Wednesday, April 30, 2014

Political Tolerance

Knowing the historical background and significance of the formation of Westminster Theological Seminary is important not only for those who still adhere to orthodox Protestantism, but also for those who want to receive direction in current political debate. Of course, the "liberal" has their own version of the story, and to hear their side would give us the total picture. However, in this article the goal is to simply present information derived from the orthodox camp, and I want to start with D. G. Hart's "J. Gresham Machen: The Politically Incorrect Fundamentalist." Depending on my availability, I want to follow this up by supplementing information from Center for Reformed Theology and Apologetics' "Testimony Before the House and Senate Committees on the Proposed Department of Education (1926)," and Cornelius Van Til's "The Story of Westminster Theological Seminary." 

The first article considers understanding the refusal of the General Assembly of the Presbyterian Church of USA to nominate Gresham Machen "in 1926 to be Princeton Seminary's professor of apologetics" critical to the elevation of "a debatable political issue" during his time, to the "reorganization of Princeton in 1929 that eroded conservative control of the seminary," and to the foundation of Westminster Theological Seminary. 

It is interesting that only Machen suffered the rejection of the General Assemply. Prior to him, the history of the seminary shows no record of such type of rejection. According to D. G. Hart, the primary reason for the failure of Machen's nomination was his political position opposing the endorsement of "the Eighteenth Amendment and the Volstead Act." His position was contrary to the position not only of the majority in the General Assembly, but also of the majority of Protestants during his time. Reading D. G. Hart's article, I understand that both the Amendment and the Act are related to "an effort to retain the Protestant character of America in an era that saw the unprecedented surge of non-Protestant immigration in America." Specifically, Machen "opposed the Eighteenth amendment because it consolidated too much power at the federal level."

Machen's political position was informed by his theological conviction. Theologically, Machen was intolerant and a vocal enemy of theological liberalism. Politically, Machen can be considered a "conservative" for "he was a strong advocate of civil liberties and religious pluralism." He "favored the sovereignty of local government," considered "federal legislation" as "unwise" "and was actually causing moral harm." He "also opposed prayer and Bible reading in public schools, child labor laws, and the creation of a federal department of education." For him, "these policies" "infringed upon the religious liberties of non-Protestants and increased the size and power of the federal government." He arrived at this conclusions due to his ideas about the "distinction between public and private institutions," and about the nature of the state as "an involuntary organization" and the church as "a voluntary organization." 

The state's "duty was to protect the freedom of individuals, families, and other private associations." As an involuntary organization and as a representative of "the interests of all citizens," the state was not allowed to prescribe any single opinion for it would be considered "an interference with civil liberty." The case is different when it comes to the church. Since it is a voluntary organization, "the principle of religious liberty was not violated by requiring ministers and church officials to hold definite theological views." By maintaining both of these poles, Machen "resolved the tension of supporting intolerance in the church and tolerance in public matters" for he believed that theological intolerance was consistent with civil liberty. Contrary to Machen's position, the Presbyterian Church of USA was theologically tolerant, but politically intolerant. Machen paid the price for his political position. 

For D. G. Hart, both the "progressive" and the "conservative" intellectuals of today can learn something from Gresham Machen's position. His conlusion is insightful:

"Those who are dedicated to academic freedom and toleration of all views, or who teach at institutions where the public ideal prevails, must welcome all viewpoints, even offensive ones. In contrast, those, who advocate a particular ideology and believe higher education should inculcate that ideology, should endeavor to found private, ideologically driven institutions."

Monday, April 28, 2014

Thomas Piketty's Solution

Published in March 10, 2014, Thomas Piketty's Book, "Capital in the Twenty-First Century" is making a sensational impact among intellectuals that many believe will certainly have strong influence in the direction of global economic debate and political actions. 

The first review I encountered was Andrew Hussey's article published last April 16. I immediately shared the link on my Facebook page, but I did not read it thoroughly until today. Paul C. How of Colorful Rag commented on my page:
"People should be more careful in the usage of a term. Without differentiating voluntary exchanges from the acquisition of goods per se, one can be led to support policies which themselves maintain the status quo."
"I can literally bet that Piketty's big book does not once show a causal relation between higher productivity and lower real wages."

Andrew Hussey's article is long. Through it, I found John Cassidy's article. I will read this one later. 

Andrew Hussey has a high regard for Thomas Piketty. He quoted Jacob Hacker's assessment of Piketty as someone who is

". . . . about to emerge as the most important thinker of his generation – as the Yale academic Jacob Hacker put it, a free thinker and a democrat who is no less than 'an Alexis de Tocqueville for the 21st century.' "

Hussey shares Piketty's belief that ascribing to capitalism the improvement of people's standard of living is a myth. Piketty claims to prove "that under the present circumstances capitalism simply cannot work," it cannot "solve the problem of inequality, " and  "that financial inequality in the 21st century is on the rise, and accelerating at a very dangerous pace" since 2008. His solution "is a progressive tax, a global tax, based on the taxation of private property." He believes, "This is the only civilised solution."

After reading Hussey's article, I checked the book on Amazon. As of today, it has 243 customer reviews. The most helpful favorable review claims to be written by a former libertarian who is now "elightened" by Piketty's book. Another reviewer defends Piketty against those who will simply dismiss the book as "socialist," and argues to the contrary and that Piketty's "conclusions are backed by more hard data than any other economist has so far amassed, and they deserve to be taken very seriously."

The article that triggers me to return to Hussey's review is co-authored by Hunter Lewis and Peter G. Klein of Ludwig von Mises Institute. Lewis compared Piketty's book to John Maynard Keynes' "General Theory of Employment, Interest, and Money" published in 1936. Lewis claims that "Piketty's book serves the same purpose in 2014, and serves the same short-sighted, destructive policies" as Keynes' book in 1936. For Lewis, the reason why the book is favorably received is because not only that Piketty advocates progressive tax on wealth, but he supports the "narrative that government is the cure for inequality when in reality government has been the principal cause of growing inequality." This means that Piketty's book provides the intellectual justification for the government to expand its size and its power, and this is exactly the essence of statism. If this is not socialism, then what is it? 

Tuesday, April 22, 2014

Government Omnipotence Through Bureaucratism

I see government omnipotence through bureaucratism as the suitable title to summarize the ideas in the remaining three sections of the Introduction of Ludwig von Mises' Bureaucracy. In the first two sections, we learned the ugliness of the terms associated with bureaucracy and the indictment of the bureaucratic system. In the succeeding three sections, Ludwig von Mises gave us the overview how the "progressives" diverted the attention of the people from government bureaucracy to corporate bureaucracy, how the advocates of government omnipotence utilized the bureaucratic system to advance the power of the state, and how can we better assess the bureaucratic system by comparing it to profit management. After presenting Mises' ideas, I reflected on the concept of government omnipotence using R. B. Kuiper's essay, The Word of God Versus the Totalitarian State published in the Westminster Theological Journal in 1948. 

Corporate Bureaucracy. Under this section, we will see how did the "progressives" divert the attention of the people to big business by attacking its bureaucratic system. In it we find the nature of the accusation in general, the absence of "creative leadership" as the chief accusation, and the subtle way the government used the income tax to stifle creativity among entrepreneurs.

The Nature of Accusation. "Progressives" describe that big business dominates the corporate world, and paint it in most ugly terms. They portray its bureaucratic character with its "absentee ownership," the powerlessness of the stockholders in the management, the hiring of professional administrators and the absence of accountability, and the distribution of functions among different departments (p.11). They say that if the power of this huge corporations are not restricted, the latter will certainly make "puppets" out of governments. And so they call for the need of government interference in order to arrest the increasing power of big business. They see that there is no other way, and think that allowing the unhampered growth of business bureaucratism will surely harm the larger society. Mises saw this as a subtle diversionary tactic to shift the blame for economic woes from government bureaucratism to corporate bureaucratism. This is the reason why Ludwig von Mises wrote this book in the first place, to prove that the expanding size of a business enterprise does not lead to bureaucratism without the interference from the government. In fact, Mises argues that business bureaucratism is an outcome of government intervention in business activities. 

