Thursday, June 6, 2013

Interventionism as German Pattern of Socialism

In the first section of "Planned Chaos" where Ludwig von Mises explains about "The Failure of Interventionism", it is my first time to realize that socialism has two patterns - the Russian or Marxian pattern and the German pattern. Understanding these two patterns, one will see that interventionism is in reality the German pattern of socialism. Of course, rhetoric and appearances can make this association difficult. And this kind of argument could be considered ridiculous. But that's how I read and understand this section. 

The first pattern of socialism suffered collapse in 1989. This caused the Marxian pattern of socialism difficult to convince the world. The world obviously witnessed that this form of socialism does not work in the real world. Putting all private initiatives under the control of the government is the certain path to slavery and poverty.  

However, the second pattern of socialism is subtle. It utilizes government policies to accomplish its goal. The policies appear to be acceptable to the people, but the logical conclusions of these policies are the exact opposite of what they claim to achieve.

The existence of these policies explains why today the free enterprise is falsely charged with all kinds of social evils that to a thinking person would appear unbelievable and contradictory simply because they cancel out each other. Mises gave a list of these charges:


  • The atheists make capitalism responsible for the survival of Christianity
  • The papal encyclicals blame capitalism for the spread of irreligion ...
  • The protestant churches and sects are no less vigorous in their indictment of capitalist greed.
  • Friends of peace consider our wars as an offshoot of capitalist imperialism
  • The adamant nationalist warmongers of Germany and Italy indicted capitalism for its 'bourgeois' pacifism,...
  • Sermonizers accuse capitalism of disrupting the family and fostering licentiousness. 
  • The 'progressives' blame capitalism for the preservation of allegedly outdated rules ...
  • Almost all men agree that poverty is an outcome of capitalism.
The above list demonstrates the bad reputation of capitalism in our time and an indication of the present success of socialism through interventionist policies.

As you can see the German pattern is more effective in implementing socialism's agenda.  The widespread influence of economic policies such as minimum wage rate, credit expansion, and the idea that the government can create jobs through increased government spending are now popular especially among democratic countries. Mises describes several features of this type of socialism:
  • It still "maintains private ownership of the means of production, entrepreneurship, and market exchange." 
  • The "entrepreneurs do the buying and selling...But they are no longer entrepreneurs." They were shop keepers.
  • The government tells them "what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell."
  • "This is socialism with the outward appearance of capitalism."
Similar to the fate of Russian socialism in 1989, the German type will certainly suffer similar failure. We cannot escape the logical economic consequences of interventionist policies. Since the date of the writing of "Socialism: An Economic and Sociological Analysis" (1951), Mises foresaw this interventionist crisis:
"No economist ever dared to assert that interventionism could result in anything else than in disaster and chaos."
 "The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism."
 "Our age has to face great economic troubles. But this is not a crisis of capitalism. It is the crisis of interventionism, of policies designed to improve capitalism and to substitute a better system for it."