a mysticoreligious theory. Even a devoted Platonist such as Alfred E. Taylor ([1926] 1955, 285) must admit that “when the forms are mentioned in a Platonic dialogue, their reality is neither explained nor proved.” Questioning Plato is forbidden, however. Any person with the audacity to question the existence of the supernatural world of Forms must have a defective soul. The chief virtue of the ignorant producer is uncritical obedience to the omniscient philosopher-king.
- KEYNES’S PLATONIC METAPHYSICS AND EPISTEMOLOGY Although Plato’s influence on Keynes is almost universally neglected, some scholars have hinted at the connection. For example, O’Donnell admits in a footnote, “It is possible to view Keynes’s philosophy as a variety of Platonism” (1989, 345n32). Athol Fitzgibbons acknowledges that “even in the General Theory, there remain suggestive structural similarities between Keynes’s political philosophy and Plato” (1988, 174, 177). Still, sympathetic commentators have been reluctant to explore his Platonism in any detail.
Keynes became a disciple of Plato when he was an undergraduate at King’s College, Cambridge. John P. Hill notes, “There had always been something of a Platonic tradition at Cambridge” (1976, 3). As an undergraduate, Keynes surrounded himself with the Cambridge philosophers George Edward Moore, Goldsworthy Lowes Dickinson, and John M. E. McTaggart. Soon after he arrived at Cambridge in October 1902, Keynes was invited to join Dickinson’s Discussion Society (Skidelsky 1983, 112).Dickinson is perhaps the most neglected figure in Keynes’s intellectual development. The Platonist Dickinson wrote in August 1884, “I’ve just descended from a seventh heaven….[I’ve been] reading and meditating on Plato’s Symposium….I’m ‘sitting at Plato’s feet’ at present, and have really never experienced such ‘ecstasy’” (quoted in Forster 1934, 43). He proclaimed, “I was led by Plato (among other things) to a belief that there was some supernormal mystic avenue to truth” (1973, 67). In May 1908, Dickinson helped secure Keynes a lectureship at Cambridge (Moggridge 1992, 178–79). Unfortunately, the voluminous Keynes-Dickinson correspondence did not survive (Skidelsky 1992, 692). In early 1903, he attended Moore’s lectures on ethics and McTaggart’s lectures on metaphysics (Keynes 1903a, 1903b). On February 28, 1903, he was “born” into the Cambridge Apostles, a secret society of which Moore, Dickinson, and McTaggart were key members (Moggridge 1992, 66).
Keynes read Moore’s Principia Ethica in October 1903, just after it was published, and he praised it as “a stupendous and entrancing work, the greatest on the subject” (1903c). As Skidelsky says, Moore’s Principia Ethica was “the most important book in [Keynes’s] life” (1983, 119). Unfortunately, Keynes’s defenders have failed to stress Moore’s Platonism.As O’Donnell admits, “It is significant that a Platonic form of realism pervades…Moore’s Principia Ethica” (1990, 338n8). Moore’s fellowship dissertation was titled The Metaphysical Basis of Ethics, and he acknowledges, “So far therefore as general philosophical scheme goes, the standpoint here taken up seems to agree most with that of Plato” ([1897] 2011, 14; [1898] 2011, 128). He boasted on August 14, 1898, “I am pleased to believe that this is the most Platonic system of modern times” (1898; Hylton 1990, 137).Lytton Strachey aligned Moore with Plato: “[Lytton] saw Moore as another Plato, and Principia Ethica as a new and better Symposium” (Holroyd [1967] 2005, 89).
Plato’s influence in Principia Ethica is most apparent in Moore’s definition of the good. For Plato, good is an indefinable Platonic Form, and the soul contains innate, or intuitive, knowledge of the good from the world of Forms (Republic 476a, 507b, 509b, 517b; Phaedo 75d, 77d; Parmenides 130b, 135c). As Taylor writes, “the apprehension of [the good] is strictly ‘incommunicable’ [indefinable]….Either a man possesses it [intuitively] and is himself possessed by it, or he does not, and there is no more to be said” ([1926] 1955, 231, 289; Copleston [1946] 1993, 178, 189). As with all other Platonic Forms, only the philosophers possess objective knowledge of the good: “Most men [are] incapable of knowing the good” (Jones 1952, 146).
Moore was a consequentialist. He argued that we must choose those actions that produce the greatest good. Being a consequentialist, Moore held that “‘good’ is the notion upon which all Ethics depends” ([1902] 1991, 105; 1903, 142). So what is good? Moore built his ethical theory upon Plato’s mystical theory of the good: “if I am asked ‘How is good to be defined?’ my answer is that it cannot be defined, and that is all I have to say about it” (1903, 5). He says, “I deny good to be definable” ([1902] 1991, 13; 1903, 7–8). As Tom Regan explains,
The similarities between Moore’s views and those of Plato’s are unmistakable….[W]hat Moore means when he claims that “Good is indefinable” is barely distinguishable (if distinguishable at all) from what Plato would mean if he said “the Form (or Idea) of Good is indefinable”….Moore explicitly acknowledges the Platonic roots of the metaphysics that grounds his ethical theory. (1991, xxxii)
Like Moore, Keynes was a consequentialist and believed that action must aim at producing the greatest good. And what is good in his view? He writes, “I grant with Moore that good is a simple and indefinable quality which I can only identify by direct inspection [intuition]” (1906a, 2). He claimed to possess “reliable intuitions of the good” (Keynes 1971–89, 10:447; hereafter cited as CW). Following Plato, Keynes held that the good is a mystical Platonic Form only accessible to the special elite: “How amazing to think that we and only we know the rudiments of the true theory of Ethic” (1906b, 123–24). By adopting the Plato-Moore definition of the good, Keynes rooted his ethical theory in Plato’s metaphysics and epistemology.
Keynes’s main philosophical work is A Treatise on Probability. Although it was not published until 1921, A Treatise on Probability was a reworking of his fellowship dissertation. The fundamental ideas contained in the dissertation and A Treatise on Probability can be traced to a paper he read to the Apostles on January 23, 1904, entitled “Ethics in Relation to Conduct” (Keynes 1904a; O’Donnell 1989, 12). On September 27, 1905, he produced his first outline of his dissertation, Principles of Probability. His dissertation was rejected on March 21, 1908, and the revised dissertation was finally accepted on March 16, 1909 (Keynes 1908, 1909).
Keynes’s theory of probability is called the logical theory of probability, and he developed it in opposition to the frequency theory of probability. According to the frequency theory, empirical observation is the only way to gain objective knowledge of probability. For example, consider the probability of rolling a three-spot on a die. In the frequency theory, the probability can only be found by throwing the die a large number of times in the real, visible world. After throwing it many times, the observer counts the number of times a three-spot occurred. This frequency is the probability of throwing a three-spot on a die.
The frequency theory is incompatible with Plato’s philosophy. To Plato, empirical frequencies from the Heraclitian flux can never provide any objective knowledge of probability: “We shall not look for knowledge in sense-perception at all” (Theaetetus 187a; Phaedo 65a–66a). Being a good Platonist, Keynes rejected the frequency theory: “this view of probability upon [empirical] series is certainly false” (1904, 11).Like Plato, Keynes was a rationalist who rejected empiricism: “Keynes is a particular kind of rationalist, rather than an empiricist” (O’Donnell 1989, 81). Anna Carabelli agrees, “Certainly, Keynes was not an empiricist” (2003, 214; Dostaler 2007, 74). Instead, he argued that probability is mental, or “purely logical” (1908, 18; CW, 8:4). Just as Plato argued that the mind possesses innate knowledge of Forms, Keynes argued that the mind possesses innate, or intuitive, knowledge of probability. In the case of throwing a three-spot, the probability is determined by mental contemplation of the perfect, eternal die in the world of Forms. On Keynes’s logical theory, probabilities are mystical Platonic Forms that only exist in the mental realm of ideas. At bottom, A Treatise on Probability, Keynes’s philosophical opus, is steeped in Plato. Fitzgibbons agrees:
The abstract Platonic insight which permeates Keynes’s system is a strict division between the mental sphere of pure ideas [Forms] and the real [visible] world of fluctuation and change….Like G.E. Moore [and Plato], Keynes believed that universals [Forms] originate and exist only in the mind….The Platonic metaphysics was conveyed…in the Treatise [on Probability] as the doctrine of rational intuition, which is the central theme of that work. (Fitzgibbons 1991, 130; Gillies 2000, 33)
Keynes also held Platonic views on gender and sexuality. Like Plato, Keynes was a sexist. He wrote to his lover Duncan Grant: “I shall have to give up teaching females after this year. The nervous irritation caused by two hours’ contact with them is intense. I seem to hate every movement of their minds. The minds of the men, even when they are stupid and ugly, never appear to me so repellent” (quoted in Moggridge 1992, 183–84). Skidelsky notes, “women were inferior—in mind and body. Love of young men was, he [Keynes] believed, ethically better than love of women” (Skidelsky 1983, 129; Hession 1984, 40; Deacon 1986, 63–64; Turnbaugh 1987, 28). Like his lover and fellow Platonist Lytton Strachey, Keynes was “a male chauvinist pig” (Levy 2005, xi).Strachey’s biographer writes, “Once [Lytton] had relinquished Christianity, Plato’s Symposium became for him a new Bible” (Holroyd [1967] 2005, 39). As with Plato, Strachey was a “communist” (Strachey [1926] 2005, 556).
All agree that Keynes had a short-run philosophy, as conveyed in his famous expression “In the long run we are all dead” (CW, 4:65, 28:62).For similar statements on his short-term orientation, see Keynes (CW, 1:120, 8:342, 10:445, 23:224, 28:62). In the secondary literature, see Carabelli (1988, 128), Deacon (1986, 173), Fitzgibbons (1988, 49), Hayek ([1960] 2011, 460; 1988, 57, 76, 84), Himmelfarb (1986, 37), Moggridge (1992, 127), O’Donnell (1989, 118, 278), Schumpeter (1946, 506), and Skidelsky (1983, 155–56; 1992, 60; 2000, 156). But it has not been emphasized that Keynes’s scorn for the long run reflects his belief in Plato’s metaphysics. The inferior reality in which human beings live is temporal, whereas Plato’s superior world of Forms is nontemporal, or timeless (Jones 1952, 103). Like Plato, Keynes wants human beings to detach themselves from life in the temporal world of past, present, and future. Mental contemplation of the timeless world of Forms is nobler than any possible long-run action taken in the inferior temporal reality. As Keynes put it,
Nothing mattered except states of mind….These states of mind…consisted in timeless, passionate states of contemplation and communion, largely unattached to “before” and “after”….The appropriate subjects of passionate contemplation and communion were a beloved person, beauty and truth, and one’s prime objects in life were love, the creation and enjoyment of aesthetic experience and the pursuit of knowledge….How did we know what states of mind were good? This was a matter of direct inspection, of direct unanalysable intuition [of the world of Forms]. (CW, 10:436–37)
On April 18, 1905, Keynes wrote to Bernard Swithinbank, “I find my chief comfort more and more in Messrs Plato” (1905b, 142). In October, Strachey grumbled to Keynes, “We’ll suffer in an eminent silence, and be Platonists till the day after tomorrow” (1905, 211). Keynes consoled Strachey on February 7, 1906:
My dear, I have been deep in Greek philosophy these last few days, Thales and Pythagoras, Zeno and his lover Parmenides: I am sure your sufferings are only due to this prison world, not the particular circumstances in it. Only when after a thousand existences and a thousand loves we have become purified from Not-Being and are a perfect harmony, we may fly on wings of love into the heaven of Pythagoras and Plato and McTaggart, when there is the comfort of souls. I am sure it must be all true. (1906c, 102)
In this passage, “heaven” is an allusion to Plato’s world of Forms. The reference to “this prison world” reflects Plato’s theory of the soul: there is an inherent conflict between the body and the soul, and the body is a prison that prevents the soul from returning to the heavenly world of Forms. The soul can only escape its earthly existence after “a thousand” reincarnations. The soul can only return to a state of “Being” in Plato’s heaven after going through the wheel of birth and rebirth (Copleston [1946] 1993, 212; Guthrie 1975, 476). Although violently opposed to Christianity, Keynes embraced Plato’s mystic religion.
A Treatise on Probability was an utter failure, and Keynes never wrote another major work on philosophy.Lawrence Klein, a dedicated Keynesian, admits, “Keynes’s ideas on probability represent a minority position among current workers on the subject and are not those for which we shall long remember his work….[H]e did not make a sensational advance in probability theory” (1951, 446). Of course, his entire ethical theory collapses if his theory of probability is flawed. See Donald Gillies (2000, 25–49) for a critique of the logical theory. Still, he always remained a disciple of Plato. In 1938, he gave a speech called “My Early Beliefs” in which he admitted, “I have called [my] faith a religion, and some sort of relation of neo-platonism it surely was” (CW, 10:438). He boasts that he was “brought up…with Plato’s absorption of the good” (10:442). He says of “The Ideal,” the sixth chapter of Moore’s Principia Ethica, “I know no equal to it in the literature since Plato” (10:444). In the summer of 1944, as he traveled to the Bretton Woods conference, he supplemented Friedrich Hayek’s The Road to Serfdom with a new edition of Plato (Skidelsky 2000, 343). In summary, the evidence confirms that Keynes was a committed Platonist through his entire adult life.
- KEYNES’S PLATONIC POLITICAL PHILOSOPHY Keynes’s political philosophy is virtually identical to Plato’s. However, Plato’s totalitarian socialism has made sympathetic commentators reluctant to admit this reality. Fitzgibbons acknowledges that “Platonic metaphysics…permeates Keynes’s political philosophy” (1991, 131). Still, he is careful to insist that “Keynes rejected Plato’s authoritarian politics” (1988, 174). Skidelsky is the most ardent defender of Keynesianism today, and he notes: “Keynes welcomed the coming to power of a new class of Platonic Guardians” (1992, 224). To protect his master from the bad name of socialism, however, Skidelsky has repeatedly maintained that “Keynes was not a socialist” (1990, 52; 1992, 233; 2000, 478; 2009, 135; Harrod 1951, 333).
But like Plato, Keynes was a socialist. As O’Donnell writes, “Keynes envisaged and espoused a particular form of socialism” and “It is clear, explicit and unambiguous; he used the term socialism to characterise his own views” (1999, 149, 164; 1989, 322; 1992, 781–82). Fitzgibbons admits that “he wanted capitalism to be eventually replaced by a non-Marxist socialism” (1988, 190–91). Still, interpreters who admit Keynes’s socialism tend to hedge their admission by insisting that he advocated a milder form called liberal socialism. For example, Gilles Dostaler says, “he proposed liberal socialism” (2007, 98; Moggridge 1992, 469; Groenewegen 1995, 153; Crotty 2019).A classical liberal must reject the notion of liberal socialism. For a classical liberal, liberalism and socialism are mutually exclusive, and the notion of liberal socialism is as self-contradictory as the notion of a triangular square. Keynes is better described as a non-Marxist socialist. See Raico (2008) on Keynes’s antiliberalism. Contrary to sympathetic commentators, however, the evidence shows that Keynes advocated a brand of socialism that contained nearly all of the totalitarian elements of Plato’s socialism.
Like Plato, Keynes had a class theory. As noted, Plato divides society into three classes: producers, auxiliaries, and guardians. Similarly, Keynes divides the population into three classes: investors, consumers, and government. Whereas the producer is the villain for Plato, the investor is the villain for Keynes: “The weakness of the inducement to invest has been at all times the key to the economic problem” (CW, 7:347–48). It should be stressed that in economic science investment does not refer to financial investment, but real investment. Investment goods are capital goods, or the means of production. Under capitalism, investors are responsible for controlling the means of production. Hence, Keynes’s attack on the investor class bears a close resemblance to Plato’s attack on the producer class.
By 1905, Keynes’s desire to “swindle the investing public” reflected his scorn for private investors (Skidelsky 1983, xxiii). He exclaimed in 1910, “There are still a good many perfect fools amongst our business men [investors]” (Keynes 1910a). In his 1910 lecture series, Company Finance and Stock Exchange, he belittles the accounting and financial tools used by private investors (Keynes 1910b). Keynes’s pessimistic theory of investment was the key to The General Theory (1936). But he had already developed his gloomy theory of investment by 1910: “[Investment] will often depend upon fashion, upon advertisement, or upon purely irrational waves of optimism or, depression” (CW,15:46, 7:162).Anna Carabelli writes, “Keynes’s attitude towards investment…remained substantially unchanged from his early articles written at the beginning of the century to the latest contributions written after The General Theory” (1988, 195; Skidelsky 1983, 208). Keynes’s theory of investor psychology reeks of Plato’s theory of producer psychology.
Like Plato, Keynes argued that a spontaneous, nonviolent social order is unworkable. Instead, systematic government violence is the only viable way to organize society. For Keynes, the only solution to the problem of social order is government control, or socialization, of investment: “A somewhat comprehensive socialisation of investment will prove the only means of securing an approximation of full employment” (CW, 7:378, emphasis added). Government control of investment means government control over the means of production. And government control of the means of production is the definition of socialism (Mises [1922] 1981, 505; Friedman 1993, 4). Thus, Keynes was correct when he “avow[ed] himself a socialist” (J. N. Keynes, 1911).