Creative Leadership. The absence of "creative leadership" is the most favorite criticism against business bureaucratism (p. 12). Mises responds to this charge by identifying that in political affairs such complain is common in societies that prepared the way for the emergence of dictatorial government. When it comes to business, the charge will not stand on the basis of facts derived from the experience of American businesses. Basically, American businesses exist and grow due to the presence of some creative pioneers who are flexible enough to adapt to the changing trend in demand and supply. These leaders utilize the latest technological discovery to produce and distribute "more, better, and cheaper" (ibid.) products. Contrary to accusation, these business leaders actually prevent bureaucratic system to develop. Instead, they motivate other businessmen to emulate their example, for if not, the latter will suffer the consequences of losing their businesses. 

Mises characterizes this type of leadership as possessing "restless dynamism and progressivism" (ibid.), which is an integral part in free market capitalism. The history of American corporations testify to the existence of a considerable number of such creative leaders. Mises has a high regard for such type of leaders, and he describes them as follows: 

"A true genius is very rarely acknowledged as such by his contemporaries. Society cannot contribute anything to the breeding and growing of ingenious men. A creative genius cannot be trained. There are no schools for creativeness. A genius is precisely a man who defies all schools and rules, who deviates from the traditional roads of routine and opens up new paths through land inaccessible before" (p. 13). 

Income Tax. However, government interference is capable to stifle such creativity. And this is best exemplified through "income tax" (ibid.). See Mises' explanation how the "income tax" prevents entrepreneurial creativity, the growth of an enterprise, and the emergence of bureaucracy:

"Let us look at one instance only, the income tax. In the past an ingenious newcomer started a new project. It was a modest start; he was poor, his funds were small and most of them borrowed. When initial success came, he did not increase his consumption, but reinvested the much greater part of the profits. Thus his business grew quickly. He became a leader in his line. His threatening competition forced the old rich firms and the big corporations to adjust their management to the conditions brought about by his intervention. They could not disregard him and indulge in bureaucratic negligence. They were under the necessity of being on their guard day and night against such dangerous innovators. If they could not find a man able to rival the newcomer for the management of their own affairs, they had to merge their own business with his and yield to his leadership" (pp. 13-14). 

"But today the income tax absorbs 80 or more per cent of such a newcomer's initial profits. He cannot accumulate capital; he cannot expand his business; his enterprise will never become big business. He is no match for the old vested interests. The old firms and corporations already own a considerable capitaL Income and corporation taxes prevent them from accumulating more capital, while they prevent the newcomer from accumulating any capital. He is doomed to remain small business forever. The already existing enterprises are sheltered against the dangers from ingenious newcomers. They are not menaced by their competition. They enjoy a virtual privilege as far as they content themselves with keeping their business in the traditional lines and in the traditional size. Their further development, of course, is curtailed. The continuous drain on their profits by taxes makes it impossible for them to expand their business out of their own funds. Thus a tendency toward rigidity originates" (p. 14).

So for Mises, the "income tax" was used by the government to choke the growth of an enterprise. This was economically destructive, which results were not only confined in the US. Similar picture could also be observed in other countries. Mises complains, "In all countries all tax laws are today written as if the main purpose of taxes were to hinder the accumulation of new capital and the improvements which it could achieve" (ibid.). 

Based on the foregoing analysis, we can say that the "progressives' " criticism of the absence of creative leadership among corporations is inaccurate. The real problem is that innovators are prevented from using their gifts for businesses to grow for they are restricted by governments' economic policies. 

Government Omnipotence. The next section shows how the advocates of government omnipotence utilized the bureaucratic system to advance the power of the state. Mises started his argument by narrating first that "The history of government bureaucratism is very old," and "It characterizes the governments of ancient Egypt and imperial China" (p. 15). In fact, the rise of modern government bureaucratism out of the ruins of feudalism was simply an attempt on the part of the state to substitute "the supremacy of a multitude of petty princes and counts" with bureaucratic management (ibid.). In Europe, France was the most successful in achieving this goal, the goal of abolishing "the autonomy of powerful vassals and of oligarchic groups of aristocrats" (ibid.). The process culminated during the French Revolution where "the arbitrariness of the kings" was eliminated, and "made the law supreme in the field of administration and restricted the scope of affairs subject to the discretionary judgment of the officeholders" (pp. 15-16). The victory of the law did not wipe out the bureaucratic system. Instead, it has been transformed and now clothed with "legal and constitutional basis" (p. 16). 

In the place of kings' arbitrariness, a new form of arbitratriness emerged. The administrative system of France in the 19th century was an example how the law was used to subdue "the arbitrariness of the bureaucrats" (ibid.). France served as a model for other nations to follow. Prussia followed after the footstep of France. In the case of Great Britain and the United States, there was much confidence that they were following a different path. They think that their concept of "rule of law" safeguarded them from the arbitratriness of the bureaucrats. However, Mises indicated that both the British and the Americans were mistaken for their experience showed "that no legal precautions are strong enough to resist a trend supported by a powerful ideology" (ibid.). Interventionist ideas and "socialism have undermined the dams erected by twenty generations of Anglo-Saxons against the flood of arbitrary rule" (ibid.). 

From this brief overview, we learned that totalitarianism grows through the expansion of government bureaucracy. But this does not mean that in order to protect freedom, bureaucracy must be totally eliminated. Mises upholds that "some amount of bureaucracy is indispensable" (p. 18). What people reject is not the legitimate, but the excessive power of bureaucracy. And we know that it is excessive when it intrudes "into all spheres of human life and activity" (ibid.). Such intrusion will ultimately results into deeper poverty and social chaos. Notice how Mises describes the relationship between bureaucratism and totalitarianism: 

"Totalitarianism is much more than mere bureaucracy. It is the subordination of every individual's whole life, work, and leisure, to the orders of those in power and office. . . . It forces the individual to renounce any activity of which the government does not approve. It tolerates no expression of dissent. It is the transformation of society into a strictly disciplined labor army- as the advocates of socialism say-or into a penitentiary- as its opponents say. At any rate it is the radical break from the way of life to which the civilized nations clung in the past. It is not merely the return of mankind to the oriental despotism under which, as Hegel observed, one man alone was free and all the rest slaves, . . . . It is different with modern socialism. It is totalitarian in the strict sense of the term. It holds the individual in tight rein from the womb to the tomb. . . . The State is both his guardian and his employer. The State determines his work, his diet, and his pleasures. The State tells him what to think and what to believe in" (p. 17). 

Profit Management. The best way to assess the bureaucratic system is by comparing it to profit management "within the framework of a capitalist society" (p. 18). Both "The essential features of capitalism" and the nature of the bureaucratic system are not widely known. The former has been misrepresented through "spurious legends" (ibid.). Capitalism has been discredited "as an 'economy of scarcity,' " whereas socialism has been praised as the economy of abundance. Mises refused to give a detailed analysis of these "fables" (p. 19). (He did that elsewhere). His primary concern in the book is to show "what the two systems in question are, how they work, and how they serve the needs of the people" (ibid.). 

In ending the Introduction, Mises gave us what he thinks to be the consensual understanding about the distinction between the two systems of management. Profit management is "the private citizens' way" and the bureaucratic management is "the way in which the offices of the government and the municipalities are operated" (ibid.). 

Theological Response. Four years after the publication of Bureaucracy, R. B. Kuiper of Westminster Theological Seminary published an essay in November 1948, The Word of God Versus the Totalitarian State. The essay has five sections: the function of government, the nature of man, the autonomy of spheres, the kingship of Christ, and the sovereignty of God. Since Mises explained in the Introduction that totalitarianism is the destiny of bureaucratic system, I want to share what Kuiper has to say on the subject limiting my summary to the first two sections of his essay. 

Kuiper began his essay by citing two historical facts related to war propaganda and the generally accepted reason for the ascendancy of totalitarianism. It was believed that the purpose of both WW1 and WW2 was to make the world a better place for democracy. But what was actually accomplished through the two world wars were the emergence of totalitarian states such as Italy, Germany, Japan, and Russia.

Furthermore, it was also believed that the neglect of spiritual values and widespread materialism prepared the way for totalitarian governments. People were willing to trade their liberty for "a big paycheck" (p. 199), and they didn't care about the expansion of government's power as long as the economy was secured. It was alleged that such attitude was prevalent during economic depression both under the Roman Empire and in the 1930s. Though there was an element of truth to this belief, R. B. Kuiper identified them not as the roots, but the symptoms of totalitarian ascendancy. He traced the cause somewhere else, which he described as "basic evil" - "irreligion and false theology" (ibid.). And he cited the experience of Israel concerning this matter as recorded in the Old Testament. 

