Saturday, April 5, 2014

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"