Keynes recommended government control over investment many years before The General Theory. On June 8, 1924, he drafted an outline for a book with the telling title “Prolegomena to a New Socialism.” Here, “Investment of Fixed Capital [is one of the] chief preoccupations of the State” (Keynes 1924a; O’Donnell 1992, 807). Hence, government control of investment, or fixed capital, is central to his new socialism, or “true socialism of the future” (CW, 19:222). Following Plato, the fundamental problem is the investor class’s lack of objective knowledge: “a great deal of money [is] invested by those who ha[ve] no special knowledge” (Keynes 1924b, 313).Skidelsky says, “What chiefly impressed Keynes about British businessmen was their stupidity” (1992, 259; Johnson and Johnson 1978, 105). Given the lack of objective knowledge, we need “central regulation of the machine” and “public control of entrepreneurs” (1924c, 150–51).
In September 1925, he traveled to the Soviet Union and preached to the Soviet Politburo. As Leon Trotsky ([1925] 1927, 286) recognized, he called for a transition from capitalism to socialism:
I direct all my mind and attention to the development of new methods and new ideas for effecting the transition from the economic anarchy of the individualistic capitalism which rules today in Western Europe towards a regime which will deliberately aim at controlling and directing economic forces. (CW, 19:439)
Like Plato, he advocated “centralized state control” of society:
I believe that there are many other matters, left hitherto to individuals or to chance, which must become in future the subject of deliberate state policy and centralised state control. Let me mention two—(1) the size and quality of the population and (2) the magnitude and direction of employment of the new national savings year by year [for investment]. (19:441)
Beatrice Webb is the most important woman in the history of British socialism, and of Keynes she recorded in 1926: “I see no other man that might discover how to control the wealth [or investment goods] of nations in the public interest” ([1926] 1985, 93–94).Keynes was close friends with the Webbs. In 1936, he praised the Webbs’ problematic book Soviet Communism (CW, 28:333). He considered Beatrice “the greatest woman of the generation” (1943). In 1928, he proposed an investment politburo, called the National Investment Board, “to mobilise and to maintain the supply of capital and the stream of savings [for investment]” (Keynes 1928a, 69). The socialist politician Hugh Dalton realized, “Such a board will, I believe, be one of our most effective instruments of Socialist planning” (quoted in Pimlott 1985, 218).The British Labour Party acknowledged that Keynes advocated socialist policy when it included his National Investment Board in its 1934 program, For Socialism and Peace (Labour Party 1934, 14). Keynes voted for the socialist Labour Party three months before he published The General Theory. Keynes demands “a new system of public control” (1928b, 109). He states in his 1929 speech “Social Reform as the New Socialism,” “Modern economic organisation is liable to produce unintended and undesired results unless it is controlled from the centre” (1929, 187).
Keynes published his first major work on economics, A Treatise on Money, on October 31, 1930. In this work, he argues that private investment is the central economic problem (Patinkin 1982, 230; Meltzer 1988, 113–14; Moggridge 1992, 486). Naturally, he calls for government control of it: “Perhaps the ultimate solution lies in the rate of capital development becoming more largely an affair of the state, determined by collective wisdom and long views” (CW, 6:145). In fact, the penultimate chapter is titled “Control of the Rate of Investment.” In it he imagines “socialistic action by which some official body steps into the shoes which the feet of the entrepreneurs are too cold to occupy” (6:335).
Keynes abandoned his flawed Treatise on Money almost immediately after it was published, and he started developing The General Theory in late 1931.In September 1930, he admitted that it was a “failure” (CW, 13:176). The Keynesian Don Patinkin writes, “[I]t is not a good book,” and “the Treatise was not a successful book” (1976, 25; 1982, 32). Also see Laidler (1999, 131), Meltzer (1988, 103), and Moggridge (1992, 530). Around this time, he gave a speech to the Society for Socialist Inquiry and Propaganda (Cole 1961, 230, 235). He exclaimed, “Central control of investment” is “urgently called for on practical grounds” (CW, 21:31). In September 1932, he wrote an article in the press calling for “a large measure of control over the volume of new investment” (21:130). He elaborates, “The chief problem would be to maintain the level of investment at a high enough rate to ensure the optimum level of employment….The grappling with these central controls [on investment] is the rightly conceived socialism of the future” (21:137). During the summer of 1933, he gave a speech on his “Control Scheme” in which he said: “My proposals for the control of the business cycle are based on the control of investment” (Keynes 1933, 675).
As with Plato, Keynes has a psychological class theory in which members of different classes are fundamentally different species, or animals. The word psychology comes from the Greek psyche, meaning soul. Just as Plato’s producers have defective souls, Keynes asserts that the “functionless investor” has “uncontrollable and disobedient psychology” (CW, 7:376, 317). Investors have “animal spirits,” meaning that “the mass psychology of a large number of ignorant [investors] is liable to change violently” (7:161–62, 154). Investors must be handled like “domestic animals,” because they have “delusions” (21:438). Keynes’s theory of investor psychology, or animal spirits, is a Platonic theory of the soul. He wrote in 1905, “the soul is divided into several simpler entities—the spirited, animal, vegetative souls and so on (i.e. Plato)….The body is moved by animal spirits” (1905d, 17).
Keynes published The General Theory in 1936 to provide an economic justification for Platonic socialism, or “anti-Marxian socialism” (CW, 7:355). He writes, “I expect to see the State, which is in a position to calculate the marginal efficiency of capital-goods on long views and on the basis of the general social advantage, taking an ever greater responsibility for directly organizing investment” (7:164). He endorses “a somewhat comprehensive socialization of investment,” and says that “Socialisation can be introduced gradually” (7:378). He declares, “I conclude that the duty of ordering the current volume of investment cannot safely be left in private hands” (7:320, 29:232). As many reviewers noticed at the time, The General Theory argues that “national control of investment is an essential prelude to any permanent solution of unemployment,” and that “investment must be socially directed and not left to the vagaries of the individual striving for gain” (Williams 1936, 8–9).
Keynes never abandoned socialism after The General Theory. He wrote in 1938, “Durable investment must come increasingly under state direction” (CW, 21:438). For him, “The Board of National Investment would in one way or another control by far the greater part of investment” (14:49). He advocated a society in which “the bulk of investment [is] under public or semi-public control” (27:322). In summary, Keynes’s goal was, in his very words, “to move out of the nineteenth century laissez-faire into an era of liberal socialism” (21:500).
As with Plato, Keynes’s ideal society is a totalitarian society. If government controls investment goods, it controls what is produced and, by extension, what is consumed. Moreover, if government controls investment goods, it must also exercise control over the human factors that operate those goods. Government must control each person’s occupation and when and where each person works (Mises [1922] 1981, 165; [1944] 2011, 60–61; [1949] 1998, 284). And to do this, it must have ultimate control over where each member of the workforce lives. Of course, some investment goods are unpleasant to operate. State violence would be required to force members of the population to work undesirable jobs on investment goods deemed essential to society. In short, Keynes’s plan to socialize investment entails totalitarianism. He admits that his plan “is much more easily adapted to the conditions of a totalitarian state” (CW, 7:xxvi).Don Patinkin, a Keynesian, observes that Keynes “speaks almost enviously (and, I think, naively) of the greater ease (as it were) with which a totalitarian government can achieve a new equilibrium position” (1976, 122).
Keynes did not advocate communism in women and children as Plato did. Still, he must be considered an opponent of the family. Clarence W. Barron, the legendary financial journalist, met Keynes in September 1918 and noted, “Lady Cunard says Keynes is a kind of socialist and my judgment is that he is a Socialist of the type that does not believe in the family” ([1918] 1930, 189). Following Plato, Keynes advocated totalitarian population controls with far-reaching implications for the family, and especially for women.
Like Plato, Keynes wanted the government to control the size of the population. His 1914 paper “Population” says, “That degree of populousness in the world, which is most to be desired, is not to be expected from the working of natural order,” and “There would be more happiness in the world if the population of it were to be diminished.” He calls for government to “mould law and custom deliberately to bring about that density of population which there ought to be” (Keynes 1914, 16, 20, 36). He declared on January 4, 1923:
In the light of present knowledge I am unable to see any possible method of materially improving the average human lot which does not include a plan for restricting the increase in numbers….It may prove sufficient to render the restriction of offspring safe and easy….Perhaps a more positive policy may be required….[I] would like to substitute schemes conceived by the mind in place of the undesigned outcome of instinct and individual advantage playing within the pattern of existing institutions. (CW, 17:453, emphasis added)
Keynes was a eugenicist from 1907 until his death, and, like Plato, he wanted government to control the quality of the population as well. In “Prolegomena to a New Socialism,” he writes, “Population, Eugenics [are] Chief Preoccupations of the State” (Keynes 1924; O’Donnell 1992, 807). He advocates “centralised state control [over the] quality of the population” (CW, 19:441, 19:124). At a meeting of the Malthusian League, of which he was chairman, he declared: “I believe that for the future the problem of population will emerge in the much greater problem of Hereditary and Eugenics. Quality must become the preoccupation” (Keynes 1927, 114). Just weeks before his death, he endorsed “the most important, significant and, I would add, genuine branch of sociology which exists, namely eugenics” (Keynes 1946, 40).
Like Plato, Keynes rejected private property. As noted, Plato wanted “the notion of ‘private property’ [to be] completely eliminated from life” (Laws 739c). Like Plato and all socialists, Keynes attacked private property: “There is no ‘compact’ conferring perpetual rights on those who Have or on those who Acquire [property]” (CW, 9:287). No doubt, the Keynesian ethical theory is totally incompatible with the notions of private property, individual rights, and the rule of law.
Although he was a consequentialist, Keynes rejected Moore’s rule consequentialism. In Principia Ethica, Moore concluded that general rules must always be obeyed: “With regard to any rule which is generally useful, we may assert that it ought always to be observed….Though we may be sure that there are cases where the rule should be broken, we can never know which those cases are, and ought, therefore, never to break it” (1903, 162–63). This conclusion was repugnant to Keynes, and he wanted to reverse it. “Ethics in Relation to Conduct” reads, “I am doubtful whether it is ever possible to show that a rule of action is generally right” (1904a, 20). He reaffirmed, “What we ought to do is a matter of circumstance; metaphysically we can give no rules” (Keynes 1905e, 2). He declared in 1938:
[I rejected] the part [of Moore’s theory] which discussed the duty of the individual to obey general rules. We entirely repudiated a personal liability on us to obey general rules. We claimed the right to judge every individual case on its merits, and the wisdom, experience and self-control to do so successfully. This was a very important part of our faith, violently and aggressively held….We repudiated entirely custom morals, conventions and traditional wisdom. We were, that is to say, in the strict sense of the term, immoralists….I remain, and always will remain, an immoralist. (CW, 10:446–47)
Keynes developed his Platonic theory of probability to attack general rules of conduct. He thought that the frequency theory forced Moore to advocate general rules. Since the conditions of human action are never repeatable, the frequency theory does not permit us to analyze the consequences of our actions with probability. By contrast, the logical theory allows us to use probability to evaluate the consequences of action. In this way, Keynes’s logical theory enhances our ability to understand the consequences of our actions. And if the consequences of violating a general rule are good, then the rule should be violated. Keynes believed he had reversed Moore’s case for general rules by Platonizing Moore’s ethical framework with the logical theory.
It would be difficult to imagine an ethical theory more radical than Keynes’s. Unfortunately, his defenders have been reluctant to spell out the radical politico-economic implications of his ethics. Capitalism is defined as a social system based on private property in the means of production. Thus, capitalism is a social system based on general rules—specifically the rules of private property. By rejecting all general rules, Keynes rejected the rules of private property and, by extension, capitalism. In contrast to capitalism, socialism opposes the general rules of private property: “the theory of the communists [or socialists] may be summed up in the single sentence: Abolition of private property” (Marx and Engels [1848] 1988, 223).Marx used the terms socialism and communism interchangeably. As Mises writes, “Until 1917 communism and socialism were usually used as synonyms” ([1944] 2011, 60–61). During the Bolshevik Revolution of 1917, Keynes described himself as a “Bolshevik” and proudly declared: “The only course open to me is to be buoyantly Bolshevik” (CW, 16:266–67). On communism and socialism, see note 5. Certainly Keynes’s policy of socializing investment would require government to overturn the institution of private property. In summary, Keynes was an ethical socialist by January 23, 1904, when he read “Ethics in Relation to Conduct” to the Apostles.
Like Plato, Keynes was an authoritarian. His ethical theory meant that he rejected all rules, or constitutional limits, to restrain government power. He opposed any rules to safeguard individual liberty from government violence. Indeed, he rejected the principle of individual liberty. In accordance with Plato’s elitist metaphysics and epistemology, he maintained that the masses are too ignorant for liberty: “It is not true that individuals possess a prescriptive ‘natural liberty’…[I]ndividuals acting separately to promote their own ends are too ignorant or too weak” (CW, 9:287–88).Dostaler notes the connection between Keynes’s “elitism” and “paternalism,” and he acknowledges that Keynes thought “working people [are] incapable of managing their own lives” (2007, 102). Only Keynes has objective knowledge of the good, and the good is far more important than individual liberty. Echoing Plato, he calls for a totalitarian government to impose the good life on the masses with institutionalized violence.Gordon Fletcher admits, “Keynes’s scheme does seem to favour the notion of a forced march to utopia” (2008, 175). As Dostaler observes, “He was and would always remain convinced that only an intellectual elite, of which he undoubtedly considered himself a gifted member, could understand the complex mechanics of economics and politics and would thus be able to implement the reforms necessary to achieve happiness” (2007, 89).
As with Plato and all totalitarians, Keynes advocated noble lies.See Hayek ([1944] 1994, 172; 1988, 138) and Popper (1945, 122–23) on the link between Plato, totalitarianism, and noble lies. For Plato, “our rulers will have to make considerable use of falsehood and deception for the benefit of those they rule….[A]ll such falsehoods are useful as a form of drug” (Republic 459c–d; 414b–15e). Keynes agrees, “A preference for truth or for sincerity as a method may be a prejudice based on some aesthetic or personal standard, inconsistent, in politics, with practical good” (CW, 2:2). He expressed the totalitarian’s cynical view on noble lies when he declared, “It’s the art of statesmanship to tell lies, but they must be plausible lies” (quoted in Colander 1984, 1574).
Like Plato, Keynes condemned the love of money. He exclaimed, “The love of money is detestable” and “The moral problem of our age is concerned with the love of money” (CW, 9:268, 331). As with Plato’s producers, Keynes’s investors are driven by the money, or profit, motive. Socializing investment will abolish the profit motive, and “once we allow ourselves to be disobedient to the test of an accountant’s profit, we have begun to change our civilization” (21:241–42). Plato also condemned interest as unnatural and called for its prohibition (Laws 742). By 1904, Keynes was attacking “unearned increments” such as interest and rent (1904b; 1914, 21). He advocated “the euthanasia of the rentier [or interest earner], and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital” (CW, 7:376). Keynes’s socialist views on money, gold, hoarding, profits, and interest smack of Plato.
Like Plato, Keynes was also a utopian. He describes himself as “among the last of the utopians” (CW, 10:447).On Keynes’s utopianism, see Brunner (1996, 208), Dostaler (2007, 99), Fitzgibbons (1988, 68, 191), Fletcher (2008, 171, 175), Hansen (1953, 215), Hession (1984, 375), Johnson and Johnson (1978, 228), Meltzer (1988, 185), Raico (2008, 171–73), Salerno (1992, 18), and Skidelsky (1992, 234-38; 2000, 478). Mises describes Plato as a “utopian” ([1962] 2006, 111). He denies that scarcity is an inevitable feature of human existence: “There are no intrinsic reasons for the scarcity of capital” (7:220). Like so many charlatans throughout history, he promised that his plan would produce an earthly utopia: “We should in 25–30 years have constructed all capital required. We would increase quantity of capital until it has ceased to be scarce” (Keynes 1989, 179–80; CW, 9:326, 21:37–38). Keynes’s goal was to abolish capitalism and establish a socialist utopia on earth.
Conventional portraits present Keynes as the intentional saviour of capitalism….The conventional picture, however, is badly incomplete and misleading….Keynes was very much concerned with the long term abolition of capitalism as he conceived it. His ultimate goal was a non-capitalist, ethically rational utopia, whose characteristics resembled more closely those of communist or left-wing utopias. (O’Donnell 1991, 15–16; 1989, 294)
And who must rule in Keynes’s socialist utopia? Like Plato, Keynes rejected democracy (Fitzgibbons 1988, 185, 197; Skidelsky 1992, 228). Just as the masses are too stupid for liberty, they are too stupid to participate in politics. “I get the feeling that most of the rest never see anything at all—too stupid or too wicked” (1905f, 124). Instead, Keynes’s ideal socialist republic would be ruled by a cadre of elite economists, such as himself. He writes, “The right solution will involve intellectual and scientific elements which must be above the heads of the vast mass of more or less illiterate voters” (CW, 9:295). Whereas Plato advocated the rule of the philosopher-king, Keynes advocates the rule of the omniscient economist-king: “No! The economist is not king; quite true. But he ought-to be!” (17:432).Roy Harrod admits that Keynes “cultivated the appearance of omniscience” (1951, 468). Quentin Bell reports that members of the Bloomsbury group resented “Maynard’s claim to omniscience” (1995, 97).