When the Israelites instead of fulfilling their calling to be a great nation before the surrounding nations through God's nearness to them by answering their prayers, through the possession of divine decrees and laws, and through careful obedience to these laws (Deuteronomy 4: 5-8), instead they wanted to follow after the footstep of the nations by asking a king to rule them. God clearly revealed to Samuel that the act of the people was not aimed against Samuel as the nation's judge, but an act of rebellion against Him. The Lord said, "it is not you they have rejected, but they have rejected me as their king" (1 Samuel 8:7). Kuiper deduced a universal application from this section of biblical history: 

"In this sinful world no nation can get along without human government. But that nation which fears God most, walks in His ways most faithfully, and so honors Him most consistently as its king, has the least need of government by men. Contrariwise, in the measure in which a nation denies the sovereignty of God, in that very measure it is certain to ascribe sovereignty to the men that rule it. The people that will not have the God of sovereign love reign over it is bound to accept the rule of despotic men. In a word, the basic cause of state totalitarianism is irreligion" (pp. 199-200).

At this point, Kuiper exposed the negligence of "the church of the social implications of the gospel of Jesus Christ" (p. 200). Modernism gently dealt with totalitarianism; fundamentalism "has been handicapped by its strong aversion toward any sort of social gospel;" both Roman Catholicism and American Protestantism have their own vision to put up a totalitarian church; and neo-orthodoxy failed to comprehensively grasp the nature of totalitarianism. As a result, all failed to arrest the continuous growth of totalitarianism. In terms of comprehensive study of totalitarianism, Kuiper thinks that "Dutch Calvinism has perhaps done best of all" (p. 201). In this essay, Kuiper aims to provide an introduction to understand totalitarianism. 

The Function of the Government. For R. B. Kuiper, the exact limit of government function is not easy to determine. To him, both "general revelation in nature and history" and the Bible are necessary to identify the legitimate role of the government. And basic to biblical revelation is that the state was instituted by God to prevent sin in destroying human society. To achieve this goal, the state's primary task is "the enforcement of justice and to abstain from all activities not bearing directly on the upholding of justice" (p. 203). Faithfulness to this task is the only antidote to totalitarianism.

Reading The Law, Frederic Bastiat exposed how modern states departed from their primary task. The concept of "social justice" of today's "progressives" is egalitarian and philanthropic in nature, and that is why instead of arresting the growth of totalitarianism, the law serves as a tool to expand state totalitarianism. Welfarism is the central program in this new kind of "justice," which Bastiat accurately identified as "legal plunder."

The Nature of Man. Turning to biblical revelation to understand the nature of man, we read that the word of God both humbles and exalts man. The Bible teaches that man is totally depraved, "that every imagination of the thoughts of his heart was only evil continually" (Genesis 6:5), that his heart is "deceitful above all things" (Jeremiah 17:9), and that no one is righteous, no one understands and seeks God (Romans 3:10-11). The goodness that we find in natural man is due to God's common grace. And yet at the same time, the Bible exalts man simply because he is made in the image of God. Considering this twin biblical truths about the nature of man, totalitarianism is against the revealed will of God. 

Without civil government, human society would turn into hell. And at the same time, simply because politicians and bureaucrats are also under the power of sin, the government cannot be trusted with total control over all the activities of its people. It is not destined for man to have this kind of power; such desire is "satanic" in nature (p. 206). 

Moreover, R. B. Kuiper believes that "The institution of the state by God was His method of punishing man's rebellion against Him" (p. 205). And tyrannical government is the most extreme form of this kind of punishment. In ending the second section of his essay, our author presents two additional biblical motifs related to human nature to strengthen his argument against totalitarianism. These are private property and the voluntary consent of the governed. The latter serves as the basis that the state instead of acting as tyrant is actually a servant of the people. 

Conclusion. In the the last three sections of the Introduction of Bureaucracy, you will see the overview of Ludwig von Mises' thesis that government omnipotence advanced by diverting the attention of the people from government bureaucratism to corporate bureaucratism, and that the advocates of the increasing power of the state failed to understand that the market with its system of profit management does not develop bureaucratic system without government intervention. In this article, I also shared R. B. Kuiper's essay about irreligion as the theological cause for the increasing power of the state. We learned further that focusing on justice is the primary task of the state and that the biblical concept of man is contrary to totalitarianism.

In concluding his essay, R. B. Kuiper argues that it is part of Christian duty to resist a totalitarian state. He shows us the way to stop the growing power of the state. It cannot be done through war for it leads to further growth of the state. Roman Catholicism cannot do it for its brand of totalitarianism cannot find biblical warrant. The principles of French Revolution are also not capable to defeat it for the dictatorship of the proletariat is just the opposite face of statist dictatorship. The only remaining solution is a return to the Word of God. Such return would mean that people should stop looking up to the state as the panacea to all our economic ills, that people should neither deride nor fight the state if it is doing its proper task, and that people should not trust the state, but criticize it when it is transgressing beyond the limits of its legitimate task.  


Mises, L. (1944). Bureaucracy. New Haven: Yale University Press.

Kuiper, R. B. (1978). The Word of God Versus the Totalitarian State. The Journal of Christian Reconstruction. Retrieved April 23, 2014, from 

Monday, April 7, 2014

The Ugliness and Indictment of the Bureaucratic System

We observe in the first article about bureaucracy that the conflict between capitalism and socialism can be seen from various angles, but among them, the investigation of the bureaucratic system is the most expedient. In this second article, I will show the ugliness and the indictment of the system taken from two sections in the introductory part of the book. 

The Ugliness of the Terms

There is a general consensus "that the terms bureaucrat, bureaucratic, and bureaucracy" are usually perceived as ugly and bad. Nobody want to be called a "bureaucrat." People in government prefer to be called "civil servant," "a functionary of the State unswervingly attending day and night to the welfare of the nation" (p. 1). Even progressives do not like the terms. 

The critics of bureaucracy identify the "progressives" as responsible for its spread. However, the response of the "progressives" to bureaucracy is puzzling. They do not defend the system. They join the critics in condemning it. They argue that bureaucracy is not an essential part in their utopia. Instead, they say that bureaucracy is a system inherent in capitalism, which is inescapable in the inevitable process of its own disappearance. Once socialism becomes a reality, both capitalism and bureaucracy will be abolished. There is no need for any bureaucrat in socialistic paradise for the proletariat will take care of themselves. Only the "narrow-minded bourgeois can fall prey to the error that bureaucracy gives a foretaste of what socialism has in store for mankind" (p. 2). 

With this confusing atmosphere about the term, it is better to first ask about the nature of bureaucracy. 

The Indictment of the Bureaucratic System

Mises darkly paints, and describes the evils of growing bureaucratization. His description is applicable to all nations who are following after the footstep of the US. 

The supremacy of the voters and the liberty of citizens are protected through election of politicians into public office and through the separation of powers of three branches of a democractic government. However, the democratic system has been gradually eroded and replaced with tyrannical government through the power of unelected bureaucrats. Mises portrays the bureaucratic system as an enemy of liberty, unconstitutional, "undemocratic," and "a replica of the totalitarian methods of Stalin and Hitler" (p. 3). Notice how Mises further depicts the economic destruction wrought by bureaucracy:
"It is imbued with a fanatical hostility to free enterprise and private property. It paralyzes the conduct of business and lowers the productivity of labor. By heedless spending it squanders the nation's wealth. It is inefficient and wasteful. . . . it has no definite plans and aims. It lacks unity and uniformity; the various bureaus and agencies work at cross-purposes. The outcome is a disintegration of the whole social apparatus of production and distribution. Poverty and distress are bound to follow" (ibid.). 
Though Mises highlights the ugliness of the bureaucratic system, he neither blames the bureaucrats nor the bureaucracy itself. Rather, he traces the evolution of the system somewhere else. He found its source among political parties and pressure groups advocating for "government omnipotence" (p. 4). Again, see how Mises pictures the economic policies advocated by these statists:
They "are fervently asking for public control of all economic activities, for thorough government planning, and for the nationalization of business. They aim at full government control of education and at the socialization of the medical profession. There is no sphere of human activity that they would not be prepared to subordinate to regimentation by the authorities. In their eyes, state control is the panacea for all ills" (ibid.). 
The statists believe that nothing can stop the inevitable evolution of the society "toward the earthly paradise of full government control" (ibid.). And as a result of "progressive" policies enumerated above, "new offices and government agencies thrive like mushrooms. The bureaucrats multiply and are anxious to restrict, step by step, the individual citizen's freedom to act" (ibid.).

