My reading of “Planned Chaos” changed the way I see current events. Blaming capitalism as the source of economic crisis is an evidence that the public knows nothing about Mises’ ideas concerning the widespread influence of socialism.
Similar misinformation that happened during WW2 is still with us in the 21st century. Nazi Germany then was described as the worst form of capitalism as far as the Russian Marxians were concerned. They denied Hitler’s regime as the embodiment of socialism. However, for Mises, socialism prepared the way for Hitler through interventionists policies.
In addition to my realization that socialism has actually two faces (Russian Marxism and German Interventionism), it is also something new for me to understand the relationship between socialism and communism. As a new comer into the field of political economy, I have almost zero knowledge as to the real nature of both communism and socialism. All I know is that both of them are political and economic terms in which the first has an ugly reputation at present while the second is gaining increasing popularity especially in the academe.
I hope that by understanding the nature of relationship between these two ideologies, one can now see better what’s happening around the world. Hopefully, this would also result into a new appreciation of capitalism. And I think the third section of Mises’ “Planned Action” can help us achieve this goal. He discussed here historically the relationship between communism and socialism.
The year 1917 is significant in understanding the similarity and distinction between communism and socialism. According to Mises, prior to 1917, no Marxist dared to make a distinction between communism and socialism. The two terms are identical. Even though Marx distinguished between the two levels of communist society in the future, he did not attempt to make any distinction between communism and socialism.
We can see the historical development for the difference between socialism and communism by restating Mises’ understanding of Marxist political economic theory. In the mind of Marx, two trains of thought exist. He believes that socialism is the natural negation of capitalism. By this, I understand that socialism will naturally result out of the highest development of capitalism. Marx believes in this natural transition from capitalism to socialism, at least in words:
"The bourgeoisie forces all nations to become capitalist nations. When the final hour of capitalism sounds, the whole world will be uniformly in the stage of mature capitalism, ripe for the transition to socialism. Socialism will emerge at the same time in all parts of the world."
However, when it comes to political action, Marx believes otherwise. He considers violent action through revolution and civil war as necessary for the transition. The use of violence is justified in order “to establish the dictatorship of the proletarians and to exterminate mercilessly all bourgeois.”
Moreover, Marx’s followers in Europe did not trust both the natural transition idealism and the use of violent action. They recoursed to “democratic” procedures to influence the government. They believe in election and parliamentary procedures. This “interventionist” development is absent in Marx’s teaching. Marx himself “did not believe that interventionism could benefit the masses.”
As noted, violent action is inconsistent with Marxist natural transition idealism. However, Russian Marxians selected this as their tactic. They were known in history as the “Bolshevists”. Nevertheless, there is another brand of Russian Marxism that believes in winning the support of the majority. They were known as the “Mensheviks”.
Lenin organized a Bolshevist version of Marxism in Europe in 1917. He named it as the Communist Party. Its mission is to annihilate members of socialist parties in Europe whom they considered as “social traitors”. They also aimed to liquidate the bourgeois and to seize government power. Lenin believed that the Communist Party was “the only genuine Marxians”. This action resulted to the distinction between communists and socialists.
Communists and socialists have two things in common. Both have common origin in Marxism and believe in the idea that production and distribution of economic goods must be under public control through central planning. On the other hand, they differ in approach and in the detail of distribution of goods. Socialists rejected the use of violent action, believe in democratic process, and does not uphold the equal distribution of goods.
As to the question which is better between the two political and economic systems, for the European Marxians, socialism is "the third stage" in economic evolution, which to my understanding is considered better than both capitalism and communism. But for both Stalin and Marx, socialism is the lower form of communism.