- PLATO AND KEYNES’S GENERAL THEORY Keynesian economics is Platonic to the core, and this is best illustrated with a reductio ad absurdum.Skidelsky notes, “One of Keynes’s favourite and most effective techniques was the use of the reductio ad absurdum to ridicule the reasoning of his opponents” (1992, 425; Johnson and Johnson 1978, 36). As the Keynesian economist Paul Davidson writes, “Keynes’s primary level of attack on classical theory involved the expansion of demand into two distinct classes” (2005, 456–57; Hansen 1953, 26).Also see Dillard (1984, 425), Dostaler (2007, 170), Pasinetti (1974, 36), Patinkin (1982, 244), and Skidelsky (1992, 498, 544; 2009, 90). Keynes divided aggregate demand between consumers and investors, and he vilified the investor class. But aggregate demand can be divided in any way to vilify any class. To illustrate, imagine that all spenders are either auxiliaries or producers. In this case, total income (Y) equals spending by the auxiliaries (A) plus spending by the producers (P):
[[{"fid":"93477","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS equation 1","field_file_image_title_text[und][0][value]":"Fuller JLS equation 1","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS equation 1","field_file_image_title_text[und][0][value]":"Fuller JLS equation 1","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Fuller JLS equation 1","title":"Fuller JLS equation 1","style":"width: 75px; height: 13px;","class":"media-element file-default","data-delta":"1"}}]]
After expanding aggregate demand into the auxiliary and producer classes, it is necessary to invent a theory of spending for each class. The auxiliaries are dominated by the spirited part of the three-part soul, meaning that they spend in a highly disciplined, robotic manner. It is asserted that there is a strict mathematical, or “functional,” relationship between auxiliary spending and income (CW, 7:90). It is possible to formulate the auxiliary spending function, where a is autonomous auxiliary spending and b is the slope of the auxiliary spending function:
[[{"fid":"93478","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS equation 2","field_file_image_title_text[und][0][value]":"Fuller JLS equation 2","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"2":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS equation 2","field_file_image_title_text[und][0][value]":"Fuller JLS equation 2","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Fuller JLS equation 2","title":"Fuller JLS equation 2","style":"width: 80px; height: 14px;","class":"media-element file-default","data-delta":"2"}}]]
Now comes the fundamental psychological law: “[Auxiliaries] are disposed, as a rule and on average, to increase their consumption as their income increases, but not by as much as the increase in their income” (CW, 7:96). The fundamental psychological law means that the slope of the auxiliary spending function (b) must be between zero and one. The use of the term “psychological” in the name of this fundamental law is significant. Recall, the Greek for soul is psyche. Thus, the fundamental psychological law is a Platonic theory of the soul.
Given Plato’s theory of the three-part soul, the producer is a fundamentally different species, or animal. Hence, the theory of producer spending is radically different from the theory of auxiliary spending. Producer spending is not a function of income at all, because, unlike the disciplined auxiliaries, producers are dominated by “animal spirits” (CW, 7:161–62). Since producers are dominated by the appetitive soul, there is no tendency for producer spending to be optimal: “There is no reason to suppose that there is ‘an invisible hand’…which ensures…that the amount of…[producer spending] shall be continuously of the right proportion” (21:386–87). The analysis can be diagrammed to give the theory a scientific aura. Figure 1 can be called the Platonic cross.
Figure 1: Platonic Cross
[[{"fid":"93479","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 1 Platonic Cross","field_file_image_title_text[und][0][value]":"Fuller JLS figure 1 Platonic Cross","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"3":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 1 Platonic Cross","field_file_image_title_text[und][0][value]":"Fuller JLS figure 1 Platonic Cross","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Fuller JLS figure 1 Platonic Cross","title":"Fuller JLS figure 1 Platonic Cross","style":"height: 271px; width: 450px;","class":"media-element file-default","data-delta":"3"}}]]
The producers’ defective souls, their psychological disobedience, means that society cannot be organized with nonviolent methods. To illustrate, we combine the income equation with the auxiliary spending function. This gives us Plato’s demand constraint.On the Keynesian demand constraint, see Roger Garrison (2001, 136).
equation
Plato’s demand constraint means that overall living standards depend on producer spending. If producer spending is high, then the amount of auxiliary spending must be high too. If producer spending is low, then the amount of auxiliary spending must also be low. Therefore, the amount of auxiliary spending can only be optimal if producer spending is optimal. Figure 2 illustrates the precise, positive relationship between producer spending and auxiliary spending.Keynes’s theory “holds not that C[onsumption] and I[investment] are alternatives but rather they move together” (Keynes 1988, L9). On the positive relationship between investment and consumption in Keynesian theory, see Dimand (1988, 151, 189), Garrison (2001, 136), and Meltzer (1988, 153).
Figure 2: Platonic Demand Constraint
[[{"fid":"93480","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 2 Platonic Demand Constraint","field_file_image_title_text[und][0][value]":"Fuller JLS figure 2 Platonic Demand Constraint","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"4":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 2 Platonic Demand Constraint","field_file_image_title_text[und][0][value]":"Fuller JLS figure 2 Platonic Demand Constraint","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Fuller JLS figure 2 Platonic Demand Constraint","title":"Fuller JLS figure 2 Platonic Demand Constraint","style":"height: 271px; width: 450px;","class":"media-element file-default","data-delta":"4"}}]]
Chronic economic stagnation is thus the fundamental economic problem facing humankind. Since the producers have defective souls, their spending is normally suboptimal. Chronically low producer spending causes chronic economic stagnation and unemployment: “There should be on the average a tendency to severe unemployment [of resources and workers]” (Keynes 1988, L9; CW, 7:249–50). In figure 3, producer spending is optimal at PO. However, producer spending tends to be suboptimal at PSO. Given the Platonic demand constraint, this means that the amount of auxiliary spending will also be chronically suboptimal. In short, suboptimal producer spending means that the national income is chronically stuck below the optimal national income, at YSO rather than YO.
Figure 3: Chronic Stagnation
[[{"fid":"93481","view_mode":"default","fields":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 3 Chronic Stagnation","field_file_image_title_text[und][0][value]":"Fuller JLS figure 3 Chronic Stagnation","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"5":{"format":"default","alignment":"","field_file_image_alt_text[und][0][value]":"Fuller JLS figure 3 Chronic Stagnation","field_file_image_title_text[und][0][value]":"Fuller JLS figure 3 Chronic Stagnation","field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"Fuller JLS figure 3 Chronic Stagnation","title":"Fuller JLS figure 3 Chronic Stagnation","style":"height: 271px; width: 450px;","class":"media-element file-default","data-delta":"5"}}]]
Chronic stagnation is the central economic problem, for it prevents humankind from entering the utopia.Keynes’s main economic concern is not the business cycle, but “a chronic state of unemployment” (Patinkin 1976, 114; 1982, 88). Skidelsky writes, “[Keynes] thought that a state of unemployment or underemployment was the general condition of mankind,” and that “suboptimal performance is normal” (1992, 615; 2009, 99). Also see Brunner (1996, 196), Dillard (1948, 3–4, 155, 269), Fletcher (1987, 165, 186), Garrison (2001, 129, 145, 168, 177), Johnson and Johnson (1978, 27, 204), Laidler (1999, 154, 265), Meltzer (1988, 6, 123, 153, 172, 300), and Schumpeter (1946, 501). What must be done? The philosopher-king must take control. In terms of figure 3, the philosopher-king forcibly increases producer spending to the optimal level, from PSO to PO. This increases national income to the optimal level, from YSO to YO. After the optimal national income is achieved, the philosopher-king must permanently maintain producer spending at the optimal level, year in and year out. If this is done, humankind will enter the utopia “within a single generation” (CW, 7:220).
This reductio ad absurdum illustrates an essential point: Keynesian economics can be repurposed to attack any class. In the example above, aggregate demand was divided between auxiliaries and producers rather than consumers and investors. But aggregate demand can be divided between men and women, whites and blacks, Aryans and Jews, heterosexuals and homosexuals, proletarians and capitalists, etc. Then the “philosopher-economist” asserts that the superior class’s spending is a function of income, while the inferior class’s spending depends on animal spirits. The pseudoscientific Keynesian equations and diagrams can be formulated to vilify any class. And the analysis always leads to the same conclusion: everyone can live in a utopia if a totalitarian government controls society. No matter the class division, it is impermissible to question the scientific validity of the theory. Only the elite philosopher-economist can peer into the world of Forms. Anyone who doubts the new economics is an ignorant soul trapped in the Heraclitian flux.Bertrand Russell and others noticed that “Keynes dismissed opponents as idiots” (Holroyd [1967] 2005, 104). Hubert Henderson observed that Keynes regarded opponents of Keynesianism as “intellectually inferior beings” ([1936] 2003, 540). Harrod wrote, “I admit that [Keynes’s] manners, where his own theories are concerned, are impossible” ([1936] 2003, 532).
CONCLUSION
John Maynard Keynes is perhaps the most important Platonist in modern history. He adopted Plato’s metaphysics and epistemology in 1903 when he was an undergraduate student at Cambridge. And, as it is prone to do, Plato’s philosophical system led him step by step to socialism. By 1904, Keynes built a socialist ethical theory on the basis of Plato’s metaphysics and epistemology. From his socialist ethical theory he derived a political philosophy that was virtually identical to Plato’s totalitarian socialism. Finally, decades later, he invented Keynesian economics to justify his brand of Platonic socialism. In summary, Keynes’s economic theory has its ultimate origins in Plato’s philosophy.
The Platonic origins of Keynesian economics must trouble economists. Like Plato, Keynes was an old-fashioned mystic: “I am sure it must be all true. We are mystic numbers,” and “I have called [my] faith a religion, and some sort of relation of neo-platonism it surely was” (1906c, 102; CW, 10:438).Kinglsey Martin confirmed that Keynes described his philosophy “as a religion” (1966, 99), and Skidelsky admits that he “thought of himself as a part of the ‘clerisy’” (1992, 8). He believed he had special access to objective knowledge in a transcendental, mystical reality. From this supernatural realm he obtained knowledge of the good, of probability, of class psychology, and, most importantly, of Keynesian economics. Keynes’s Platonism means that Keynesian economics is a mysticoreligious theory, not legitimate economic science. Not only are the Platonic origins of Keynesian economics deeply unscientific, but they are dangerous. For totalitarian socialism naturally follows from any philosophy that holds that the elite have exclusive access to objective knowledge in a mystical reality.O’Donnell confesses, “Plato’s republic was to be governed by highly educated philosopher-guardians. For Keynes, it was the intelligentsia….Far from being a mere personality trait, the intellectual elitism detectable in some of Keynes’s writings and attitudes can be given some foundation in his philosophy. Elitism is always a possible companion of intuitionist [i.e., Platonic] philosophies” (1989, 66).
GMU economics professor Chris Coyne explains how US militarism abroad ends up violating civil liberties on the home front. They also discuss the contributions of James Buchanan that should interest Austrian economists.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this interviewChris Coyne’s webpage and his book Tyranny Comes HomeThe LSE essays on cost (edited by Buchanan)Tom DiLorenzo article on Public ChoiceRothbard’s essay on reconstructing utility and welfare economics, his reply to Schuller on praxeology, and his essay on Progressivism and WW1.Bob’s booklet on market anarchy and essay on private defense.Bob Murphy Show ep. 102 on the Grievance Studies hoax For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Jeff Deist joins David Gornoski on A Neighbor's Choice for a preview of the Trump, Biden debate. On the aborted 60 Minutes Trump interview, Deist says: “Talk to us directly….We don’t need the sham intermediary of CNN or any of these people. That, for me, is what the digital age is all about.” Is Trump the “lesser of two evils”? Deist makes the case that, in terms of centralization, there is almost no difference between Trump and Biden. Join David and Jeff as they reflect on all of this, plus the online mob attack on Chris Pratt, and more.
Find more from David Gornoski on A Neighbor's Choice.
Hans-Hermann Hoppe has shown in his writings on democracy that democracy leads to economic impoverishment and political disaster under certain conditions.
But what are those conditions, and are they dominant in electoral institutions in the United States today? And what role does ideology play in limiting the abuse of the ballot box by voters?
Additional Resources "Stop Saying We're a Republic, Not a Democracy" by Ryan McMaken: Mises.org/RR_38_1
Patrick Newman's 2020 Supporters Summit talk, "The Jacksonians’ Bank War: Liberty versus Power": Mises.org/RR_38_2
"Nasty Politics and 'Low-Information Voters' Are Nothing New" by Ryan McMaken: Mises.org/RR_38_3
What Must Be Done by Hans-Herman Hoppe: Mises.org/RR_38_4
And, be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
With an ugly presidential election just three weeks away, we dive into Hans Hoppe's classic Democracy: The God That Failed to puncture some of the myths surrounding democracy and voting. Jayant Bhandari joins the show to discuss Hoppe's controversial thesis concerning monarchy and democracy, time preference and its manifestation in the two systems, the forces constraining monarchs, and the terrible incentives created for democratic rulers. This is a must-listen show for anyone interested in Hoppe's most famous work and its application to the problems western states face today.
Find more from Jayant Bhandari on his website (JayantGhandari.com) and his Twitter account (@JayantBhandari5).
Use the code HAPOD for a discount on Democracy: The God That Failed from our bookstore: Mises.org/BuyHoppe
Although many politicians and pundits have deified democracy, it often leads to the oppression of political minorities while encouraging abuse. Here are some strategies for lessening the damage democracy can do.
And be sure to follow Radio Rothbard at Mises.org/RadioRothbard.
We're building a bridge from Austrian theory to its application in business. This can help us gain a greater understanding of the merits of Austrian economics.
Presented at the historic Jekyll Island Club Resort on Jekyll Island, Georgia, on 9 October 2020.
For more information on the Economics for Business program, visit Econ4Business.com.
What we are now witnessing in the larger society is the result of decades of work within academia and government to destroy the private-property system of the West and replace it with a new socialist order. From the 2020 Supporters Summit, presented at the historic Jekyll Island Club Resort on Jekyll Island, Georgia, on 9 October 2020.
Rather than choose among a group of narcissists desperate to become popular by redistributing the income of others, why not choose officeholders by lot for a single term?
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Our Politicians Would Probably Be Better If We Picked Them by Lot".
Most of you know the great journalist Henry Hazlitt for his remarkable Economics in One Lesson. But in this episode, Jeff Deist discusses Hazlitt's virtually unknown 1942 book A New Constitution Now, which is nothing short of a how-to guide for remaking the US constitutional system. Hazlitt was concerned about FDR's third term and what it meant for presidential power, along with what he saw as the benefits of a quasi-parliamentary government for the US. This is a radical and controversial book, with detailed proposals and serious rebuttals to likely objections. It's a book that deserves a wider audience, especially by those frustrated with the two-party stranglehold on DC.
Also, get your free copies of Economics in One Lesson at Mises.org/OneLesson.
Governments that redistribute wealth and regulate our daily lives are inherently corrupt. We cheapen the word "corruption" when we reserve it for just a few politicians who break the arbitrary rules.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Most Everything Governments Do Should Be Regarded as 'Corrupt'".
Libertarian writer David Ramsay Steele joins Bob for a fun tour of some essays from his collection, "The Mystery of Fascism".
Mentioned in the Episode and Other Links of Interest: The YouTube version of this episode.David Ramsay Steele’s books The Mystery of Fascism and From Marx to Mises.Bryan Caplan’s article endorsing the Thomas Szasz approach to mental illness.Comedian Bill Hicks on the JFK assassination. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Any act of the state is now thought to be justified if "the people voted for it." And, as government increases its plundering activities, more and more citizens want in on the popular say-so.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why Democracy Cannot Protect Our Freedoms".
Jeff Deist joins David Gornoski to discuss some important upcoming events. Deist addresses the absence of the trillion-dollar deficit and other topics not addressed in the debate. Is there a mass clamoring for the COVID economic shutdowns? What does Dick Costolo’s tweet on executing business leaders reveal about the mindset of Big Tech barons? Who are the Spanish scholastics and how have they influenced the Austrian school of economics? Listen to the full episode to find out.
Find more from David Gornoski on A Neighbor's Choice.
Ryan McMaken and Tho Bishop talk about Tuesday's debate, why "the issues" don't matter, and why the debate probably won't change the minds of many voters.
And be sure to follow Radio Rothbard at mises.org/RadioRothbard.
Jeff Deist returns to the show to comment on Ruth Bader Ginsburg’s passing. Was Bader Ginsburg a judge or legislator? “She was a judge in name only, someone with a political agenda,” Deist says. Are there genuine revolutionaries in America? How does Keynesianism overlap with Fascism? “It’s no coincidence that Mussolini would praise Keynes; every dictator would need the financial wherewithal to spend without restraint.” Listen to the full episode for all this and more.
Find more from David Gornoski on A Neighbor's Choice.
When Vikings robbed their victims, they often called the booty gjald (debt) as if the stolen goods were repayment for a service provided by the robbers.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Taxation and Theft, Viking Style".