Criticizing the system itself is misleading for it fails to identify the source. Technical procedures themselves are not the problems, but totalitarian economic policies. Parliamentary procedures for instance "are an adequate method for dealing with the framing of laws needed by a community based on private ownership of the means of production, free enterprise, and consumers' sovereignty" (p. 8), but they are inappropriate under a totalitarian regime. Government control of business is one specific example. In the US, the framers of the Constitution "understood that government control of business is ultimately incompatible with any form of constitutional and democratic government" (ibid.). It is therefore not an accident that socialist countries are governed in a totalitarian way. You cannot reconcile totalitarianism and representative government. Even if Hitler and Stalin would submit to "parliaments," affairs in Germany and Russia would not change. Under totalitarian "control of business, parliaments cannot be anything else than assemblies of yes men" (ibid.). 

It is therefore mistaken to blame the system if the bureaucrats are no longer acting as civil servants "but irresponsible and arbitrary masters and tyrants" (p. 9). The culprit is the new political system, "which restricts the individual's freedom to manage his own affairs and assigns· more and more tasks to the government" (ibid.). And besides, the political system considers the anti-business policy of bureaucracy as commendable, and any businessman who resists it is considered a public enemy. 

And finally, from a formalistic perspective, the constitutionality of bureaucracy is legitimate. However, assessing it on the basis of the spirit of the Constitution, it is equivalent to an abandonment of the cherished values that made the American people great in the past. But this argument is not enough to convince the progressives in their advocacies. They see history differently. They see that the Constitution has been abused by the ruling class to exploit the masses. 

And so for Ludwig von Mises, simply focusing on the evils of bureaucratism is misleading. One must see beyond the symptoms and penetrate into the source, a new political system that advocates government ominipotence, and socialism is the only ideology that provides justification for totalitarianism. See how Ludwig von Mises defines this conflict: 
"The main issue in present-day political struggles is whether society should be organized on the basis of private ownership of the means of production (capitalism, the market system) or on the basis of public control of the means of production (socialism, communism, planned economy). Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individual's life and the unrestricted supremacy of the government in its capacity as central board of production management. There is no compromise possible between these two systems. Contrary to a popular fallacy there is no middle way, no third system possible as a pattern of a permanent social order. The citizens must choose between capitalism and socialism . . . ." (p. 10). 

Source: Mises, L. (1944). Bureaucracy. New Haven: Yale University Press.

Another Evidence of Statist Subtlety?

"The economics of success is clear: higher spending on urbanization, health care, and education, funded by increases in taxes, could simultaneously sustain growth, improve the environment, and reduce inequality. If China’s politics can manage the implementation of this agenda, China and the entire world will be better off." - Joseph E. Stiglitz, "Reforming state-market balance in China"

"Reform" is a popular word subtly used by advocates of statist economic policies. They call such policies as "a better strategy" and "the economics of success." They diagnose that "too much market and too little government" is the source of the problem. The antidote therefore is to expand the size of government bureaucracy funded by greater amount of taxes.

This statement is correct understood in its proper context: "The government is clearly doing some things that it should not, it is also not doing some things that it should." To put it in a different context advocating for greater government intervention is not only a distortion of the real state of the economy, but in the end will result into further economic destruction. Allocating more resources to health care and education, and calling for government to take a "leading role" in these sectors of the economy are typical examples. And yet, they still call it "market economy."

Last December 6, 2013, The Freeman published an article, "Abundance Down There, and Back Up." In it, The Freeman claims that there is an ongoing revolution that is quiet and invisible to many. This revolution is happening in the midst of "The Great Stagnation" as described by intellectuals and economists, and has something to do with "automation of everything" and "nanomanufacturing." As a result of this revolution, industries will certainly benefit, but "the political class" is the primary obstacle for the realization of this vision particularly in sectors of economy such as "healthcare, education, and energy." The favorite strategy of this class is increasing economic regulations. No wonder, products and services in these three sectors of economy "are getting worse, slower, and more expensive." 

The progressives do not trust the market; they actually hate it, but they avoid to clearly express their hostility in public. And so they change their language to make their statist ideas palatable to the people. The most successful among them is given a Nobel laureate in "economics." 

Saturday, April 5, 2014

Growth of Interventionist State through Bureaucratic Management

After finishing my review of "The Anti-Capitalistic Mentality," my next reading target is "Bureaucracy." In this book, Ludwig von Mises investigated his subject where he studied the growth of bureaucratic agencies not only in the US, but also the experiences of France, Germany, and Russia. For Mises, the conflict between socialism and capitalism can be seen from different angles, and the most expedient among them is the investigation of bureaucratic expansion. Remember that when Mises wrote this book, the world was at war; it was in 1944. He described that time that socialism was advancing, and only America was still free. He even claimed that the outcome of the decision of the American people will determine the future of humanity. 

The burning issue during Mises' time was the choice between "freedom, private initiative, and individual responsibility" (p. iii) on the one hand, and a coercive and interventionist state on the other hand. Or to put it another way, the choice is between "authoritarian totalitarianism" or "individualism and democracy" (ibid.). He asked, "Should a citizen be deprive of his most precious privilege to choose means and ends and to shape his own life?" (ibid.).

After reading the Preface of the book, a series of questions emerges in my mind. When Mises said that "America alone is still free to choose" (ibid.), did he mean that the entire Europe that time was already under socialism? How about today? In what way socialism is advancing at present? If it is really true that socialism can advance through bureaucratic agencies, how come many people are not worried in our time in the expansion of these agencies? Is this not an indication that the statement uttered by an eminent British statesman, Sir William Harcourt more than a century ago that 'We are all socialists now" has been fulfilled in our time? How about the situation of the US today? Was Mises' description that the US "compared with the rest of the world, only superficially afflicted" still true even at present? 

I want to keep these questions in mind as I journey through the book. 

Roots and Fruits of Anti-Capitalistic Mentality

Mises, L. (2008). The Anti-Capitalistic Mentality. Auburn, Alabama: The Ludwig von Mises Institute. (122 pages). 

Now is the right time for me to review "The Anti-Capitalistic Mentality." After writing seven articles based on five chapters of the book, I can now judiciously assess the book.

The main objective of Mises in writing the book is to analyze the roots and fruits of ideas that hate the free enterprise. To accomplish this, he divided the book into five chapters: 

Chapter 1 - The Social Characteristics of Capitalism and the Psychological Causes of its Vilification 

Chapter 2 - The Ordinary Man's Social Philosophy

Chapter 3 - Literature Under Capitalism

Chapter 4 - The Noneconomic Objections to Capitalism

Chapter 5 - "Anticommunism' Versus Capitalism

Chapter 1

I further subdivided chapter 1 into two parts: Distinguishing Features of a Capitalist Society and Psychological Roots for the Denigration of Capitalism. In part 1, we read here six basic features of a capitalist society. These are mass production, mass consumption, consumer sovereignty, freedom, economic democracy, and social mobility. Examples of relevant quotations from the book and ideas to prove these important features are the following: 

"Capitalism deproletarianizes the 'common man' and elevates him to the rank of a 'bourgeois' " (p. 1). 
The idea of "consumer sovereignty" is like a "daily plebiscite in which every penny gives a right to vote" (p. 2).

Economic democracy is based on the idea that whoever serves the majority will receive higher salary.

"There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and political parties are eager to destroy this system" (p. 5). 
And then I concluded the first part of chapter 1 with this paragraph:
"Based on the foregoing observation, if ever at present the decision of the consumers no longer affect the wealth of those at the top of the social ladder, it only shows that something strange is happening to the market. Moreover, if a common man finds it difficult to change his social status despite possessing all the necessary qualities to economically succeed, this proves further that something abnormal is introduced into the market. Furthermore, if we find the situation today closer to the society of aristocracy than the free society described by Mises, it is proper to inquire what brought us into this kind of situation? 
Part 2 of chapter 1 is about psychological roots for the denigration of capitalism. Mises identified six of them: resentment of frustrated ambition, resentment of the intellectuals, resentment of the white collar workers, resentment of the "cousins," socialites' isolation, and entertainers' hope for deliverance. Speaking of intellectuals' resentment, this is what Mises wrote:
"To understand the intellectual's abhorrence of capitalism one must realize that in his mind this system is incarnated in a definite number of compeers whose success he resents and whom he makes responsible for the frustration of his own farflung ambitions. His passionate dislike of capitalism is a mere blind for his hatred of some successful 'colleagues ' " (p. 18). 
The resentment of the white collar workers is based on the deficiency of Lenin's idea concerning capitalism. Mises summarized this deficiency in "the philosophy of the filing clerk" (p. 25).

Among the identified causes, it is the resentment of the cousins that is most critical. Notice how this internal strife influenced the public: 
"The family feud between the bosses and the cousins concerns only the members of the clan. But it attains general importance when the cousins, in order to annoy the bosses, join the anticapitalistic camp and provide the funds for all kinds of 'progressive' ventures. The cousins are enthusiastic in supporting strikes, even strikes in the factories from which their own revenues originate. It is a well-known fact that most of the 'progressive' magazines and many 'progressive' newspapers entirely depend on the subsidies lavishly granted by them. These cousins endow progressive universities and colleges and institutes for 'social research' and sponsor all sorts of communist party activities. As 'parlor socialists' and 'penthouse Bolsheviks,' they play an important role in the 'proletarian army' fighting against the 'dismal system of capitalism' " (p. 30). 
Chapter 2

Chapter 2 is about a social philosophy of a common guy. In it, we will also read the distinction between two kinds of progressives. In this social philosophy, Mises touched six essential themes: the unfortunate state of economic ignorance, the continuous evolution of "material productive forces," three progressive classes, misrepresentation of capitalism, the three old powers, and the influence of socialism. 

Mises has his own progressive concept, and this has been concretely demonstrated through the economic contribution of "the entrepreneurs, the capitalists, and the technologists" (p. 43). Unfortunately, the progressive character of capitalism has been denied and widely misrepresented. Unlike the mainstream "progressives," they advocate statist policies, which are harmful to the economy. 

The most interesting section in chapter 2 is the material on "the three old powers: the monarchy, the aristocracy and the churches" (pp. 43-44). Mises gave us an overview of how these three powers combine their forces against classical liberalism and capitalism: 
"The Hohenzollern in Germany inaugurated a policy that an American observer called monarchical socialism. The autocratic Romanoffs of Russia toyed with labor unionism as a weapon to fight the "bourgeois" endeavors to establish representative government.· In every European country the aristocrats were virtually cooperating with the enemies of capitalism. Everywhere eminent theologians tried to discredit the free enterprise system and thus, by implication, to support either socialism or radical interventionism. Some of the outstanding leaders of present-day Protestantism-Barth and Brunner in Switzerland, Niebuhr and Tillich in the United States, and the late Archbishop of Canterbury, William Temple-openly condemn capitalism and even charge the alleged failures of capitalism with the responsibility for all the excesses of Russian Bolshevism" (pp. 44-45).
I like how Mises ended this chapter. It hurts, but I think his words are accurate: 
"People may disagree on the question of whether everybody ought to study economics seriously. But one thing is certain. A man who publicly talks or writes about the opposition between capitalism and socialism without having fully familiarized himself with all that economics has to say about these issues is an irresponsible babbler" (p. 47). 
Chapter 3

Chapter 3 has six sections, but I focused only on two of them: the socialists' novels and plays and the dogmatism of progressivism. Here are sample quotes about these socialists' novels and plays: 
"They interpret these facts from the point of view of the teachings of Marx, Veblen and the Webbs. This interpretation is the gist of their writings, the salient point that characterizes them as pro-socialist propaganda" (p. 69). 
"Everything they convey in their books depends on the validity of the socialist tenets and pseudoeconomic constructions" (ibid.). 
The businessmen are the favorite target of socialist writers. They usually associate them with the " 'financial gangsters' " and " 'robber barons' " taken from history books (p. 71). And when it comes to private life, businessmen are perceieved as barbarians, gamblers, and drunkards (p. 72). They spend their days at the race tracks and their nights in night clubs and with their mistresses (ibid.). This is the popular picture of American businessmen in novels and plays. 

The dogmatism of progressivism has three primary contents: internal strifes among the progressives, the characteristics of the progressives, and their three fundamental errors. 

"Unorthodox dogmatism" is Mises' summary description of the taboos of progressivism. He described it as "self-contradictory and confused mixture of various doctrines incompatible with one another" (ibid.). Concerning sources of dogmas, it is eclectic "at its worst, a garbled collection of surmises borrowed from fallacies and misconceptions long since exploded. It includes scraps from many socialist authors, both 'utopian' and 'scientific Marxian,' from the German Historical School, the Fabians, the American Institutionalists, the French Syndicalists, the Technocrats. It repeats errors of Godwin, Carlyle, Ruskin, Bismarck, Sorel, VebIen and a host of less well known men" (pp. 58-59).

The progressives advocate "credit expansion and increasing the amount of money in circulation, minimum wage rates to be decreed and enforced either by the government or by labor union pressure and violence, control of commodity prices and rents and other interventionist measures" (p. 60). These measures have long been refuted by economists, and "no 'progressive' pseudo-economist ever tried to" answer those arguments (ibid.). Here is Mises' summary analysis: 
"Credit expansion results in the recurrence of economic crisis and periods of depression. Inflation makes the prices of all commodities and services soar. The attempts to enforce wage rates higher than those the unhampered market would have determined produce mass unemployment prolonged year after year. Price ceilings result in a drop in the supply of commodities affected" (ibid.). 
Concerning the "moderate" position of the progressives, it emerges as a result of contention about the distribution of profit between the "management" and the working class. The intellectuals took advantage that "the majority of the working class is moderate enough not to indulge in excessive radicalism" (p. 61). And so the essence of the progressives' moderate stance is to go for "mixed economy" characterized by central planning, welfare state, and socialism (ibid.). Notice how Mises described the subtle role of the literati:
"In this controversy the intellectuals who allegedly do not belong to either of the two opposite camps are called to act as arbiters. They-the professors, the representatives of science, and the writers, the representatives of literature-must shun the extremists of each group, those who recommend capitalism as well as those who endorse communism. They must side with the moderates. They must stand for planning, the welfare state, socialism, and they must support all measures designed to curb the greed of management and to prevent it from abusing its economic power" (pp. 61-62). 
The three fundamental errors are: erroneous diagnosis of the nature of ideological problem in our time, failure to see the similarity of the economic system of both socialism and communism, and thee naive belief about the possibility of a third economic system resulting from a combination of both socialism and capitalism. 

Chapter 4

Chapter 4 is all about non-economic objections to capitalism related to happiness, materialism, injustice, and liberty. Mises did not question the validity of the happiness proposition, but he could not see its connection to the so-called "faults" of capitalism. 

Concerning the materialism objection, and that capitalism causes the "decay of the arts," and produces nothing but "trash" (p. 75), Mises responded that evaluating art is not easy due to its subjective nature, and then he introduced a penetrating analysis of educated men afflicted by hypocrisy due to their lip-service given to art, and yet they despised living and promising artists. Mises argued that only prejudice blinds someone not to see that capitalism does not lack in artistic accomplishments. Nevertheless, Mises agreed that only in one respect that the argument is correct, and that is, comparable to the "immortal" structures like the "pyramids, Greek temples, Gothic cathedrals, churches and palaces of the Renaissance" (p. 78). Valid reasons are enumerated for such superiority: conservatism of the churches that kills innovation, the passing away of dynasties and aristocracies, the big discrepancy between the wealth of the capitalists and the royalties, and in terms of artisitic furnitures, the failure to identify that ancient furnitres are "collectors' items," while the products of big businesses are for mass consumption. 

In relation to injustice objection, it is based on ignorance of scarcity as fundamental law of economics. And since Mises does not accept the existence of either "divine or natural principle of justice" (p. 80), to him it does not make sense to appeal to this idea of justice for the distribution of wealth. The important thing is not the fair allocation of natural resources, but the growth of social institutions that give people the ability to expand production to meet human needs (pp. 80-81).

Mises further refuted the 1948 position of World Council of Churches based on the erroneous idea of justice. He argued that the WCC misrepresented capitalism due to its failure to comprehend the nature of capital. And then he advanced his defense of the West against the accusation that the povery of Asia and Africa is a result of Western misdeeds. His challenge is to examine the economic policies of backward countries, and replaced them. The chapter ended with a long of exposition about the nature of capital, production, and wage rate. 

The liberty objection is difficult to discern due to its sophisticated formulation. The essence of the objection is that under capitalism, self-realization and freedom of an individual is confined only to the wealthy, and in contrast to socialism, which practices "social justice" due to the provision of "equal resources" and "equal freedom." Mises answered this objection with a detailed analysis of the origin of liberty, liberty's temporary victory, continuous challenges, contrast from socialist concept of liberty, an exposition of liberty under capitalism, and the distinction between East and West in relation to liberty.