Former Military Intelligence Sergeant Donnie Gebert returns to the show, this time to explain some of the major elements of his new book, The Art of War 2020. Gebert draws on his eclectic background to give techniques for navigating the modern world.
Mentioned in the Episode and Other Links of Interest: The YouTube version of this episodeDonnie Gebert’s The Art of War, 2020 (pdf)Donnie’s original appearance on BMS ep 42Daily Show bit on Ron PaulSNL bit poking fun at Ross Perot For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
The disputed election of 1876 could have led to another civil war. Fortunately, civilian institutions intervened to create a compromise, and the military was kept out of it.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "If the Election Produces No Clear Winner, the Military Is Definitely Not the Answer".
Gender feminism, the New Left, and Marxism all share an anticapitalist stance and the framework of class struggle. The difference is that gender feminism, the New Left, and their ideological heir have redefined the antagonists.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original article: "The Gender Feminist–New Left–Marxist Axis Attacks All Civil Society."
The commandment "Thou shalt not steal" was not to be abolished outright. That would offend too many. So the commandment was simply modified to "Thou shalt not steal—except by majority vote."
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Howard Buffett: Against Legal Plunder".
Jeff Deist joins David to discuss the latest news of Nashville officials withholding covid numbers from bars and restaurants. What lessons can future generations learn from the stupidity of governments shutting down economies on bogus information? Are mainstream journalists sacrosanct in our culture?
Find more from David Gornoski on A Neighbor's Choice.
Dr. Damian Carabello discusses the depths insurance companies go to make sure they end up on top.
SHOW NOTES Damian Carabello, MD: Twitter
Anish Koka long read on surprise billing
Damian Carabello “Let’s end surprise billing without a Trojan horse” blog on KevinMD about the problems with benchmarking.
Twitter thread on the history of Ingenix
Andy Slavitt’s involvement with health insurance fraud case
Watch the episode on YouTube
Jeff Deist returns to the show. Are there any differences between North Korea and Antifa? David asks. Deist says that, for the left, democracy is a means to an end. Listen to the full episode for all this and more.
Find more from David Gornoski on A Neighbor's Choice.
Dr. John Mandrola returns to the show to discuss why doctoring and politics shouldn’t mix and how he got into hot water on Twitter for holding that unacceptable view.
Dr. Mandrola is an electrophysiologist in Louisville, Kentucky. He is is cardiology editor on Medscape where he writes a regular column and produces a weekly podcast.
SHOW NOTES John Mandrola, MD: Twitter and Website
John Mandrola: “Doctoring and Activism“
Sally Satel: “The Hypocritical Oath“
Mandrola et al: The Case for Being a Medical Conservative (in the American Journal of Medicine)
Watch the episode on YouTube
Dr. Mandrola's previous appearances on the show: Ep. 12 and Ep. 107
This show features a personal and revealing interview of Comic Dave Smith by Jeff Deist. It shows a side of Dave you haven't seen before—so don't miss it.
And be sure to follow Radio Rothbard at mises.org/RadioRothbard.
Our first show was recorded with a raucous live audience at our recent event in Orlando, with Jeff Deist hosting and Lena Wang, Tho Bishop, and Patrick Newman joining. They handicap Trump's reelection chances, consider whether Biden makes it to election day, and defend the young shooter Kyle Rittenhouse caught up in the Kenosha riots. Don't miss this hardboiled hour of pro-liberty populism, with a strong dose of anti-politics every Rothbardian will love!
This is astonishing, even by 2020 standards. The Centers for Disease Control and Prevention, operating under the US Department of Health and Human Services, has asserted jurisdiction over private residential leases nationwide.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Michael Stack.
Original Article: "The CDC Is America's New Landlord"
- Mises on Nationalism, the Right to Self-Determination, and the Problem of Immigration
-
Introduction In the current discussion about immigration, Ludwig von Mises is often invoked by libertarians as a staunch proponent of free trade in the broad sense that pertains to the free movement of goods, capital, and labor. Mises has even been proclaimed by some libertarians as an advocate of open borders. However, Mises’s views on the free migration of labor across existing political borders were carefully nuanced and informed by political considerations based on his first-hand knowledge of the deep and abiding conflicts between nationalities in the polyglot states of Central and Eastern Europe leading up to World War One and during the subsequent interwar period. Thus Mises did not evaluate immigration in terms of purely economic optima such as maximizing the productivity of human labor, irrespective of the political context. Rather, he assessed the effects of immigration from the viewpoint of the classical liberal regime of private property. My purpose in this short essay is to set forth Mises’s views on immigration as he developed them as an integral part of the classical liberal program he elaborated.
-
Liberal Nationalism For Mises,Nation, State, and Economy: Contributions to the Politics and History of Our Time, trans. Leland B. Yeager (New York: New York University Press, 1983), pp. 34, 36. liberalism first emerged and expressed itself in the nineteenth century as a political movement in the form of “peaceful nationalism.” Its two fundamental principles were freedom or, more concretely, “the right of self-determination of peoples” and national unity or the “nationality principle.” The two principles were indissolubly linked. The primary goal of the liberal nationalist movements (Italian, Polish, Greek, German, Serbian, etc.) was the liberation of their peoples from the despotic rule of kings and princes. According to Mises,Ibid. liberal revolution against despotism necessarily took on a nationalist character for two reasons. First, many of the royal despots were foreign, for example, the Austrian Hapsburgs and French Bourbons who ruled the Italians, and the Prussian king and Russian czar who subjugated the Poles. Second, and more important, political realism dictated “the necessity of setting the alliance of the oppressed against the alliance of the oppressors in order to achieve freedom at all, but also the necessity of holding together in order to find in unity the strength to preserve freedom.”Ibid., p. 38. This alliance of the oppressed was founded on national unity based on common language, culture, and modes of thinking and acting.
Even though forged in wars of liberation, liberal nationalism was for MisesIbid., p. 35. both peaceful and cosmopolitan. Not only did the separate national liberation movements view each other as brothers in their common struggle against royal despotism, but they embraced the principles of economic liberalism, “which proclaims the solidarity of interests among all peoples.” MisesIbid., pp. 36–37. stresses the compatibility of nationalism, cosmopolitanism, and peace:
[T]he nationality principle includes only the rejection of every overlordship; it demands self-determination, autonomy. Then, however, its content expands; not only freedom but also unity is the watchword. But the desire for national unity, too, is above all thoroughly peaceful. … [N]ationalism does not clash with cosmopolitanism, for the unified nation does not want discord with neighboring peoples, but peace and friendship.Mises (ibid., p. 34) gives the charming example of the Italian nationalists who shouted to the imperial Austrian soldiers: “Go back across the Alps and we will become brothers again.”
As a classical liberal, MisesLiberalism in the Classical Tradition, Trans. Ralph Raico, 3rd ed. (Irvington-on-Hudson, NY and San Francisco: The Foundation for Economic Education and Cobden Press, 1985), p. 109. is careful to specify that the right of self-determination is not a collective right but an individual right: “It is not the right of self-determination of a delimited national unit, but rather the right of the inhabitants of every territory to decide on the state to which they wish to belong.” MisesIbid., pp. 109–10. makes it crystal clear that self-determination is an individual right that would have to be granted to “every individual person … if it were in any way possible.” It should also be noted in this respect that Mises rarely speaks of the “right of secession,” perhaps because of its historical connotation of the right of a government of a subordinate political unit to withdraw from a superior one.
While championing self-determination as an individual right, MisesNation, State, and Economy, pp. 39–40. argues that the nation has a fundamental and relatively permanent being independent of the transient state (or states) which may govern it at any given time. Thus he refers to the nation as “an organic entity [which] can be neither increased nor reduced by changes in states.” Accordingly, MisesLiberalism, p. 106. characterizes a man’s “compatriots” as “those of his fellow men with whom he shares a common land and language and with whom he often forms an ethnic and spiritual community as well.” In the same vein, MisesNation, State, and Economy, p. 79n 45. cites the German author J. Grimm, who refers to the “natural law … that not rivers and not mountains form the boundary lines of peoples and that for a people that has moved over mountains and rivers, its own language alone can set the boundary.” The nationality principle therefore implies that liberal nation-states may comprise a monoglot people inhabiting geographically non-contiguous regions, provinces and even villages.Liberalism, p. 113. MisesIbid., 110. contends that nationalism is thus a natural outcome of and in complete harmony with individual rights: “The formation of [liberal democratic] states comprising all the members of a national group was the result of the exercise of the right of self-determination, not its purpose.”However, Mises (1983, p. 37) concedes that in rare cases, “where freedom and self-government already prevail and seem assured without it,” such as Switzerland, the right of self-determination may not result in a nationally unifi ed state. MisesOmnipotent Government: Th e Rise of the Total State and Total War (Spring Mills, PA: Libertarian Press [1944] 1984), p. 101. elaborates on this important point:
Liberalism does not say: Every linguistic group should form one state and one state only, and each single man belonging to that group should, if at all possible, belong to that state. Neither does it say: No state should include people of several linguistic groups. Liberalism postulates self-determination. That men in the exercise of this right allow themselves to be guided by linguistic considerations is for liberalism simply a fact, not a principle or a moral law.
It should be noted here that, in contrast to many modern libertarians who view individuals as atomistic beings who lack emotional affinities and spiritual bonds with selected fellow humans, Mises affirms the reality of the nation as “an organic entity.” For Mises the nation comprises humans who perceive and act toward one another in a way that separates them from other groups of people based on the meaning and significance the compatriots attach to objective factors such as shared language, traditions, ancestry and so on. Membership in a nation, no less than in a family, involves repeated, concrete acts of volition based on subjective perceptions and preferences with respect to a complex of objective historical circumstances.
According to Murray Rothbard,Murray N. Rothbard, “Nations by Consent: Decomposing the Nation-State,” Journal of Libertarian Studies 11, no. 1 (Fall 1994): 1–3. who shares Mises’s view of the reality of the nation separate from the state apparatus:
Contemporary libertarians often assume, mistakenly, that individuals are bound to each other only by the nexus of market exchange. They forget that everyone is necessarily born into a family, a language, and a culture. Every person is born into one of several overlapping communities, usually including an ethnic group, with specific values, cultures, religious beliefs, and traditions. … The “nation” cannot be precisely defined; it is a complex and varying constellation of different forms of communities, languages, ethnic groups or religions. … The question of nationality is made more complex by the interplay of objectively existing reality and subjective perceptions.
- Colonialism as the Denial of the Right of Self-Determination Unlike many late nineteenth- and early twentieth-century liberals, Mises was a passionate anti-colonialist. As a radical liberal, he recognized the universality of the right of self-determination and the nationality principle for all peoples and races. He wrote powerful and scathing indictments against the European subjugation and mistreatment of African and Asian peoples and demanded a quick and complete dismantling of colonial regimes. It is worthwhile quoting MisesLiberalism, pp. 125–26. on this at length:
The basic idea of colonial policy was to take advantage of the military superiority of the white race over the members of other races. The Europeans set out, equipped with all the weapons and contrivances that their civilization placed at their disposal, to subjugate weaker peoples, to rob them of their property, and to enslave them. Attempts have been made to extenuate and gloss over the true motive of colonial policy with the excuse that its sole object was to make it possible for primitive peoples to share in the blessings of European civilization. … Could there be a more doleful proof of the sterility of European civilization than that it can be spread by no other means than fire and sword?
No chapter of history is steeped further in blood than the history of colonialism. Blood was shed uselessly and senselessly. Flourishing lands were laid waste; whole peoples destroyed and exterminated. All this can in no way be extenuated or justified. The dominion of Europeans in Africa and in important parts of Asia is absolute. It stands in the sharpest contrast to all the principles of liberalism and democracy, and there can be no doubt that we must strive for its abolition. … European conquerors … have brought arms and engines of destruction of all kinds to the colonies; they have sent out their worst and most brutal individuals as officials and officers; at the point of the sword they have set up a colonial rule that in its sanguinary cruelty rivals the despotic system of the Bolsheviks. Europeans must not be surprised if the bad example that they themselves have set in their colonies now bears evil fruit. In any case, they have no right to complain pharisaically about the low state of public morals among the natives. Nor would they be justified in maintaining that the natives are not yet mature enough for freedom and that they still need at least several years of further education under the lash of foreign rulers before they are capable of being left on their own.
In those areas where native peoples were strong enough to mount armed resistance to colonial despotism, MisesIbid., p. 124. enthusiastically supported and cheered on these national liberation movements: “In Abyssinia, in Mexico, in the Caucasus, in Persia, in China — everywhere we see the imperialist aggressors in retreat, or at least already in great difficulties.” To completely phase out colonialism, Mises proposed the establishment of a temporary protectorate under the aegis of the League of Nations. But he made it clear that such an arrangement was “to be viewed only as a transitional stage” and that the ultimate goal must be “the complete liberation of the colonies from the despotic rule under which they live.” MisesIbid., p. 127. based his demand for the recognition of the right of self-determination and respect for the nationality principle among colonized peoples on the bedrock of individual rights:
No one has a right to thrust himself into the affairs of others in order to further their interest, and no one ought, when he has his own interests in view, to pretend that he is acting selflessly only in the interest of others.
- The Breakdown of Liberal Nationalism: Majority Rule and Nationality Conflicts This bring us to Mises’s key insight into the irreconcilable “conflict of nationalities” bred by majority rule — even under liberal democratic constitutions. As a keen observer of the pre- and post-Great War polyglot states of Central and Eastern Europe, MisesNation, State, and Economy, p. 46. notes that “national struggles can only arise on the soil of freedom.” Thus as prewar Austria approached freedom, “the violence of the struggle between the nationalities grew.” With the collapse of the old royalist state, these struggles were “carried on only more bitterly in the new states, where ruling majorities confront national minorities without the mediation of the authoritarian state, which softens much harshness.” Mises attributes such a counterintuitive outcome to the fact that the nationality principle was not respected in the creation of the new states.Mises (Liberalism, pp. 87–88) refers particularly to the Poles, Czechs, and Magyars, who substituted an “aggressive nationalism” for “the liberal principle of self-determination” with the aim of “domination of people speaking other languages.” German and Italian nationalists and other nationalities quickly followed suit. Mises’s point is illustrated in the modern ethnic conflicts that erupted in the wake of the collapse of Communism and the breakup of the Soviet Union and of Yugoslavia.On the ethnic-religious confl icts in the former Yugoslavia see Murray N. Rothbard, “Hands Off the Serbs,” (RRR: Rothbard-Rockwell Report, 1993): 1–5 and “Nations by Consent,” pp. 1–10.
MisesNation, State, and Economy, pp. 48–49. maintains that two or more “nations” cannot peacefully coexist under a unitary democratic government. National minorities in a democracy are “completely politically powerless” because they have no chance of peacefully influencing the majority linguistic group. The latter represents “a cultural circle that is closed” to minority nationalities and whose political ideas are “thought, spoken, and written in a language that they do not understand.” Even where proportional representation prevails, the national minority “still remains excluded from collaboration in political life.” According to Mises,Ibid., p. 51. because the minority has no prospect of one day attaining power, the activity of its representatives “remains limited from the beginning to fruitless criticism … that … can lead to no political goal.” Thus, concludes Mises,Ibid., p. 47. even if the member of the minority nation, “according to the letter of the law, be a citizen with full rights … in truth he is politically without rights, a second class citizen, a pariah.”
In a later, unpublished paper dealing with the post-World War II reconstruction of Eastern Europe, Mises“An Eastern Democratic Union: A Proposal for the Establishment of a Durable Peace in Eastern Europe,” in Selected Writings of Ludwig von Mises: The Political Economy of International Reform and Reconstruction, ed. Richard M. Ebeling (Indianapolis, IN: Liberty Fund, 2000), p. 184. put the matter even more strongly: “To be a member of such a linguistic minority means to be an outlaw. … There were and are autonomy and democracy only for the members of the ruling linguistic majorities. …” It is no wonder, then, that MisesIbid., p. 181. portrayed linguistic minorities as “bearers of permanent unrest … and hatred.”
MisesNation, State, and Economy, p. 50 thus characterizes majority rule as a form of colonialism from the point of view of the minority nation in a polyglot territory: “[It] signifies something quite different here than in nationally uniform territories; here, for a part of the people, it is not popular rule but foreign rule.” Peaceful liberal nationalism therefore is inevitably stifled in polyglot territories governed by a unitary state, because, MisesIbid., p. 56. argues, “democracy seems like oppression to the minority. Where only the choice is open oneself to suppress or be suppressed, one easily decides for the former.” Hence, for Mises,Nation, State, and Economy, p. 50. democracy means the same thing for the minority as “subjugation under the rule of others,” and this “holds true everywhere and, so far, for all times.” Mises dismisses “the often cited” counter-example of Switzerland as irrelevant because local self-rule was not disturbed by “internal migrations” between the different nationalities. Had significant migration established the presence of substantial national minorities in some of the cantons, “the national peace of Switzerland would already have vanished long ago.”
With respect to regions inhabited by different nationalities, MisesLiberalism, p. 113. therefore concludes, “the right of self-determination works to the advantage only of those who comprise the majority.” This is especially true, for example, in interventionist states where education is compulsory and “peoples speaking different languages live together side by side and intermingled in polyglot confusion.” Under these conditions, formal schooling is a source of “spiritual coercion” and “one means of oppressing nationalities.” The very choice of the language of instruction can “alienate children from the nationality to which their parents belong” and “over the years, determine the nationality of a whole area.” The school thus becomes the source of irreconcilable national conflict and “a political prize of highest importance.” With respect to the debate over compulsory education, MisesIbid., pp. 114–15. emphasizes, the only effective solution is to depoliticize schooling by abolishing both compulsory education laws and political involvement with schools, leaving the education of children “entirely to parents and to private associations and institutions.”
Compulsory education is only an extreme example of how interventionism exacerbates the inevitable conflict between different nationalities that are living together under the jurisdiction of a single state. In such a situation, MisesIbid., p. 116. argues: “Every interference on the part of government in economic life can become a means of persecuting the members of nationalities speaking a language different from that of the ruling group.” Perhaps Mises’s most important insight, however, is that even under a laissez-faire system, where government is rigorously restricted to “protecting and preserving the life, liberty, property and health of the individual citizen,” the political arena will still degenerate into a battleground between disparate nationalities residing within its geographical jurisdiction. Even the routine activities of the police and judicial system in this ideal liberal regime “can become dangerous in areas where any basis at all can be found for discriminating between one group and another in the conduct of official business.”Rothbard (1994, pp. 5–6) makes a similar point about the unavoidable political conflicts that arise in a situation where diff erent nationalities are bound together under the jurisdiction of a single, laissez-faire liberal government: “But even under the minimal state, national boundaries would still make a difference, often a big one, to the inhabitants of the area. For in what language … will be the street signs, telephone books, court proceedings, or school classes of the area?” This is especially true in states where “differences of religion, nationality, or the like have divided the population into groups separated by a gulf so deep as to exclude every impulse of fairness or humanity and to leave room for nothing but hate.” MisesLiberalism, p. 116. gives the example of a judge “who acts consciously, or still more often unconsciously, in a biased manner” because he believes “he is fulfilling a higher duty when he makes use of the powers and prerogatives of his office in the service of his own group.”
Not only is the member of a national minority subjected to ingrained and routine bias in the political sphere, he is unable to grasp the thought and ideology that shape political affairs. His social and political worldview as well as his cultural and religious attitudes reflects ideas formulated and discussed in the national literature of, in effect, a foreign language, and these ideas diverge, possibly radically, from those of the majority linguistic group. According to MisesNation, State, and Economy, pp. 47–48. even though political and cultural ideas are transmitted and shared among all nations, “every nation develops currents of ideas in its own special way and assimilates them differently. In every people they encounter another national character and another constellation of conditions.” Mises gives the example of how the political ideal of socialism differed between Germany and France, and between the latter two and Russia.
The result of this natural “nationalizing” and differentiating of even similar ideas and intellectual trends is that the member of the minority nation confronts a linguistic and intellectual barrier that prevents him from meaningfully participating in the political discussion that shapes the laws under which he lives. Explains MisesLiberalism, pp. 119–20.:
Cast into the form of statute law, the outcome of [the majority’s] political discussions acquires direct significance for the citizen who speaks a foreign tongue, since he must obey the law; yet he has the feeling that he is excluded from effective participation in shaping the will of the legislative authority or at least that he is not allowed to cooperate in shaping it to the same extent as those whose native tongue is that of the ruling majority. And when he appears before a magistrate or any administrative official as a party to a suit or petition, he stands before men whose political thought is foreign to him because it developed under different ideological influences. … At every turn the member of a national minority is made to feel that he lives among strangers and that he is, even if the letter of the law denies it, a second-class citizen.
The result of the political impotence of the national minority in a majoritarian democracy is that it perceives itself to be a conquered or colonized people. For as MisesIbid., p. 119. points out: “The situation of having to belong to a state to which one does not wish to belong is no less onerous if it is the result of an election than if one must endure it as the consequence of a military conquest. …” In the 1920s Mises had already identified the phenomenon of what today is misleadingly called “institutional racism” — because the problem lies not with all institutions, only political ones — but is better described as “democratic subjugation.” In the 1960s, Malcolm X“Malcolm Explains the Difference between Separation and Segregation.” Transcribed text from audio excerpt from “The Race Problem,” a speech at Michigan State University, East Lansing (January 23). gave poignant expression to the yearning for self-determination on the part of minority African nationalities in the U.S. saddled with an interventionist state controlled by peoples of European extraction:
This new type of black man, he doesn’t want integration; he wants separation. Not segregation, separation. To him, segregation … means that which is forced upon inferiors by superiors. … In the white community, the white man controls the economy, his own economy, his own politics, his own everything. That’s his community. But at the same time while the Negro lives in a separate community, it’s a segregated community. Which means it’s regulated from the outside by outsiders. The white man has all of the businesses in the Negro community. He runs the politics of the Negro community. He controls all the civic organizations in the Negro community. This is a segregated community. … We don’t go for segregation. We go for separation. Separation is when you have your own. You control your own economy; you control your own politics; you control your own society; you control your own everything. You have yours and you control yours; we have ours and we control ours.
Malcolm X“An Interview by A. B. Spellman,” in Malcolm X, By Any Means Necessary, 2nd ed. (New York: Pathfinder: [1964] 1992), pp. 31–32. later explained the concept of separation in terms more congenial to the liberal concept of national self-determination:
A better word to use then separation is independence. This word separation is misused. The thirteen colonies separated from England but they called it the Declaration of Independence; they don’t call it the Declaration of Separation, they call it the Declaration of Independence. When you’re independent of someone you can separate from them. If you can’t separate from them it means you’re not independent of them.
- Liberal Constitutions and Laissez-Faire Policies Are not Enough In analyzing the causes and solution of nationality conflicts, MisesNation, State, and Economy, p. 39. coined the terms “militant” or “aggressive” nationalism, which he contrasted with “liberal” or “peaceful” nationalism. Thus for Mises, the choice was never between nationalism and a bland, atomistic “globalism”; the real choice was either nationalism that was cosmopolitan and embraced universal individual rights and free trade or militant nationalism intent on subjugating and oppressing other nations. As pointed out above, he attributed the rise of anti-liberal nationalism to the failure to apply the right of self-determination and the nationality principle consistently and to the utmost degree possible in the formation of new political entities in the wake of the overthrow of royal absolutism by war or revolution. The consequence was peoples differentiated by language, heritage, religion, etc., arbitrarily and involuntarily bound together in artificial political unions. The inevitable outcome of these polyglot, mixed-nation-statesA more felicitous term than “mixed-nation-states” for these political entities would be “multinational states” but, given its current connotation, the latter term is likely to be misleading. was the suppression of minorities by the majority nationality, a bitter struggle for control of the state apparatus, and the creation of mutual and deep-seated distrust and hatred. This state of affairs often culminated in state-sanctioned physical violence, including the expropriation and expulsion and even the murder of minority populations.
Mises argues that all of this could have been avoided if only the complete liberal agenda had been implemented. This includes, in addition to an economic policy of domestic laissez-faire and international free trade in goods, the crucial right of self-determination and the nationality principle to which it gives rise. MisesLiberalism, pp. 22–23. does not mince words in describing the plight of minority nationalities in an illiberal, interventionist system:
If the government of these territories [inhabited by members of several nationalities] is not conducted along completely liberal lines, there can be no question of even an approach to equal rights in the treatment of the members of the various national groups. There can then be only rulers and those ruled. The only choice is whether one will be hammer or anvil.
Mises goes further, however, and argues that even an end to interventionism will not resolve the conflict of nationalities. Almost alone among classical liberals and libertarians of his era and ours, Mises clearly recognizes that laissez-faire capitalism and free trade are necessary but not sufficient to ensure peace among different groups of individuals forced to live under a unified political system, each of which voluntarily and naturally self-identify as different peoples or nations on the basis of language, shared customs and traditions, religion, ethnic heritage or any other objective factor that is subjectively meaningful for them. As MisesIbid., p. 129. states:
All these disadvantages [experienced by minorities] are felt to be very oppressive even in a state with a liberal constitution in which the activity of the government is restricted to the protection of the life and property of the citizens. But they become quite intolerable in an interventionist or socialist state.
For MisesIbid., p. 118. the best that can be said of a government whose functions are strictly limited to protection of person and property and enforcement of contract is that it does not “aggravate artificially the friction that must arise from this living together of different groups.”
Mises defends the complete liberal agenda—the laissez-faire and self-determination principles — against those who vacuously attribute the “violent antagonisms” between nations inhabiting a single political jurisdiction to an “innate antipathy” between different peoples. To the contrary, argues Mises,Ibid., pp. 120–21. despite the hatreds that may naturally exist between various groups of people of the same nationality, they are able to get along peacefully when living under the jurisdiction of the same state, while different nationalities that are forcibly bound together under common political arrangements are in constant conflict:
The Bavarian hates the Prussian; the Prussian, the Bavarian. No less fierce is the hatred existing among individual groups within both France and Poland. Nevertheless, Germans, Poles, and Frenchmen manage to live peacefully within their own countries. What gives the antipathy of the Pole for the German and of the German for the Pole a special political significance is the aspiration of each of the two peoples to seize for itself political control of the border areas in which Germans and Poles live side by side and to use it to oppress the members of the other nationality. What has kindled the hatred between nations to a consuming fire is the fact that people want to use the schools to estrange children from the language of their fathers and to make use of the courts and administrative offices, political and economic measures, and outright expropriation to persecute those speaking a foreign tongue.
So it is not natural antipathies between peoples — which may or may not exist — but the political denial of the right of self-determination that is the underlying cause of national conflicts. In this vein, Mises issues a dire and, in hindsight, prescient warning: “As long as the liberal program is not completely carried out in the territories of mixed nationality, hatred between members of different nations must become ever fiercer and continue to ignite new wars and rebellions.” This is certainly true of today’s world, particularly in Asia and Africa, where European imperialists and colonialists dragooned different “nations” (tribes, chiefdoms, linguistic groups, ethnicities, religions) into deeply dysfunctional political unions. Most of the 37 wars being waged in 2015 on these continents were “intrastate” or civil wars and, of these, most are “fueled as much by racial, ethnic, or religious animosities as by ideological fervor.”GlobalSecurity.org 2019. Retrieved August 27, 2019. At their root lie the attempts of minority groups to resist or end oppression by the majority by seizing the existing state apparatus, seceding from the state, or creating an entirely new state, e.g., ISIS.
- Immigration as a Political Problem This brings us to the vexed question of immigration. For Mises, immigration is entirely a political problem. MisesLiberalism, pp. 138–39; Human Action: A Treatise on Economics, Scholar’s Edition (Auburn, AL: Mises Institute, 1998), pp. 160–63, 742–49. summarily dismisses the strictly economic arguments against free immigration as fallacious. He points out that, from the global point of view, migration raises the productivity of human labor, the supply of goods, and standards of living because it facilitates the reallocation of labor (and capital) from regions with less advantageous natural conditions of production to those with more advantageous natural conditions. Barriers to labor migration therefore cause a misallocation of labor and its geographic maldistribution, with a relative oversupply in some areas and undersupply in other areas. The effects of migration barriers are thus exactly the same as the effects of tariffs and other barriers to the international trade of goods: the reduction of productive efficiency and real income because comparatively unfavorable opportunities for production are exploited in some regions while comparatively favorable opportunities remain unutilized in others.
Although Mises argues that free movement of goods, capital, and labor tends to maximize the productivity of labor and the total output of goods and services, he does not envision this as the ultimate goal of liberalism. As MisesCritique of Interventionism, trans. Hans F. Sennholz, 2nd ed. (Irvington-on-Hudson, NY: The Foundation for Economic Education, 1996), p. 35. argues in another connection, it was a mistake to believe “that the essence of liberal programs was not private property but ‘free competition’ [i.e., free of the ‘economic power’ of large business enterprises].” The same also applies when evaluating the social desirability of labor migration: the welfare standard for Mises and classical liberals is not the “economistic,” Chicago-school goals of production efficiency or maximum labor productivity measured in objective terms but the securing of a full private-property regime. For it is the operation of the unhampered market based on private property that best satisfies consumer preferences for both exchangeable and non-exchangeable goods, which is the ultimate goal of all economic activity.On the crucial distinction between “exchangeable” and “nonexchangeable” goods, see Murray N. Rothbard, Man, Economy and State: A Treatise on Economic Principles with Power and Market: Government and the Economy, Scholar’s Edition, 2nd ed. (Auburn, AL: Mises Institute, 2009), pp. 214–18, 1323–24) and Philip Wicksteed, The Common Sense of Political Economy and Selected Papers and Reviews on Economic Theory, ed. Lionel Robbins (New York: Augustus M. Kelley, 1967), pp. 132–34.
In his brilliant but neglected analysis of the labor market in his economic treatise, Human Action, MisesHuman Action, p. 622. points out that even the completely unhampered migration of labor across political boundaries does not lead to maximum labor productivity and a distribution of labor that equalizes wage rates for the same kind and quality of labor services throughout the global economy. The reason?
The worker and the consumer are the same person. … Men cannot sever their decisions concerning the utilization of their working power from those concerning the enjoyment of their earnings.
Descent, language, education, religion, mentality, family bonds, and social environment tie the worker in such a way that he does not choose the place and the branch of his work merely with regard to the height of wage rates.
In discussing labor migration Mises therefore shifts the focus from the analytical abstraction of the “laborer” seeking the highest wages consonant with his leisure preferences to the real human actor who demonstrates preferences across a broad range of goals that include non-exchangeable goods like close proximity and association with members of the same family, religious affiliation, ethnicity or language group. Hence, MisesNation, State, and Economy, p. 64. explicitly recognizes that once the outdated assumptions underlying the free-trade doctrine advanced by Ricardo and the classical economists are dropped, and the international mobility of capital and labor as well as goods is considered, the case for free trade, while it remains valid “from the purely economic point of view … presents a quite changed point of departure for testing the extraeconomic reasons for and against the protective system.” Mises thus takes the analysis of migration beyond the realm of narrowly economic considerations and brings it into contact with the concrete political reality of the democratic mixed-nation-state and its characteristic suppression and violation of the property rights of national minorities by the majority nationality.
This analysis leads Mises to view mass “immigration,” that is, labor migration across state borders, even when it occurs for purely economic reasons, as posing an inherent problem. MisesLiberalism, p. 123; Nation, State, and Economy, p. 59. maintains that the creation of mixed-nation-states resulting from the immigration of workers of a foreign nationality “gives rise once again to all those conflicts that generally develop in polyglot territories” and “to particularly characteristic conflicts between peoples.” MisesNation, State, and Economy, p. 61n. 33 does recognize that peaceful cultural and political assimilation can take place “if the immigrants come not all at once but little by little, so that the assimilation process among the early immigrants is already completed or at least already under way when the newcomers arrive.” He cites the example of Chinese immigration to the United States in the nineteenth century, which did occur in a manner amenable to assimilation. MisesIbid., p. 61. remarks, however, that “perhaps” the Chinese would have “achieve[d] domination in their new home … in the western states of the Union if legislation had not restricted their immigration in time.” But this is strictly a positive observation and Mises draws no policy implications from it.
Indeed, MisesLiberalism, p. 139. exposes the economic arguments to restrict immigration put forward by protectionist trade unions in relatively high-wage countries like the U.S. and Australia as transparently self-serving and injurious to the economic interests of their fellow nationals as well as contrary to the teachings of sound economic theory. But MisesIbid., pp. 139–40. takes a more measured tone when considering the extra-economic argument in favor of immigration restriction that is disingenuously resorted to by the protectionists as a fallback position. According to the latter argument, in the absence of immigration barriers “hordes of immigrants” of non-English-speaking European and Asian nationalities would “inundate Australia and America.” Because these immigrants would arrive rapidly and in great numbers, the argument asserts, they could not be assimilated and Anglo-Saxons in the host countries would find themselves in a minority and their “exclusive dominion … would be destroyed.”
In evaluating this argument, MisesLiberalism, pp. 140–41. emphasizes the political problems that would arise in a mixed-nation-state created overnight by mass immigration:
These fears may perhaps be exaggerated with regard to the United States. As regards Australia, they certainly are not. … If Australia is thrown open to immigration, it can be assumed with great probability that its population would in a few years consist of Japanese, Chinese and Malayans. … The entire nation [not just workers] is unanimous, however, in fearing inundation by foreigners. The present inhabitants of those favored lands [the U.S. and Australia] fear that some day they could be reduced to a minority in their own country and that they would then have to suffer all horrors of national persecution to which, for instance, the Germans today [1927] are exposed in Czechoslovakia, Italy, and Poland.
While Mises does not take an explicit position on the desirability of a policy curbing massive immigration flows that are induced by economic opportunity, he acknowledges that “these fears” of the nationality inhabiting the receiving country “are justified,” especially in a world of interventionist states.Writing during World War II Mises (Omnipotent Government, p. 114; “The Fundamental Principles of a Pan-European Union,” in Selected Writings of Ludwig von Mises: The Political Economy of International Reform and Reconstruction, ed. Rich-ard M. Ebeling [Indianapolis, IN: Liberty Fund, 2000], p. 47) did strongly argue against admitting immigrants from the Axis states of Germany, Italy, and Japan. Mises,Liberalism, p. 141. who for many years observed firsthand the egregious maltreatment of national minorities in Central and Eastern Europe, vividly expresses the basis of the majority nation’s fear of being transformed into a national minority:
As long as the state is granted the vast powers which it has today and which public opinion considers to be its right, the thought of having to live in a state whose government is in the hands of members of a foreign nationality is positively terrifying. It is frightful to live in a state in which at every turn one is exposed to persecution — masquerading under the guise of justice — by a ruling majority. It is dreadful to be handicapped even as a child in school on account of one’s nationality and to be in the wrong before every judicial and administrative authority because one belongs to a national minority.