Chapter 5

In chapter 5, after discussing man's quest for permanence and utopia, Mises focused on George Sorel and the emergence of "anti-communist" liberals, whose influence according to Mises is the price we have to pay in a free society. Mises described the ideas of George Sorel as "the most pernicious ideology of the last sixty years" (p. 109)referring to "syndicalism" and "action directe" (ibid.). Furthermore, Sorel is "anti-intellectual," and "opposed to cool reasoning and sober deliberation" (ibid.). The important thing for Sorel is "the act of violence for the sake of violence" (ibid.). Sorel developed a philosophy of destruction "for the sake of destruction!" (p. 110). His advice: "Do not talk, do not reason, kill!" (ibid.).

The widespread influence of Sorel's ideas reveals the low state the intellectuals had fallen during Mises' time, and yet Mises blamed neither Sorel nor "his disciples, Lenin, Mussolini, and Rosenberg" for the propagation of the philosophy of violence (ibid.). Instead, he faulted the absence of critical examination of its errors and excesses. 

Out of this sad scenario, a new class of "intellectuals" emerged, the appearance of "anti-communist" liberals. Mises marked this class as "a sham anti-communist front," "fake anti-communism," and characterized its aim as "communism without those inherent and necessary features of communism which are still unpalatable to Americans" (pp. 110-112). This group makes "an illusory distinction between communism and socialism" (p. 111). The proponents of "anti-communist" liberalism use aliases such as "central planning" and "welfare state." I think this is the very socio-economic and political climate that we have right now. Mises further depicts the activities of this group as follows: 
"They pretend to reject the revolutionary and dictatorial aspirations of the 'Reds' and at the same time they praise in books and magazines, in schools and universities, Karl Marx, the champion of the communist revolution and the dictatorship of the proletariat, as one of the greatest economists, philosophers and sociologists and as the eminent benefactor and liberator of mankind. They want to make us believe that untotalitarian totalitarianism, a kind of a triangular square, is the patent medicine for all ills" (p. 112).
Personal Response

After digesting the book, you can assess whether Mises really achieved his objective, whether he is really successful in exposing the roots and the destructive results of anti-capitalistic mentality. Personally, though the book is dated, still it helps me understand the basic operation of the free market and the reasons for hostility against it, and it also helps me analyze the erroneous foundation of mainstream ideas. 

Concerning intellectual contribution, Mises describes things, which I think are true to biblical presuppositions as far as natural revelation and common grace are concerned. I just don't have time now to give concrete examples for that would require a separate time for study. However, his concepts of justice, liberty, denial of stability and future utopia, and reason are contrary to biblical revelation. He thinks that "divine justice" does not exist. He also did not go beyond the Greeks and the Romans in his concept of liberty. For Mises, liberty is primarily based on the free market, which of course rooted in the individual. Moreover, Mises also did not accept any idea of permanence or concept of future utopia. As far as the content of the book is concerned, his understanding of human history is a continuous process. I think, his idea of reason as autonomous played a big role for this contradiction. 

I am not sure whether Mises is a deist or an atheist. If he is an atheist, his denial of a "divine" idea of justice is beyond his basic presupposition. It is not within his jurisdiction to say anything about it. The same thing is true with his concept of liberty. Furthermore, both Jewish tradition and Christianity have much to say about liberty, and Mises failed to mention about them except of course the section on "three old powers" where he mentioned that churches joined forces with the forerunners of socialism (pp. 43-45). However, Christianity is far broader than the official churches. Moreover, during the time of Reformation, Christianity played a significant role in recovering the right of private judgment, which is the essence of personal liberty. I suspect that the silence in this matter is either due to Mises' atheistic assumptions or perhaps he subsumed both Jewish and Christian concept of liberty under his consideration of Greeks and Romans along with the Renaissance and Enlightenment. 

Focusing on liberty, a Dutch theologian, Herman Bavinck in his book "Philosophy of Revelation," distinguished between two kinds of liberty, Christian and revolutionary; they are not one and the same. These two kinds of liberty have separate roots. Christian liberty was recovered by new Protestantism led by Luther, whereas revolutionary liberty can be traced back to old Protestantism inspired by Erasmus, which was part of the 16th century Renaissance, and had finally come into maturity in the 18th century during the so-called Age of Reason or the Enlightenment. And then Deism, which originated from England finally declared the complete emancipation of "the world from God, reason from revelation, and will from grace” (p. 7). I think Mises' concept of liberty though not revolutionary in the sense that he advocates violence, has its root in this movement for his idea of liberty exists apart from the existence of God and the reality of revelation.

Related Article:

Thomas Piketty and Mises' "The Anti-Capitalistic Mentality"

Friday, April 4, 2014

George Sorel and the "Anti-Communist" Liberals

In reading the final chapter of the book, "The Anti-Capitalistic Mentality," again I stumble with another strange term similar to what I found in chapter 3. In that chapter, Mises mentioned about "progressive dogmatist" (p. 61), which is difficult to reconcile for "dogmatism" would mean the stop of the continuity of progress, and on the other hand, a progressive would mean inimical to dogmatism. That is, if you take these terms at face value. However, after reading Mises, we know that those terms mean different at present from the context that they were used during Mises' time. 

The strange term that I encounter this time is " 'anti-communist' liberals." You notice that the term "anti-communist" is enclosed within open and close quotation marks, which means that it is not really anti-communist, but actually, a subtle term to hide communism in order to continually propagate it. And adding to the confusion is the way Mises connected "anti-communism" with liberalism. Again, at face value, true anti-communism and liberalism go hand in hand for both are hostile to tyranny, and it appears that both also advocate liberty. But this is not the case in the way Mises exposed the term here in chapter 5. 

George Sorel is also unknown to me. This is the first time I heard about his name. To close a book mentioning his name in four out of thirteen paragraphs shows that understanding the influence of this man in the flow of thought during Mises' time is really important. It serves as a connecting link after the time of Mises, which includes our time. 

Man's Quest for Permanence and Utopia

And so Mises began the concluding chapter of the book by identifying man's quest for permanence and utopian dream. For Mises, this quest is contrary to reality for life is characterized by continuous change and such immovable being does not exist. Moreover, Mises also opposes any utopian idea for that would mean "an end to history" and reaching "a final and permanent calm" (p. 106). 

Mises thinks that he understands human nature in his quest for permanence. Many do not prefer change for it threatens their sense of security and it calls for adjustment and flexibility. In terms of the market and intellectual development, change "hurts vested interests and threatens traditional ways of production and consumption" and "it annoys all those who are intellectually inert and shrink from revising their modes of thinking" (pp. 106 -107).

Mises captures this idea of man's quest for stability and permanence under the term "conservatism" (p. 107). To him, this "is contrary to the very nature of human acting" (ibid.), and yet "it has always been the cherished program of the many" (ibid.). And so he labels the conservative as reactionary, and applies the latter term beyond "the aristocrats and priests," and includes "the guilds of artisans blocking entrance into their field to newcomers," "the farmers asking for tariff protection, subsidies and 'parity prices,' " and "the wage earners hostile to technological improvements and fostering featherbedding and similar practices" (ibid.).

In the midst of continuous change, we find entrepreneurs in its center stage. No wonder, this true progressive class receives attacks from "the literati and the Bohemian artists" and the latter dismissed the former as a class of people who are not interested in intellectual pursuit, but profit. Mises refuted this baseless assertion and argued that the intellectual capabilities of the entrepreneurs are more superior "than the average writer and painter" and "many self-styled intellectuals" (ibid.). This is because they lack knowledge and ability "to develop and to operate successfully a business enterprise" (ibid.). 

The appearance of the above type of critics is a common and unfortunate development under a capitalistic society. Mises describes them as "nuisance" (ibid.), and wishes something be done to wipe out their superficial criticism in order that their ideas could not harm anyone. However, Mises does not want to resort to such action for he doubts that it could really root out these pseudo intellectuals. Instead, it would certainly restrict the liberty of those who are genuinely creative and innovative, and that would harm the larger society. And so Mises accepted that the existence of this breed of intellectuals is part of the price that humanity "must pay lest the creative pioneers be prevented from accomplishing their work" (p. 108). 