Thus, MisesIbid., p. 142. views immigration as always and everywhere a “problem” to which there is “no solution,” as long as interventionist political regimes are the norm. Only when the crossing of state borders by members of a different nation portend no political dangers for the indigenous nationality will the “problem of immigration” disappear and be replaced by the benign migration of labor that creates unalloyed and mutual economic advantages for all individuals and peoples. From Mises’s perspective, then, the solution to the immigration problem is not to legislate some vague, ad hoc right to the “freedom of movement” between existing fixed-boundary states. Rather, it is to complete the laissez-faire liberal revolution and secure private property rights by providing for the continual redrawing of state boundaries in accordance with the right of self-determination and the nationality principle. Then — and only then — can the continual and wealth-creating global reallocation of labor generated by a dynamic capitalist economy be peacefully accommodated without precipitating political turmoil and conflict.
- Conclusion Mises was a radical liberal nationalist and cosmopolitan whose overarching goal was to promote policies that facilitated the peaceful extension of the social division of labor founded on private property to all individuals and nations. He acknowledged the reality of separate nations and its meaningfulness for political and economic policy analysis. He recognized that political borders that were not formed according to the nationality principle were an insurmountable impediment to the fullest realization of the concept of free trade and an important source of national conflicts and protectionism that destroyed wealth. In particular, Mises realized that “immigration” was not the solution to the problem of the uneconomic spatial distribution of labor, but the very cause of the problem. The problem of immigration would be solved only with the consummation of the classical liberal revolution in the universal recognition of the right of self-determination. Then the problem — and the very phenomenon — of immigration would disappear, as the borders of states would move with the migration of peoples and nations.
Epilogue: Did Mises Change His Mind? Mises laid out his radical liberal program of self-determination and peaceful nationalism in two books written during the interwar period, Nation, State, and EconomyNation, State, and Economy. and Liberalism,Liberalism. originally published in German in 1919 and 1927, respectively. Later, however, during the dark days of World War II, MisesOmnipotent Government; “Postwar Reconstruction,” in Selected Writings of Ludwig von Mises: The Political Economy of International Reform and Reconstruction, ed. Richard M. Ebeling (Indianapolis, IN: Liberty Fund, 2000); “An Eastern Democratic Union.” wrote a number of works in which he abandoned hope that the liberal program would ever provide a workable solution to the problem of national minorities in Eastern Europe. Given the intellectual trends of economic nationalism and interventionism that had taken hold among the political leadership and public intellectuals in all nations, Mises“An Eastern Democratic Union,” p. 184. had come to believe “that the principle of nationality, as developed in Western Europe, is simply inapplicable in Eastern Europe, where the linguistic groups are inevitably mingled.” In lieu of the nationality principle as a guide to political organization, MisesIbid., p. 176. proposed an Eastern Democratic Union (EDU), a highly centralized and supranational democratic state to rule over all nationalities residing in the area “between the eastern boundaries of Germany, Switzerland, and Italy and the western borders of Russia … from the shores of the Baltic to those of the Black, Adriatic, and Aegean seas.”
MisesIbid., pp. 182, 183, 186–87. was remarkably forthright about the nature of the EDU: it would involve “a total suppression of local sovereignty” with “the whole territory of Eastern Europe … organized as a political unit under a strictly unitary government,” with the “foremost aim” being “to eliminate the problem of national minorities.” In the territory of the EDU, the largest linguistic group would be the Poles, comprising 20 percent of the population. There would thus be no national majority to lord it over minority nationalities. Under these politico-demographic conditions, MisesIbid., p. 187. believed that the constitution of the EDU would be able to effectively ensure every citizen equal treatment under the law and the right to free movement and choice of occupation within the union.
Without delving further into the details of Mises’s proposal, we may make three observations. First, although desperate times may have moved Mises to change his mind about the nature of the solution, he never wavered in his view of the essential problem, namely, the impossibility of the peaceful coexistence between majority and minority nationalities under a unitary government, especially a majoritarian democracy. Second, Mises anticipated criticism that his plan was an attempt to restore the old Austro-Hungarian Empire on a larger scale. In partially conceding this point, MisesIbid., p. 198. emphasized the liberal aspects of the empire: “This is true as far as old Austria … was the only power among those ruling in this area which tried to treat all citizens on an equal footing.” While admitting that the Austrian system had failed, Mises argued that his proposed constitution for the EDU embodied details “based on precisely the lessons the Austrian failure teaches us.” Finally, after World War II, Mises stopped writing about nationality conflicts because the problem had been rendered moot by the forcible incorporation of the warring nationalities of Eastern Europe — with the connivance of the other Allied powers — into the sphere of influence of a rigidly centralized despotic state, the Soviet Union. Mises restricted his focus to a strictly positive analysis of immigration barriers as an interventionist policy of economic nationalism that was designed to raise wage rates for domestic laborers, especially those belonging to labor unions. In sum, despite his EDU proposal, MisesHuman Action. never later expressed any departure from his interwar views about the source and nature of nationality conflicts and the insurmountable political problem they pose for mass immigration.
- The Nationalist Case for Free Trade, in the Words of Classical Economists The founders of classical economics, namely David Hume (1711–1776), Adam Smith (1723–1790), and David Ricardo (1772–1823) and their British followers were fervent advocates of the principle of free trade between nations. Even more so were J.-B. Say (1767–1832), Frédéric Bastiat (1801–1850) and their Continental disciples of the liberal school (who for simplicity I will broadly classify as classical economists because of their link to Adam Smith). Despite their devotion to free trade, the classical economists were nationalists. They viewed free trade as one of the most important means for advancing the security, prosperity, and cultural achievements of their own nations. In this sense, they tended to be what Ludwig von Mises described as “peaceful” or “liberal” nationalists,For Mises’s description and defense of liberal nationalism, see the previous essay in this book. who recognized the existence of profound differences among nations and nationalities and loved their own nations above all others, yet discerned that the economic and cultural flourishing of each nation was inextricably linked with the flourishing of all other nations. In recognizing this international harmony of interests, the classical economists were naturally thoroughly cosmopolitan and anti-war.
The cosmopolitanism and pacifism of the classical economists has in the past been misconstrued — often deliberately — by their protectionist opponents as a lack of affection and concern for their nation and its interests. This erroneous interpretation of the classical case for free trade has once again gained currency in the writings of some contemporary libertarians and free-market economists who have embraced the anti-nationalist, globalist agenda. Fortunately, eminent historians of economic thought have previously demolished this gross caricature of the classical position and clarified the rationale of the classical economists in promoting free trade. Let us take a few examples.
Lionel Robbins was a British economist who was heavily influenced by Mises, Hayek, and the founders of the Austrian school early in his career. He was also one of the foremost historians of the classical school of economics, having written several articles and books on the subject. Robbins was emphatic in defending the view that the British classical economists promoted free trade because it improved economic conditions for Great Britain:
To the extent to which [classical economists] repudiated former maxims of economic warfare and assumed mutual advantage in international exchange, it is true that the outlook of Classical Economists seems, and indeed is, more spacious and pacific than that of their antagonists. But there is little evidence that they often went beyond the test of national advantage as a criterion of policy, still less that they were prepared to contemplate the dissolution of national bonds. If you examine the ground on which they recommend free trade, you will find that it is always in terms of a more productive use of national resources. … I find no trace anywhere in their writings of the vague cosmopolitanism with which they are often credited by continental writers [such as the protectionist, Friedrich List]. … All that I contend is that we get our picture wrong if we suppose that the English Classical Economists would have recommended, because it was good for the world at large, a measure which they thought would be harmful to their own community. It was the consumption of the national economy which they regarded as the end of economic activity.Lionel Robbins, The Theory of Economic Policy in English Classical Political Economy (London: Macmillan, 1953), pp. 10–11.
In a classic work, published just after World War II, Edmund Silberner surveyed the thought of the leading economists of the nineteenth century, including the British classical and French liberal economists, on the problem of war, its causes and solution.Edmund Silberner, The Problem of War in Nineteenth Century Economic Thought, trans. Alexander H. Krappe (Princeton, NJ: Princeton University Press, 1946). Silberner pointed out that the classical economists, whom he called “liberals,” viewed war as “economically and socially harmful” and “not only immoral but stupid” because “it is in effect the natural state of men ignorant of the laws of political economy.”Ibid., p. 280. Silberner summarized the classical-liberal position on the connection between free trade, prosperity, war, and the science of political economy as follows:
By favoring international accord … [free trade] contributes not only to the material prosperity of nations but also to the intellectual and moral progress of mankind as a whole. Of all known economic systems it is therefore … the most favorable to each nation as well as to the human race in its entirety. … [T]he establishment of commercial freedom will bring about one of the most profound revolutions in history. Free trade will assure to all men the maximum possible of material well-being, which in fact will know no other limits than the natural resources of the globe and the creative work of men. What is more, the influence of free trade will not be restricted to the economic field: freedom of international commerce will also considerably increase the external security of nations. … The role assigned by the liberals, in this matter, to political economy is most significant. This science must deal with war because peace is an essential element of public prosperity. Political economy … is regarded by the liberals as the science par excellence of peace. The diffusion of economic knowledge thus tends, in their eyes, to prevent wars.Ibid., pp. 281–82.
Having demonstrated the profoundly cosmopolitan and pacific attitudes of the classical economists, Silberner, like Robbins, emphasized that they were first and foremost nationalists. Thus he wrote: “Though hostile to militarism, they make it clear that their attitude is opposed neither to an enlightened patriotism nor to the principle of nationalities.”Ibid., p. 282. In addition, the classical economists not only saw free trade as the most effective policy for avoiding war but also as the best means of preparing for a war that was impending. According to Silberner, “whatever their differences of view [on the relative effectiveness of free trade as a deterrent to war] they all take it for granted that, if war is truly inevitable, free trade, by enriching the nations, prepares them better for it than does the protective system, which impoverishes them all.”Ibid. Finally, despite their abhorrence of war, the classical economists, “with a few exceptions,” were “opposed or hostile” to surrendering national sovereignty to a “supernational peace organization.”Ibid., p. 283.
In an important recent work, Razeen Sally has investigated the views on international economic order held by classical liberals from Hume and Smith to Wilhelm Röpke and other economists of the twentieth-century German Ordoliberal school.Razeen Sally, Classical Liberalism and International Economic Order: Studies in Theory and Intellectual History (New York: Routledge, 1998). In his treatment of Hume and Smith, Razeen argues that both view a person’s discriminative love for his or her nation as psychologically and morally warranted:
[B]oth Hume and Smith strongly believe that human fellow-feeling (or approbation of others) — the famous “sympathy” principle in eighteenth-century moral philosophy — might apply within a nation but hardly at all between nations. Sympathy subsumes a sentiment of patriotism or “love of country,” but does not extend to “love of mankind.” … Both Hume and Smith opine that this is right and proper, for the public interest is secured when one fixes one’s attention on something limited and proximate, stretching to patriotism or love of country, rather than something vague and uncertain like love of humanity.Ibid., pp. 56–57.
Accordingly Razeen insists that Hume’s and Smith’s advocacy of free trade is based on their belief that it is the policy that best conduces to enhancing the wealth and welfare of their own nation. Sally is emphatic on this point:
… Hume and Smith stick to considerations of the nation and the national interest as practical objects of analysis. This is a point of absolutely vital importance. Note that Smith does not expatiate on the wealth of “the world”; rather he focuses on the wealth of nations. First and foremost, the interrelation of economic phenomena is examined according to the criterion of national, not global, wealth maximization. … In contradistinction to the mercantilists, however, he holds that, under free trade, the national interest corresponds to the global interest. However, as a by-product, such a regime benefits the rest of the world through a better allocation of world resources, not to mention the dynamic gains of technology transfer, competitive emulation, and a widening market that spread across the globe. … This then is the context for Smith’s advocacy of unilateral free trade which the nineteenth-century classical economists believe in as well: one or a number of nations adopt free trade independently in their own interest; others, also acting in their self-interest, are likely to follow the example of pioneering free trading nations once the benefits of such a policy become readily apparent. [Emphases in the original.]Ibid., p. 58.
We need not, however, depend only on the interpretation of modern historians of thought on this matter for we have the words of the classical economists themselves. There is no better place to start than a famous statement by one of the first classical economists, David Hume. Hume’s dictum poignantly illustrates how, in the eyes of classical economists, free trade perfectly harmonized nationalism and cosmopolitanism.
I shall therefore venture to acknowledge, that, not only as a man, but as a British subject, I pray for the flourishing of commerce of Germany, Spain, Italy, and even France itself. I am at least certain, that Great Britain and all those nations, would flourish more did their sovereigns and their ministers adopt such enlarged and benevolent sentiments towards each other.David Hume, “Of the Jealousy of Trade,” in David Hume, Writings on Economics, ed. Eugene Rotwein (Madison: University of Wisconsin Press, 1970), p. 82.
As Robbins pointed out,Robbins, The Theory of Economic Policy, p. 10n. 5 Adam Smith “expressly repudiates” the globalist position that places the welfare of one’s own nation on all fours with that of other nations:
France may contain, perhaps, near three times the number of inhabitants which Great Britain contains. In the great society of mankind, therefore, the prosperity of France should appear to be an object of much greater importance than that of Great Britain. The British subject, however, who upon that account should prefer upon all occasions the prosperity of the former to that of the latter country, would not be thought a good citizen of Great Britain. We do not love our country merely as part of the great society of mankind — we love it for its own sake, and independently of any such consideration.Adam Smith, The Theory of Moral Sentiments (New Rochelle, NY: Arlington House, 1969), p. 337.
Ricardo’s closest disciple, J. R. McCulloch (1789–1864), argued that free trade unites all nations and peoples in common interest. “Commerce embracing different nations,” declared McCulloch,
by … making every people to a great extent dependent on others … forms a powerful principle of union and binds together the universal society of nations by the powerful ties of mutual interest and reciprocal obligation.John R. McCulloch, The Principles of Political Economy, 5th ed. (New York: Augustus M. Kelley, 1965), p. 92.
Now McCulloch is not saying that free trade will dissolve peoples and nations into a homogeneous globalist mass or eradicate the desire most individuals have for the flourishing and pre-eminence of the nationality or “people” they identify with. In fact he is saying quite the opposite: that free trade and the mutual benefits it confers on all nations are the only rational means available to sustain one’s own nation and secure its desired advancement and distinction among other nations. In McCulloch’s words:
It has been shown over and over again, that nothing can be more irrational and absurd, than that dread of the progress of others in wealth and civilization that was once so prevalent; that what is for the advantage of one state is for the advantage of all; and that the true glory and real interest of every people will be more certainly advanced by endeavoring to outstrip their neighbors in this career of science and civilization, than by engaging in schemes of conquest and aggression.Ibid., pp. 92–93.
Henri Baudrillart (1821–1892) was an eminent French liberal economist and economic historian and a follower of Bastiat’s. He was an avid free trader and anti-militarist, who objected to standing armies. Baudrillart however maintained that international free trade and division of labor are not only consistent with separate nations and nationality differences but require such separateness and differences. Wrote Baudrillart:
Those who do not consider at all the differences produced among men by climate, race, and institutions, are the very theoreticians of prohibitions who want every nation to be self-sufficient and devote itself to all industries at the same time. … By endeavoring to maintain that division of labor which Providence itself has established among men, political economy is obviously not hostile to the spirit of nationality; it bases the alliance of peoples on the difference of characters and faculties; it wants each to excel under the conditions peculiar to it, and each to produce so as to have means of exchange. To generalize and extend trade, it localizes industry.Henri Baudrillart quoted in Silberner, The Problem of War in Nineteenth Century Economic Thought, p. 111.
It is imperative to emphasize the nationalist basis of the classical case for free trade for two reasons. First, modern libertarians and “classical” liberals who favor open borders and are indifferent to the dissolution of historical nations often invoke the names of Hume, Smith, and Bastiat in support of their position. But as we saw, the liberality, pacifism, and cosmopolitanism of these great thinkers and their nineteenth-century followers is far different from the homogenizing globalism embraced by their modern epigones. Second, without taking a position on the vexed question of immigration, it is important to bear in mind that the classical rationale for the free movement of goods cannot be simply extended to justify the “free movement of labor,” that is, open borders, especially if the result is mass immigration. As nationalists, the classical economists would hardly look on with equanimity as their nation disintegrated.
The US foreign policy establishment has for decades been dominated by neoconservative interventionists and falsely named “humanitarian” interventionists.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Pompeo’s Iran Failures Make War More Likely"
DC execs think Superman is "too perfect" to resonate with modern audiences, but Dan Sanchez profoundly disagrees. He and Bob discuss this issue and other topics in the intersection of politics & superhero movies.