The Influence of George Sorel

All the foregoing observation led to the appearance of George Sorel and the "anti-communist" liberals, which according to Mises is the price we must pay in a free society. Mises described the ideas of George Sorel as "the most pernicious ideology of the last sixty years" (p. 109). By this, he was referring to Sorel's "syndicalism" and "action directe" (ibid.). Notice how Mises explained the influence of George Sorel:
"Generated by a frustrated French intellectual, it soon captivated the literati of all European countries. It was a major factor in the radicalization of all subversive movements. It influenced French royalism, militarism and antiSemitism. It played an important role in the evolution of Russian Bolshevism, Italian Fascism and the German youth movement which finally resulted in the development of Nazism. It transformed political parties intent upon winning through electoral campaigns into factions which relied upon the organization of armed bands. It brought into discredit representative government and 'bourgeois security,' and preached the gospel both of civil and of foreign war. Its main slogan was: violence and again violence. The present state of European affairs is to a great extent an outcome of the prevalence of Sorel's teachings" (ibid.). 
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This is a sad picture and such a costly price to pay for the maintenance of a free society. This reveals the low state the intellectuals had fallen during Mises' time, and I am afraid still lingers up to our time. 

Mises described Sorel as "anti-intellectual," and "opposed to cool reasoning and sober deliberation" (ibid.). The important thing for Sorel is "the act of violence for the sake of violence" (ibid.). Sorel developed a philosophy of destruction "for the sake of destruction!" (p. 110). His advice: "Do not talk, do not reason, kill!" (ibid.).

And yet Mises blamed neither Sorel nor "his disciples, Lenin, Mussolini, and Rosenberg" for the propagation of the philosophy of violence (ibid.). The influence of this disastrous ideology became widespread due to the absence of critical examination of its faults and excesses. Objections came late and still lacked courage and precision. Out of this scenario, a new "intellectual" movement emerged, the appearance of "anti-communist" liberalism. 

The Emergence of "Anti-Communist" Liberalism

Mises' school of thought rightly deserves such title. However this title is not reserved for him, but he used it to describe a group of "intellectuals" that came out of the reaction due to the excesses of Sorelism. By exposing the identity of this group, I cannot avoid asking: Is this not the very air that we breath today? If it is, how should we call the attitude of dismissing Mises as irrelevant?

Mises marked this group as "a sham anti-communist front," "fake anti-communism," and characterized its aim as "communism without those inherent and necessary features of communism which are still unpalatable to Americans" (pp. 110-112). This group makes "an illusory distinction between communism and socialism" (p. 111). The proponents of "anti-communist" liberalism use aliases such as "central planning" and "welfare state." "In short: they pretend to fight communism in trying to convert people to the ideas of the Communist Manifesto" (ibid.). 

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Mises further depicts the activities of this group as follows: 
"They pretend to reject the revolutionary and dictatorial aspirations of the 'Reds' and at the same time they praise in books and magazines, in schools and universities, Karl Marx, the champion of the communist revolution and the dictatorship of the proletariat, as one of the greatest economists, philosophers and sociologists and as the eminent benefactor and liberator of mankind. They want to make us believe that untotalitarian totalitarianism, a kind of a triangular square, is the patent medicine for all ills" (p. 112).
Another pair of unusual terms: "untotalitarian totalitarian" and "triangular square." This group of intellectuals is really very "creative" and "innovative." They invent concepts, which are non-existent. Mises claimed that if not for the "creativity" of this "anti-communist" liberals, communism and socialism would have collapsed in the West due to the failure of Russian and all socialist experiments. And besides, all "anti movements" offer nothing workable, but a negative program. There's no chance that an ideology focusing on criticism and attacks will succeed, except in introducing disorder and chaos. A positive program is vital, and people must fight for something constructive, not just simply renounce evil. The free market economy is the remaining and only option that works in the real world. 

Source: Mises, L. (2008). The Anti-Capitalistic Mentality. Auburn, Alabama: The Ludwig von Mises Institute.

Thursday, April 3, 2014

Fighting for Liberty as an Objection to Capitalism

At first, I thought sections 4 and 5 of "Anti-Capitalistic Mentality" are not related to "Non-Economic Objections to Capitalism." But after spending some time summarizing the ideas in these sections and reflecting on them, I realize that it is also part of the objection to capitalism, though in a more sophisticated formulation. This time, it's in the name of fighting for liberty. 

It is alleged that under capitalism, the self-realization and freedom of an individual is a privilege accessible only to those who have the economic resources. Unlike under socialism, everyone will have equal resources, and therefore everyone will also enjoy equal liberty. 

In the last two sections of chapter 4, we will see how Mises answered this "liberty objection." Let us begin this summary about liberty with an overview of the two sections and the origin of liberty. And then we will consider next liberty's temporary victory, continuous challenges, contrast from a different concept of liberty, the liberty under capitalism, and the distinction between East and West concerning liberty. 

Overview and the Origin of Liberty

Ludwig von Mises' opened section 4 with this statement: "The history of Western civilization is the record of a ceaseless struggle for liberty" (p. 90). And then he defines what he meant by this statement. He first acknowledged the need for civil government in order to protect "social cooperation under the division of labor" from "unruly people" whose actions are "incompatible with community life" (ibid.). The role of the government is necessary to safeguard man's source of success and efforts to develop his material well-being. 

However, a new problem emerges from this kind of social structure. Who will restrain those people in civil authority for them not to abuse their power? It is exactly in this context that Mises' idea of liberty must be understood, "freedom from arbitrary action on the part of the police power" (ibid.).

And then Mises made a distinction next between the East and the West in relation to liberty (Mises returned to this subject in detail in the closing part of the chapter). He claims that "the idea of liberty is and has always been peculiar to the West" (ibid.), which cannot be said in the case of the East. This idea of liberty originated from ancient Greeks and Romans, and was transmitted to Europe and America, and became the foundation of laissez-faire philosophy, which is the source for "the unprecedented achievements of the age of capitalism" (p. 91).

Liberty's Temporary Victory

After indicating the distinction between East and West in relation to liberty, Mises returned to the subject about the need of protection of liberty from arbitrary action on the part of the police power. He identified that "the purpose of all modern political and judicial institutions is to safeguard the individuals' freedom against encroachments on the part of the government" (ibid.), and with this in mind, he enumerated examples of these institutions, which include "representative government and the rule of law, the independence of courts and tribunals from interference on the part of administrative agencies, habeas corpus, judicial examination and redress of acts of the administration, freedom of speech and the press, separation of state and church, . . ." (ibid.). And then he introduced that such protection actually prospered under the era of capitalism:
"The age of capitalism has abolished all vestiges of slavery and serfdom. It has put an end to cruel punishments and has reduced the penalty for crimes committed to the minimum indispensable for discouraging offenders. It has done away with torture and other objectionable methods of dealing with suspects and law breakers. It has repealed all privileges and promulgated equality of all men under the law. It has transformed the subjects of tyranny into free citizens" (pp. 91-92). 
Liberty's Continuous Challenges

As a result of the triumph of liberty, material advancement and population growth follow. However, the seeds of tyranny are not completely weeded out. Despite of the victory of the Enlightenment in defeating the advocates of tyranny, the latter keep on re-appearing in subtle forms. With the disappearance of classical literature (Of course, judged by modern standards, the kind of liberty that the Greeks celebrated was oligarchic, and reserved only for the few), the liberal spirit that gained foothold throughout Europe and served as the foundation of American society has been challenged anew by tyrannical ideas in clever forms (pp. 92-94). 

The fight against liberty was "camouflaged as superliberalism, as the fulfillment and consummation of the very ideas of freedom and liberty. It came disguised as socialism, communism, planning" (p. 94). The aim was the abolition of the individuals' freedom and the establishment of government omnipotence" (ibid.). It is the denial of the very purpose for the existence of the aformentioned political and judicial institutions. In essence, it is a restoration of arbitrary action on the part of the civil government.What makes such return subtle was that "socialist intellectuals were convinced that in fighting for socialism they were fighting for freedom. They called themselves left-wingers and democrats, and nowadays they are even claiming for themselves the epithet 'liberal' " (ibid.).

A Different Kind of Liberty

In the second part of chapter one of "Anti-Capitalistic Mentality" we already discussed the psychological roots for the denigration of capitalism. At this point, another kind of argument has been advanced. It is argued that under capitalism, liberty and "self-realization are only possible for the few" (p. 95). Mises quoted H. Laski, saying " 'Liberty in a laissez-faire society is attainable only by those who have the wealth or opportunity to purchase it' "(ibid.). And that is why state intervention is necessary for the victory of " 'social justice' " (ibid.). Many people believe that it is really possible for liberty to exist under the socialist agenda. Credit is to be given to the apologists of socialism who "are forced to distort facts and to misrepresent the manifest meaning of words when they want to make people believe in the compatibility of socialism and freedom" (p. 96). 