Mentioned in the Episode and Other Links of Interest: Dan Sanchez’s FEE articleBob’s previous interview with Dan on the JokerThe Captain America clipBob’s article Superman Needs an AgentJordan Peterson on Cain and AbelSome Supes clips mentioned: one, two, three, and four For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
Today, during a deep economic crisis, citizens of many Latin American countries will suffer the asphyxiation of a violent state that has used the emergency to increase its power.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The Covid Crisis Has Pushed Latin American Regimes back toward Authoritarianism".
Ludwig von Mises rejects the standard arguments for democracy. Not for him are the alleged virtues of public deliberation. For him, there is only one argument for democracy that is convincing. He says that only democracy allows for a peaceful change of power. Every government, he thinks, rests on popular consent. If a sufficient number of people find the government no longer tolerable, it won’t be able to maintain itself in power. In a democracy, people in this situation can peacefully replace the government with an opposition party more to its liking. Without democracy, there is liable to be a violent revolution, because those in power and their supporters are likely to cling to power, even if their position is in the long run unsustainable.
Mises puts the argument in this way in Liberalism:
Government by a handful of people—and the rulers are always as much in the minority as against those ruled as the producers of shoes are as against the consumers of shoes—depends on the consent of the governed, i.e., on their acceptance of the existing administration. They may see it only as the lesser evil, or as an unavoidable evil, yet they must be of the opinion that a change in the existing, situation would have no purpose. But once the majority of the governed becomes convinced that it is necessary and possible to change the form of government and to replace the old regime and the old personnel with a new regime and new personnel, the days of the former are numbered. The majority will have the power to carry out its wishes by force even against the will of the old regime. In the long run no government can maintain itself in power if it does not have public opinion behind it, i.e., if those governed are not convinced that the government is good. The force to which the government resorts in order to make refractory spirits compliant can be successfully applied only as long as the majority does not stand solidly in opposition.
There is, therefore, in every form of polity a means for making the government at least ultimately dependent on the will of the governed, viz, civil war, revolution, insurrection. But it is just this expedient that liberalism wants to avoid. There can be no lasting economic improvement if the peaceful course of affairs is continually interrupted by internal struggles….
Here is where the social function performed by democracy finds its point of application. Democracy is that form of political constitution which makes possible the adaptation of the government to the wishes of the governed without violent struggles. If in a democratic state the government is no longer being conducted as the majority of the population would have it, no civil war is necessary to put into office those who are willing to work to suit the majority. By means of elections and parliamentary arrangements, the change of government is executed smoothly and without friction, violence, or bloodshed.
There are various points at which you can challenge this argument. For example, what if the majority of people oppose the government, but there isn’t a consensus backing a particular opposition group? (I don’t mean that the party in power won’t let popular opposition groups run. Mises when he talks about democracy assumes that elections are fair.) But even if the argument can be challenged, it seems to have much in its favor.
Murray Rothbard raises a remarkable objection to this argument that hasn’t received the attention it deserves. His book Power and Market contains a profusion of arguments, one right after the other, and this one has escaped much notice.
His argument, in brief, is that if democracy is supposed to be a substitute for violent revolution, then the democratic government must exactly resemble the government that would have won out in a violent revolution. It is most unlikely that this will happen. If so, Mises’s argument fails.
Rothbard explains what he has in mind in this passage:
There is, moreover, another flaw in the “peaceful-change” argument for democracy, this one being a grave self-contradiction that has been universally overlooked. Those who have adopted this argument have simply used it to give a seal of approval to all democracies and have then moved on quickly to other matters. They have not realized that the “peaceful-change” argument establishes a criterion for government before which any given democracy must pass muster. For the argument that ballots are to substitute for bullets must be taken in a precise way: that a democratic election will yield the same result as would have occurred if the majority had had to battle the minority in violent combat. In short, the argument implies that the election results are simply and precisely a substitute for a test of physical combat. Here we have a criterion for democracy: Does it really yield the results that would have been obtained through civil combat? If we find that democracy, or a certain form of democracy, leads systematically to results that are very wide of this “bullet-substitute” mark, then we must either reject democracy or give up the argument.
How, then, does democracy, either generally or in specific countries, fare when we test it against its own criterion? One of the essential attributes of democracy, as we have seen, is that each man has one vote. But the “peaceful-change” argument implies that each man would have counted equally in any combat test. But is this true? In the first place, it is clear that physical power is not equally distributed. In any test of combat, women, old people, sick people, and 4F’s would fare very badly. On the basis of the “peaceful-change” argument, therefore, there is no justification whatever for giving these physically feeble groups the vote. So, barred from voting would be all citizens who could not pass a test, not for literacy (which is largely irrelevant to combat prowess), but for physical fitness. Furthermore, it clearly would be necessary to give plural votes to all men who have been militarily trained (such as soldiers and policemen), for it is obvious that a group of highly trained fighters could easily defeat a far more numerous group of equally robust amateurs.
Could Mises respond to this argument? He might have said that even if Rothbard is right that democracy isn’t a perfect substitute for the results of a violent revolution, it’s close enough to merit our support, given the costs of violence. But I’m sure Rothbard would have had a counter for that as well. Murray had an amazing ability to counter any argument against him, and I’ve never met his match in this.
Jeff Deist joins David Gornoski to critique the DNC and their pro-war and divisive policies. Deist also provides some humorous commentary on the DNC’s anti-capitalist rhetoric. On the economic shutdowns and calls for more socialism, Deist remarks: “We’re actually sacrificing the young to the old.”
Find more from David Gornoski on A Neighbor's Choice.
Like it or not, libertarians have divided themselves along left-right lines. Here's a brief explanation.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why There's a Left-Right Divide among Libertarians".
Populists need a status quo to oppose, but now Trump stands as the incumbent.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Trump Agonistes".
Bob first observes that the Left (institutionally) hates Christianity, and that standard explanations, such as its alleged bigotry, don't explain why the Left gives Islam a pass. Christianity stands in the way of the Leftist agenda. Moreover, if the Devil exists, he would favor not just the "false religion" of environmentalism and Marxism, but also postmodernism, for Jesus is the Logos. Ultimately, the gospel reconciles God and man, which is not what the Devil wants.
Mentioned in the Episode and Other Links of Interest: An example of James Lindsay arguing about 2+2=5 on Twitter.A Mises University presentation on Antonio Gramsci.The Snopes article “debunking” claim that Saul Alinsky dedicated his book to Lucifer.Wikipedia entry on “Logos” in Christology context.John Piper on the opening of the gospel of John.Bob’s debate (ep. 133) with Thaddeus Russell on postmodernism as a foundation for liberty. For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on iTunes, Stitcher, Spotify, and via RSS.
In response to my article last week opposing the use of federal soldiers and federal agents on the streets of American cities, my inbox and the article's comment section filled up with readers claiming that it most certainly is the job of the US federal government to step in and take control of US cities against the will of the state and local governments.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Dear Portland, It's Not America's Job to Solve Your Problems".
Today's anticapitalists fall into a familiar pattern pioneered by Mussolini and Giovanni Gentile.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Today's Anticapitalists Are Closer to Fascism Than They Think".
Yes, there are still the people buying into the fear, ratting out their neighbors, etc. But I'm seeing a lot more of the opposite: people recognizing who the enemy is here, and that it is not their neighbors.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The Implosion of the Virus Hysteria Smells a Lot like 1989".
Joshua Gottlieb is an economist who co-authored a recent paper examining the effect of government policy and physician income. The paper was recently presented at a conference co-sponsored by the NBER and NIA and its pre-publication has generated significant controversy among doctors.
SHOW NOTES Joshua Gottlieb, PhD: Twitter and WebsitePaper: Who Values Human Capitalists’ Human Capital? Healthcare Spending and Physician Earnings Watch this episode on YouTube
Manny Sethi is a trauma surgeon running to be the next senator from the state of Tennessee. He is the son of immigrants, and an unabashed conservative who discusses his journey from medicine to politics, as well as his views on healthcare.
SHOW NOTES Manny Sethi: Twitter and BioWatch this episode on YouTube
The economic nationalist faces a dilemma. Foreign aid handouts and economic protectionism are not only wholly compatible in theory, but the effects of foreign aid perfectly complement economic nationalists’ goals.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Foreign Aid Is Protectionism".
Murray Rothbard explains that anarcho-communists' longing for a preindustrial primitivism would mean starvation and death for nearly all of mankind and a grinding subsistence for the ones remaining.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The Death Wish of the Anarcho-Communists".
Even if the idea of democracy were a good one, there is a myriad of problems that come with translating the will of the voters into "representation" in political institutions.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Three Reasons Representative Democracy Doesn't Work".
The enemies of the system of free enterprise paid liberalism an unintended compliment when they applied the name "liberal" to their own creed, historically the opposite of what liberalism stood for from the start.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The "Old" vs. the "New" Liberalism".
Download the slides from this lecture at Mises.org/MU20_PPT_29.
Recorded at the Mises Institute in Auburn, Alabama, on 16 July 2020.
Download the slides from this lecture at Mises.org/MU20_PPT_22.
Recorded at the Mises Institute in Auburn, Alabama, on 15 July 2020.
Includes question and answer period. Recorded at the Mises Institute in Auburn, Alabama, on 13 July 2020.
Liberalism was the most popular and influential ideology during the nineteenth and early twentieth century. So, every new socialist and authoritarian movement defined itself as "liberal" to capitalize on liberalism's popularity and importance.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "How Historians Changed the Meaning of 'Liberalism'".
Mises points out that eugenicists’ aim to improve the “quality” of the human race is an incoherent and meaningless goal: there exists no clear and objective standard by which the quality of human beings can be measured.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Why Mises Opposed Both Eugenics and Social Darwinism".
The political machines that run America's cities are likely to keep running them when these protests and riots end. Taxpayers will be worse off, but politicians will be even more powerful.
Narrated by Daniella Bassi.
Original Article: "These Protests Don't Threaten the Ruling Party in America's Big Cities".
Recorded at Avondale Brewing Company in Birmingham, Alabama, on June 6, 2020. Special thanks to Mark Walker for sponsoring this event.
Just as America begins to reopen from the Coronavirus lockdowns, protests break out across the country over the killing of George Floyd by police in Minneapolis. Governors deploy riot police into the streets to deal with looting, Trump threatens to invoke the Insurrection Act of 1807, and millions of Americans wonder if they still have a job. Racial tensions grow, while groups like Antifa violently agitate for the abolition of property and capitalism. With curfews and business closures in effect, what does the rule of law even mean? How does government at any level maintain legitimacy when it cannot provide basic order?
Judge Andrew P. Napolitano, the Senior Legal Analyst for Fox News and a board member of the Mises Institute, joins Jeff Deist for an in-depth look at the legal crisis facing America in the wake of COVID-19 and ongoing civil unrest. Among the topics:
What powers do Trump and governors have to quell protests or prevent the spread of disease? Are orders not authorized by legislatures flatly illegal? Do they carry the force of law?Can Trump call out National Guard or federal military forces without congressional approval or consent of governors?What does due process mean during a crisis? Do constitutional protections disappear when public health is at stake or mass protests overtake the streets?What level of constitutional scrutiny should apply to measures taken by governors and mayors—quarantines, business closures, curfews, police mobilizations?Are qualified immunity protections keeping dangerous cops and politicians from accountability? Will business owners be able to sue state or local governments for violating their rights?Is "property vs. lives" a false choice from a legal perspective? Do police have any affirmative duty to safeguard either?What roles do the Ninth and Tenth Amendments play—or should they play—in how various states deal with these crises? Is federalism poised for a resurgence? This online seminar is a hard-hitting and uncompromising discussion of government malfeasance and lawlessness.
Capitalism Alone: The Future of the System That Rules the WorldBy Branko MilanovicHarvard University Press, 2019287 pages
At first, one might be tempted to toss this book aside. Milanovic, who used to be lead economist at the World Bank’s research department, is a specialist in global inequality. He esteems the work of Thomas Piketty. He spends a great deal of time on proposals to make “liberal meritocratic capitalism,” his name for the economic system we live in, more egalitarian. If you care more about doing well than about whether people are “equal,” why bother with Capitalism, Alone?
In answer, the book has some good insights, along with bad but instructive arguments. The book’s main thesis can be summarized quickly. The choice the world faces is between two varieties of capitalism, liberal meritocratic and political. America is the foremost example of the first of these, and China of the second. The Chinese system features much more government control.
Why does he think this is the choice the world faces? Why not socialism? His answer is that capitalism is immensely more productive, and that the system pushes people to support the values that sustain it.
The fact that the entire globe now operates according to the same economic principles—production organized for profit using legally free wage labor and mostly privately owned capital, with decentralized coordination—is without historical precedent….None but capitalism remains today, except in very marginal areas with no influence on global development….The uncontested dominion of the capitalist mode of production has its counterpart in the similarly uncontested ideological view that money-making not only is respectable but is the most important objective in people’s lives, an incentive understood by people from all parts of the world and all classes….We live in a world where everybody follows the same rules and understands the same language of profit-making.
Here Milanovic falls for an old fallacy. People wouldn’t try to make more money unless the capitalism pushes them into it:
When money becomes established as the sole criterion by which success is judged (as is the case in hypercommercialized societies) other hierarchical markers vanish (which in general is a good thing), but the society also sends a message that “being rich is glorious,” and that the means used to achieve glory are largely immaterial—as long as one is not caught doing something illegal.
This pressure to make more money cannot be easily escaped:
We thus reach the conclusion again that the only way to defy the commercialized world is by withdrawing from it altogether, either through personal exile in a secluded community, or, in the case of larger groups like nations, by embracing autarky.
Of course this is nonsense. People want a wide variety of goods and services, and making money enables you to obtain those that can be bought. Most people don’t have an irrational craving for money, but they do value prosperity. What is wrong with that? Oddly enough, Milanovic recognizes this himself. In the course of an excellent criticism of the view that robots will cause mass unemployment, he says:
Hence the second “lump” fallacy: human needs are limited…we tend to assume that human needs are limited to what we know exists today and what people aspire to today, and we cannot see what new needs will arise with new technologies.
Milanovic launches another criticism of capitalism. If the free market is the best conceivable social system, how do you explain World War I?
Why did fascism and communism become powerful if humanity—and certainly the advanced liberal capitalist countries—was on the right path in 1914? We encounter here a fundamental problem that the liberal capitalist view of history faces: explaining the outbreak of the most destructive war in history (up to that point) within a system that, from a liberal point of view was fully consonant with the highest, most developed and peaceful way of organizing human society.
This argument rests on a misunderstanding. Promoting international trade and peaceful relations was indeed in the interest of the great majority of people in 1914. But it does not follow from this that people judge their interests correctly. The governments of the major European powers in 1914 were dominated by militaristic ideas inimical to peace and prosperity. Given this fact, the outbreak of war is not at all hard to understand. Readers who want further details might with profit consult the classic work of Sidney Bradshaw Fay, The Origins of the World War. Milanovic wrongly takes support for the free market to entail a theory of history that makes the triumph of the market unstoppable once it has arrived.
Milanovic has an answer to this, but it leads him to another fallacy, this one especially instructive. He thinks that imperialist rivalries led inevitably to world war.
World War I did not just come out of the blue: its seeds were contained in conditions prevailing before the war….Lots of income in the hands of the rich…caused a disproportion between the (high) amount of savings and the availability of profitable domestic investments….Several major states all sought to expand their reach in this way at the same time, and imperialist competition ensued. The situation, when translated into European politics, produced the war.
Readers acquainted with Austrian capital theory as found in the works of Mises, Hayek, and Rothbard need no instruction from me on the Keynesian errors in the “oversavings” argument just given. I wish instead to call attention to another fallacy. This is the assumption that a “structural” or “systemic” explanation of a historical event is automatically better than one that stresses individual human decisions. Milanovic takes for granted that this is so but gives no reason for it. He mocks the view, “least convincing of all,” that the outbreak of war stemmed from “the idiosyncrasies of individual actors, mistakes, and accidents (A.J. P. Taylor).” You will find the same undefended position that a “structural” explanation is better than an individualist one in the work of the great contemporary Marxist panjandrum Perry Anderson. It’s a pet peeve of mine.
As I mentioned before, not everything in this book is bad. I’ve already quoted Milanovic’s excellent comment about robots and new technology, and he makes other insightful comments. He mentions.
The fallacy of the lump of labor doctrine, which holds that the total number of jobs is fixed and that as the new machines take over jobs they will cause many workers permanent unemployment….We know that similar fears have always existed and have never been realized. New technologies ended up creating enough new jobs, and actually more and better jobs than those that were lost.
He strikes a decisive blow at a key mistake of the “sustainable growth” movement.
The third “lump” fallacy is the “lump of raw materials and energy” fallacy, the idea of the so-called carrying capacity of the earth. There are of course ultimate geological limits to the supply of raw materials, simply because the earth is finite. (Note however that the cosmos, at least from our small, human perspective is indeed unlimited.) But experience teaches us that the terrestrial limits are much wider than we generally think at any one time because our knowledge of what the earth contains, and how it can be used for our needs, is itself limited by our current level of technology. The better our technology, the more reserves of everything we discover, and the more efficient we are in using them.