A certain Professor Laski believed in the existence of liberty under socialist regime. Mises described him as "an eminent member and chairman of the British Labour Party, a self-styled noncommunist or even anticommunist" (ibid.). Laski reported that "full sense of liberty" was enjoyed under Soviet Russia (ibid.). 

Mises refuted Laski's idea of liberty. The kind of liberty that was present in Russia was the freedom to follow the orders of those in authority. Any slight indication of dissent from the official idea will certainly be punished with immediate liquidation. Mises described the nature of this "socialist liberty:"
"All those politicians, officeholders, authors, musicians and scientists who were 'purged' were-to be sure not anticommunists. They were, on the contrary, fanatical communists, party members in good standing, whom the supreme authorities, in due recognition of their loyalty to the Soviet creed, had promoted to high positions. The only offense they had committed was that they were not quick enough in adjusting their ideas, policies, books or compositions to the latest changes in the ideas and tastes of Stalin" (ibid). 

Mises also differentiated the type of liberty in Russia from that in Italy. He further identifed Laski's inconsistent concept of liberty. However, due to the difficulty in understanding what Mises meant, I decided to skip that part and proceed to the present theme, which is about two illustrations of the difference between liberty and tyranny. 

The two illustrations are related to Karl Marx's enjoyment of liberty under Victorian England and the British Labor Party's enjoyment of liberty under post-Victorian England. Karl Marx after being expelled from Prussia and Germany due to his revolutionary activity in 1848 and 1849 was received by Paris and later transfered to London. After receiving amnesty, he did not want to return to Germany, but chose instead to settle in London. Nobody harrased him "when he founded, in 1864, the International Working Men's Association, a body whose avowed sole purpose was to prepare the great world revolution" (p. 98). He enjoyed freedom "to write and to publish books and articles" which primary goal was " 'to alter in a radical way the property rights of the rich.' And he died quietly in his London home, 41 Maitland Park Road, on March 14, 1883" (pp. 97- 98).

The same is true with British Labour party. The effort of the party " 'to alter in a radical way the property rights of the rich' was, as Professor Laski knew very well, not hindered by any action incompatible with the principle of liberty" (p. 98). 

Compare this two examples with the kind of liberty under socialist Russia, and see which economic system really practices the principles of liberty. For Mises, the difference is crystal clear: 
"Marx, the dissenter, could live, write and advocate revolution, at ease, in Victorian England just as the Labour Party could engage in all political activities, at ease, in post-Victorian England. In Soviet Russia not the slightest opposition is tolerated. This is the difference between liberty and slavery" (p. 99). 
Liberty Under Capitalism

The liberty under capitalism is radically different from the one reported by Laski. At the outset, Mises emphasized that freedom from arbitrary action on the part of civil government is not enough to guarantee individual freedom. He is careful to indicate that no proponent of liberty argues that refraining the police power of the state is sufficient to guarantee freedom. For Mises, it "is the operation of the market economy" that gives freedom to the individual and not "the constitutions and bills of rights" (p. 99); "they merely protect the freedom that the competitive economic system grants to the individuals against encroachments on the part of the police power" (pp. 99-100). Mises expounded the nature of this liberty:
"In the market economy people have the opportunity to strive after the station they want to attain in the structure of the social division of labor. They are free to choose the vocation in which they plan to serve their fellow men" (p. 100).

"Neither does the wage earner depend on the employer's arbitrariness. An entrepreneuer who fails to hire those workers who are best fitted for the job concerned and to pay them enough to prevent them from taking another job is penalized by a reduction of net revenue. The employer does not grant to his employees a favor. He hires them as an indispensable means for the success of his business in the same way in which he buys raw materials and factory equipment" (ibid.).

On the other hand, the worker is also "free to find the employment which suits him best" (ibid.).

Mises continues: 
"The process of social selection that determines each individual's position and income is continuously going on in the market economy. Great fortunes are shrinking and finally melting away completely while other people, born in poverty, ascend to eminent positions and considerable incomes" (p. 101).

"Within the framework of social cooperation under the division of labor everybody depends on the recognition of his services on the part of the buying public of which he himself is a member. Everybody in buying or abstaining from buying is a member of the supreme court which assigns to all people-and thereby also to himself-a definite place in society. Everybody is instrumental in the process that assigns to some people a higher, and to others a smaller, income. Everybody is free to make a contribution which his fellow men are prepared to reward by the allocation of a higher income. Freedom under capitalism means: not to depend more on other people's discretion than these others depend on one's own." (ibid.).
Armed with the above ideas about liberty under capitalism, for Mises, "Socialism is unrealizable as an economic system because a socialist society would not have any possibility of resorting to economic calculation. This is why it cannot be considered as a system of society's economic organization. It is a means to disintegrate social cooperation and to bring about poverty and chaos" (p. 102). 

Distinction between East and West Concerning Liberty

As already mentioned earlier, "the idea of liberty is and has always been peculiar to the West" (p. 90), which cannot be said in the case of the East. In the concluding part of chapter 4, Mises returned to this distinction between the East and the West in relation to liberty. 

Mises appreciated the accomplishments of representative nations of the East "in the industrial arts, in architecture, in literature and philosophy and in the development of educational institutions. They founded and organized powerful empires" (p. 102). But this accomplishments did not last; they deteriorated. Mises narrated this deterioration: 
"But then their effort was arrested, their cultures became numb and torpid, and they lost the ability to cope successfully with economic problems. Their intellectual and artistic genius withered away. Their artists and authors bluntly copied traditional patterns. Their theologians, philosophers and lawyers indulged in unvarying exegesis of old works. The monuments erected by their ancestors crumbled. Their empires disintegrated. Their citizens lost vigor and energy and became apathetic in the face of progressing decay and impoverishment" (pp. 102-103). 
Compared to the West, in terms of intellectual accomplishments for many centuries, the contribution of the East is largely missing: 
"The ancient works of oriental philosophy and poetry can compare with the most valuable works of the West. But for many centuries the East has not generated any book of importance. The intellectual and literary history of modern ages hardly records any name of an oriental author. The East has no longer contributed anything to the intellectual effort of mankind. The problems and controversies that agitated the West remained unknown to the East. In Europe there was commotion; in the East there was stagnation, indolence and indifference" (p. 103). 
Mises identified the reason for such cultural deterioration and absence of intellectual contribution. "The East lacked the primordial thing, the idea of freedom from state" (ibid.). Mises continues: 
"The East never raised the banner of freedom, it never tried to stress the rights of the individual against the power of the rulers. It never called into question the arbitrariness of the despots. And, consequently, it never established the legal framework that would protect the private citizens' wealth against confiscation on the part of the tyrants" (ibid.).
And instead of raising the banner of liberty from the state, support for state intervention is the dominant feature of the East. The outcome is obvious: a cycle of poverty. Mises elaborates this pervasive influence of statist ideas in the East: 

"On the contrary, deluded by the idea that the wealth of the rich is the cause of the poverty of the poor, all people approved of the practice of the governors of expropriating successful businessmen. Thus big-scale capital accumulation was prevented, and the nations had to miss all those improvements that require considerable investment of capital. No 'bourgeoisie' could develop, and consequently there was no public to encourage and to patronize authors, artists and inventors. To the sons of the people all roads toward personal distinction were closed but one" (pp. 103-104). 
Mises finally concluded the distinction between the East and the West:
"They could try to make their way in serving the princes. Western society was a community of individuals who could compete for the highest prizes. Eastern society was an agglomeration of subjects entirely dependent on the good graces of the sovereigns. The alert youth of the West looks upon the world as a field of action in which he can win fame, eminence, honors and wealth; nothing appears too difficult for his ambition. The meek progeny of Eastern parents know of nothing else than to follow the routine of their environment. The noble self-reliance of Western man found triumphant expression in such dithyrambs as Sophocles' choric Antigone-hymn upon man and his enterprising effort and Beethoven's Ninth Symphony. Nothing of the kind has been ever heard in the Orient" (p.104). 

Source: Mises, L. (2008). The Anti-Capitalistic Mentality. Auburn, Alabama: The Ludwig von Mises Institute.