These days a universal basic income (UBI) is popular on the left and the right, but Milanovic has no use for it. He finds in it a basic problem:
Society might become very polarized, with, say, some 20 percent of the working-age population choosing not to work at all…while the middle class would. Would such a society, where work is not treated as something intrinsically good and desirable…be considered a good society?
Thus, there are some valuable points in Capitalism, Alone. But they are few and far between. You wouldn’t miss that much if you did toss the book aside.
This book is a systematic treatment of the historic transformation of the West from limited monarchy to unlimited democracy. Revisionist in nature, it reaches the conclusion that monarchy, with all its failings, is a lesser evil than mass democracy, but outlines deficiencies in both as systems of guarding liberty.
Narrated by Paul Strikwerda.
Download the complete audiobook (15 MP3 files) in one ZIP file here. This audiobook is also available on Soundcloud and via RSS. Purchase the Audiobook on MP3-CD and Audible/Amazon, or paperback at the Mises Store. © 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Key Takeaways and Actionable Insights What is Entrepreneurial Intelligence? For Steven Phelan, “It’s all about the spark” — the moment of inspiration in combining disparate elements together to develop a new solution. Humans draw on “the fringes of consciousness” to create new constructs.
Entrepreneurs also take risks, investing time, talent and treasure in their venture in hopes of gain, yet understanding that they could lose something of value to them in the endeavor.
How do we contrast Entrepreneurial Intelligence and Artificial Intelligence? First, we need to differentiate between the narrow and general forms of AI. Narrow AI is software that can solve problems in a single domain. For example, a Nest thermostat can raise the temperature or lower it in a room according to a pre-set rule. “If this, then that” is the general rule for this kind of intelligence. The parameters are designed by the programmers.
For the unstructured problems of life and business, a truly intelligent computer would have to figure out for itself what is important. Part of the problem is that understanding or predicting human motivations — as entrepreneurs do — requires a “theory of mind”, an understanding of what makes humans tick. Entrepreneurs need empathic accuracy — unavailable to AI — to anticipate the needs of consumers. A sentient computer would need self-awareness or consciousness to truly empathize with humans, and have a set of values with which to prioritize decisions.
What’s the role of machine learning? If you work in a business that generates a lot of data, it can be mined by data scientists for patterns, and those patterns might indicate a better way to respond to customer needs. The richest source of data is behavioral — like choosing songs to listen to on Pandora. Machine learning can detect a pattern of what kinds of sings a user chooses most. A human interpreter can translate those patterns into preferences — in other words, motivations are embedded in behavior and machine learning can help entrepreneurs extract them.
So, the entrepreneur’s best resource is entrepreneurial intelligence. The psychologist Howard Gardner helped us to recognize many types of intelligence, including math, language, spatial, musical and social. There are two types that might be indicative of entrepreneurial intelligence: EQ (Emotional intelligence) might be associated with intensified empathic skills and empathic accuracy; CQ (Curiosity Intelligence) is linked to the kind of creativity that finds solutions by combining elements on the “fringes of consciousness”, as Hubert Dreyfus puts it.
Can entrepreneurs and business owners assess their own entrepreneurial intelligence? There are scales to measure EQ and Creativity. Here’s a link to an entrepreneurial quotient assessment: Mises.org/E4E_68_QA
And here is a more action-oriented self-assessment we developed for E4E: Mises.org/E4E_68_SA
The bottom line: Entrepreneurs need knowledge of how to profitably satisfy customer preferences given the resources at hand. This is not a trivial requirement. It is not possible to pre-state all of the uses for a given resource nor to compute the payoff for a given application. Current computational methods are thwarted without a complete list of entrepreneurially valid moves and the payoffs from such moves. No amount of growth in processing power, data communication, or data storage, can solve this problem.
The late Steve Jobs is often held up as the epitome of a successful entrepreneur. His founding of Apple, ousting by his own board, and subsequent return to rescue the company, and then make it the most valuable publicly traded company in the world is the stuff of legend. One of the apparent secrets of his success was to understand that “people don’t know what they want until you show it to them. That’s why I never rely on market research. Our task is to read things that are not yet on the page.”
This ability to “read things that are not yet on the page” lies at the heart of the concept of empathic accuracy. Empathic accuracy is “the ability to accurately infer the specific content of other people’s thoughts and feelings”. Until AI can do this, Entrepreneurial Intelligence is a better tool for the innovating entrepreneur.
Additional Resources "Entrepreneurial Intelligence vs. Artificial Intelligence" (PDF): Mises.org/E4E_68_PDF
"Entrepreneurial judgment as empathic accuracy: a sequential decision-making approach to entrepreneurial action" by Jeffrey S. McMullen (PDF): Mises.org/E4E_68_Article
"Are you ready to be an entrepreneur?" (PDF): Mises.org/E4E_68_QA
"Entrepreneurial Self-Assessment" (PDF): Mises.org/E4E_68_SA
Some county governments in Colorado have made it clear that they don't intend to adhere to the governor's ongoing edicts requiring business closures and mandating social distancing. And it's unclear that the governor is willing to burn the political capital to force county governments to do so.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "In the Lockdown Fight for Local Control, Colorado Counties Begin to Ignore State Edicts"
Governments often demand that you "ask what you can do for your country," but those governments never guarantee us anything in return for our sacrifice.
Narrated by Daniella Bassi.
Original Article: "The Folly of 'Ask What You Can Do for Your Country'"
Every successful business is built on empathic understanding of customers’ preferences. As we know from the theories of Austrian economics, the preference scales of every individual are highly subjective, idiosyncratic, context-dependent, and highly changeable. How does an entrepreneur develop the appropriate level of understanding? Can this understanding be a source of business-building advantage?
We talked with Trini Amador, a returning guest and an in-demand global branding and marketing consultant who has developed an effective process for every entrepreneur to achieve a breakthrough level of insight into customer motivations.
Customers bond with businesses and brands they love and trust. The choices they make have their own internal logic. Entrepreneurs must develop insights into their motivations. Insights are the lifeblood of any brand- or business-owner, says Trini. Why do customers behave the way they do — especially in buying or not buying? Insights tell you. They become the difference between “just a business” and a brand that successfully delivers against the needs of their customers.
Insights are the entrepreneur’s understanding of customers’ motivations, values and attitudes. They’re the “Why” in why people act the way they do. Always emotional, always subjective. Entrepreneurs who understand “Why” can design stimulus or communication or innovation to motivate buying behavior.
There’s an insights generation process. It starts with identifying the people you wish to serve. Trini recommends a focus on your “core target” audience — not a general definition of who might buy, rather a highly specific profiling of your most likely and best prospects. Mark Packard, in episode #62, called them “high knowledge” customers. They know what they want, they know the category and they’re precise about what experience is satisfactory and what is not.
There is no shortage of data for you to utilize. Make sure you select the most important and useful data:
Attitudinal data: how your customer feels, especially if they are expressing dissatisfaction;
Behavioral data: behavior reveals preferences — “motivations are embedded in behaviors”.
The best sources of data are first hand observation and one-on-one conversation.
Organize your data in an insightful way. To avoid data overload (there’s so much of it to collect!) Trini suggested couple of organizational techniques.
One is visualization: build a visual profile of the customer with photos and notes indicating their hobbies, favorite brands, activities — visuals that depict their behavior and preferences.
A second is personalization: write a composite profile as if it were one individual and use it as a “one perfect customer” persona.
The objective is to change behaviors. Insight is the required key to unlock the possibility of doing so. Trini cited the example of his own wine brand from Sonoma County, California: Gracianna. For example, the objective may be to get people to visit the tasting room who have never visited before. That’s a behavior change.
Why do people behave the way they do? One inquiry tool is the 5 Why’s, which is a way to examine the sequential rungs on the individual’s means-ends ladder to identify their highest value, the motivation that is ultimately driving them. Trini used the example of why some people feel better about buying a Tesla than an alternative vehicle. Ultimately, they want to feel that they are better citizens of the planet. Trini entertainingly ascends the rungs of the ladder from “need a new car” and “get from A to B” to arrive at “the feeling of being a better citizen”.
Using these tools, we arrive at a deep understanding of why customers make the choices they make — that is, an insight.
The Insight feeds the Behavior Modification tool. The definitive “Why?” that emerges from the 5 Why’s inquiry becomes the current state in the behavior modification tool. This tool has two components:
Attitude Modification: behaviors are related to attitudes, and so to change an attitude can lead to a change in behavior. Attitude modification documents the FROM (the attitude we want to change) and the TO (the new attitude we want to encourage).
Key Marketing Platform: a marketing platform is a staging point for all initiatives aimed at achieving the desired attitude among target customers: communication, promotion, innovation, distribution, relationship.
Continuing the Tesla example, we want our prospective customer to feel that Tesla is the most progressive electric car that helps save the planet in the coolest, most prestigious ultra-premium way. If we can get them to feel that way, they’ll buy. The entrepreneur imagines the future behavior, and then acts through the marketing platform to cultivate that motivation.
How? Consider all resources that fall under the headings of communication, innovation, promotion, expanded distribution, and enhanced relationships. Experiment, experiment, experiment. Test, test, test. We’ll discuss the techniques in a future episode of Economics For Entrepreneurs.
Additional Resources "Insights Statement Template" (PDF): Mises.org/E4E_67_PDF_A
"Marketing Platform Tool": (PDF): Mises.org/E4E_67_PDF_B
One-Question Survey with Free Wine Giveaway: E4EPod.com/Question
With such chaos, confusion, and incompetence playing out, it is little wonder that more and more Pennsylvanians are refusing to obey lockdown decrees.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "The Shutdown May Soon Collapse in Pennsylvania Thanks to Local Resistance"
Key Takeaways and Actionable Insights A growth business is what John Rossman, in episode #50, termed a flywheel. Using Amazon.com as an example, he gave us this simple image.
[[{"fid":"90017","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"E4E Flywheel","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"E4E Flywheel","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"E4E Flywheel","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]]
The flywheel looks simple, but in reality it’s quite nuanced. Lower prices and a great customer experience will bring customers in, Bezos reasoned. High traffic will lead to higher sales numbers, which will draw in more third-party, commission-paying sellers. Each additional seller will allow Amazon to get more out of fixed costs like fulfillment centers and the servers needed to run the website. This greater efficiency will then enable it to lower prices further. More sellers will also lead to better selection. All of these effects will come full circle back to a better customer experience.
John Tamny sees the American entrepreneurial economy as a beautiful and productive flywheel (see Mises.orgE4E_66_PDF).
Why are Americans so entrepreneurially focused? We descend from “the crazies” — the other thinkers who came from around the world, dissatisfied with their lives, and willing to cross oceans and borders to get to a place that offers no security but offers freedom. They took the ultimate entrepreneurial leap. We got the nut cases. Steve Jobs, for example, was of Syrian descent. Could he have started Apple in Syria? No.
Entrepreneurs lead us to a better place. John’s definition of an entrepreneur is someone who has a vision that everyone else thinks is ridiculous, yet they follow it anyway. They have no time for the way things are done today. They want something different. And to win consumer acceptance, what’s different must also be better. So they quite literally lead us to a better place. Horse drawn carriages weren’t enough, so Henry Ford gave people something different. Everyone wanted Blackberry phones when Steve Jobs brought out the iPhone, and he quickly demonstrated its superiority. Every entrepreneurial act is speculation — there is never certainty that people are going to want the new product. That’s what is so important about entrepreneurs.
Entrepreneurs need to attract intrepid finance and intrepid financiers. Silicon Valley is littered with VC’s who turned down Facebook, and turned down Amazon. Founding entrepreneurs think differently and have a vision that is far out of the norm, and they need to be matched with financiers who can be strong supporters and collaborators on the path to a better place. Irrespective of whether it is from Wall Street or Sand Hill Road, or from visionary friends and family, it’s critically important that we figure out a way to get financing to brilliant people. Government restrictions on entrepreneurial activity are certainly barriers to growth, but so is failure of imagination on the part of capitalists.
Intrepid lending takes place far away from banks. Unspent wealth is the source, and the more unspent wealth one person has, the more risks they can take. We tend to complain about the antiquated and sclerotic banking system, but it has nothing to do with entrepreneurs and innovation. Banks make loans to entities they know will pay them back. Entrepreneurs fail 90% of the time. Banks want nothing to do with innovation.
Those with unspent wealth are the most crucial people in the economy when they match their unspent wealth with entrepreneurial talent and vision. The more unspent wealth they have – and the less the government takes away from them in taxes — the more intrepid they can be in investing it. When we tax away the wealth if the richest, we tax away the most important wealth of all — that which has the highest odds of being directed towards new ideas that, while they look promising, have high odds of failure.
More and more of us have the opportunity to become entrepreneurs, if we harness the flywheel of original ideas that attract intrepid capital. One of John’s many books, The End Of Work, describes how we are all now so enabled with interconnectivity to resources that we have the chance to make money by doing what we love. Our passion can become our job. If we are able to imagine a future place that is better — that improves the lives of individuals — we can create a growing business. The more of us who can do this, the more we grow the whole economy — which, after all, is made up of individuals. If we can also attract that intrepid capital that John refers to, growth becomes faster and higher.
Besides The End Of Work: Why Your Passion Can Become Your Job, John’s books include Popular Economics: What The Rolling Stones, Downton Abbey and LeBron James Can Teach You About Economics, and Who Needs The Fed: What Taylor Swift, Uber, and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank.
Additional Resource "John Tamny's Entrepreneurial Flywheel" (PDF): Mises.org/E4E_66_PDF
Hayek is guilty of pointing out what should be abundantly obvious: both democratic and authoritarian regimes can commit grave crimes against human rights. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "No, Hayek Didn't Support the Pinochet Regime"
The COVID-19 panic has provided a myriad of opportunities for politicians to exploit the fear and pain of ordinary people for personal profit. This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Crisis or Opportunity? To Politicians, It's the Same Thing"
Presenting "saving lives" as a more or less equal alternative to commerce and community is a misguided view of what the lockdown debate is really all about.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Viruses versus Lockdowns: It's Not about Tradeoffs"
Key Takeaways and Actionable Insights When we talk about entrepreneurial alertness to opportunity, it can sound pretty vague. What exactly does that mean? How is alertness translated into profitable action?
This week’s guest, David Bienstock, provided us with a very precise example. He had just started his media buying services business when a phone call came in. Do you provide service in the category of political advertising? David’s answer was yes. There was no reason for it to be otherwise because there was no information at the time that would indicate any differences between media buying services in the political advertising category compared to the commercial advertising category.
He was able to transfer existing knowledge from his expertise in media buying and placement, and also develop more and more new knowledge. He thereby identified more and more ways in which political advertising was specialized — factors of timing, competitiveness, geography, pricing, regulation, and many more. David built his own island of specialization and became the foremost expert in a burgeoning field.
What can we learn from following David’s entrepreneurial journey?
[[{"fid":"89836","view_mode":"image_no_caption","fields":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"David Bienstock’s Logic Of Customer-Led Growth","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""},"type":"media","field_deltas":{"1":{"format":"image_no_caption","alignment":"center","field_file_image_alt_text[und][0][value]":"David Bienstock’s Logic Of Customer-Led Growth","field_file_image_title_text[und][0][value]":false,"field_caption_text[und][0][value]":"","field_image_file_link[und][0][value]":""}},"attributes":{"alt":"David Bienstock’s Logic Of Customer-Led Growth","class":"media-element file-image-no-caption media-wysiwyg-align-center","data-delta":"1"}}]]
1) The alertness we talk about that entrepreneurs display to opportunities can be triggered by the smallest piece of data. For David, it was one phone call. His instantaneously positive and open response led to a long and successful journey.
2) Wherever there is business expenditure there is an opportunity for an entrepreneurial business service. The business we discussed in episode #65 is campaigning — political, public affairs, ballot measures. How much is spent on campaigns? A lot. There’s the opportunity.
3) The best entrepreneurial businesses are often the ones that clients put you into. David’s inbound phone call was a new client stating an unmet need. That’s all the invitation the alert entrepreneur requires.
4) Opportunities, once seized, expand. David has expanded his original business by adding many related services for current clients to utilize, including multi-channel media, market research and analytics. In addition, he has added multiple new businesses in related spaces. He’s been creative, he’s taken action, he’s been constantly looking for new opportunities that are complementary to the first one that he spotted. However small the start, the next steps will quickly become apparent to the entrepreneur who is not only alert to opportunity but also to expansion and growth.
Additional Resource "David Bienstock’s Logic of Customer-Led Growth" (PDF): Mises.org/E4E_65_PDF
What is the number of deaths due to disease which justifies the total abandonment of the rule of law and basic human freedoms? Sixty thousand? One hundred thousand? Three hundred thousand? Supporters of the current police state ought to pin down a number for us at which all rights are forfeit.
This Audio Mises Wire is generously sponsored by Christopher Condon. Narrated by Millian Quinteros.
Original Article: "Exactly How Many Deaths Are Needed to Justify Giving Governments Control of Everything?"
Chapter 2 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 4 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Acknowledgments from Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 5 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Introduction to Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 3 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.
Chapter 1 of Democracy: The God That Failed. Narrated by Paul Strikwerda.
© 2001 Taylor and Francis, published 2017 by Routledge, an imprint of the Taylor and Francis Group.