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.


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

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.). 

Photo Credit: http://patriotaction.net/photo/anticommunisim-antisocialism

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.

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.

Happiness, Materialism, and Injustice: The Three Non-Economic Objections to Capitalism

Chapter 4 of "Anti-Capitalistic Mentality" can be divided under two categories. Though Mises gave the chapter the title "The Non-Economic Objections to Capitalism," I see that only the first three sections speak about the subject. The subject of the remaining two sections is liberty, and so I think, it is suitable to treat them in a separate article. 

In this article, I intend to describe as concise as possible the three objections popularly used to discredit capitalism as an economic system. The three objections touch important matters in life such as happiness, materialism, and injustice. 

Happiness and Capitalism

Capitalism, with its promise of material well-being cannot make people happy. Mises' first objection deals with this subject of happiness, and he puts it in a way similar to this: Possession of the latest gadgets does not make people happy, and besides, there are lots of people who do not have those gadgets.

Mises did not question the validity of the proposition. He actually agrees with it. However, he could not see the connection of the proposition to the so-called "faults" of capitalism. 

Mises admits that market products do not make people fully happy, but they make people happier compared to their situation prior to the purchase of the products. He also adds that other forms of happiness exist and here he identifies "Buddhist mendicants" (p. 74) as examples, but to make them as models for the majority of people would be ridiculous for such life was unbearable to many.

Mises mentioned that "drop in infant mortality" is "one of the most remarkable achievements of capitalism" (ibid.). And perhaps none would object that infant mortality is a cause of human unhappiness. And so we can say that the achievement of capitalism in dropping infant mortality removes one of the cause of people's unhappiness. Again, though the result does not give people complete happiness, but compared to the prior state of society where infant mortality is high, people today are happier. 

Before closing the section, Mises brought up a related objection that not all people are benefited by "technological and therapeutical innovations" (ibid.) as if it is the mistake of capitalism that this thing is not happening. Mises considered this objection absurd for changes in society do not happen instantly. They are pioneered by innovators and only later on that the larger society gradually follows. 

Materialism and Capitalism

Capitalism promotes "mean materialism" (p. 75). Even though the complainers accept that capitalism has improved the material well-being of mankind, they grumble that the minds of men were diverted from superior pursuits in life to inferior ones. They say that materialism tends to give attention only on the needs of the body, and neglects the needs of the soul and of the mind (Ibid.). Capitalism causes the "decay of the arts," and produces nothing but "trash" (ibid.). 

Mises' response to this is quite long. He first accepted 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. Among these men, Mises singled out John Ruskin and identified the latter together with Carlyle, the Webbs and Bernard Shaw as "gravediggers of British freedom, civilization and prosperity" (p. 76). The reason why Mises focused on Ruskin is due to the influence of the latter's idea in propagating contempt for capitalism (an economic system that Mises said Ruskin did not understand) by describing it as "a bad economic system," and as a system that "has substituted ugliness for beauty, pettiness for grandeur, trash for art" (ibid.).

And then Mises refuted the argument that capitalism gives mankind nothing but trash. It is only prejudice that blinds someone not to see that capitalism does not lack in terms of artistic accomplishments. Mises mentioned names of great musicians, novelists, poets, painters, and sculptors who made excellent achievements under capitalism. 

Mises agrees that only in one respect that the argument is correct, and that is, if we compare the architectural accomplishments under capitalism with "immortal" structures like the "pyramids, Greek temples, Gothic cathedrals, churches and palaces of the Renaissance" (p. 78). And of course there are valid reasons for such superiority. One of them is the conservatism of the churches that kills innovation. And still another, the passing away of dynasties and aristocracies. With their disappearance, the drive to build new palaces also disappeared. And also in terms of wealth, the capitalists' wealth cannot be matched to the wealth of royalties. These made the capitalists incapable to afford those "luxurious construction" (p. 79).

And still another response related to this "trash argument" is the failure to distinguish between ancient furniture and cheap goods produced by big businesses. Ancient furnitures that are preserved in museums are "collectors' items," whereas the goal of big businesses "was to produce as cheaply as possible without any regard to aesthetic values" (ibid.). Mises concluded that as "capitalism had raised the masses' standard of living, they turned step by step to the fabrication of things which do not lack refinement and beauty" (ibid.).

Injustice and Capitalism

A succinct way to put this objection: Capitalism promotes social injustice, and therefore must be discarded and replaced. 

The detractors' idea of justice is based on the concept that nature provides abundant resources sufficient for all. The only obstacle is the unjust capitalist system that promotes greed and inequality. The role therefore of both the church and State is vital to arrest these evils and to equally distribute resources for all. 

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The primary trouble with the above idea of justice is that it ignores scarcity, which is a fundamental economic reality. And not only that, apart from man's use of reason, there is no way for him to protect himself from the threat to human life displays by the operation inherent in nature. The truth is, the expansion of wealth is not natural. It is an outcome of the division of labor, which is a product of human reason.

Mises did not believe in the existence of either "divine or natural principle of justice" (p. 80), and so to him it does not make sense to appeal to this idea of justice for the distribution of wealth. For Mises, 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).

And then Mises proceeds to refute the position of World Council of Churches particularly in reference to its 1948 declaration based on the mentioned idea of justice. Mises argued that the WCC misrepresented capitalism due to its failure to understand the nature of capital. Mises also argued that blaming the West for the povery of Asia and Africa is based on economic ignorance. It is not the fault of the West if the backward countries are unwilling to adopt the economic system that explains the wealth of the former. In fact, if one will closely examine the economic policies of these countries, you will see that these policies discourage foreign investment, the employment of more advanced technologies for production, and the growth of domestic capital. What underdeveloped countries need, argues Mises is "private enterprise and the accumulation of new capital, capitalists and entrepreneurs." The solution therefore is not the mentioned idea of justice, but the substitution of sound economic policies for unsound ones. It is not the "vague concept of justice that raised the standard of living of the common man." Instead, it is "the activities of men dubbed as 'rugged individualists' and 'exploiters.' "

At this point, to avoid misinterpretation, I will rely heavily on the actual quotations taken from the book. These quotations deal with the nature of capital, production, and wage rate. 

1. Concerning the Nature of Capital. In dealing with this topic, Mises explained the basic ideas surrounding the subject of capital and the relationship between capital and population growth. 

Here is Mises' exposition focusing on the generation, maintenance, and the benefits derived from the use of capital in production processes:

"The only source of the generation of additional capital goods is saving. If all the goods produced are consumed, no new capital comes into being. But if consumption lags behind production and the surplus of goods newly produced over goods consumed is utilized in further production processes, these processes are henceforth carried out by the aid of more capital goods. All the capital goods are intermediary goods, stages on the road that leads from the first employment of the original factors of production, i.e., natural resources and human labor, to the final turning out of goods ready for consumption. They all are perishable. They are, sooner or later, worn out in the processes of production. If all the products are consumed without replacement of the capital goods which have been used up in their production, capital is consumed. If this happens, further production will be aided only by a smaller amount of capital goods and will therefore render a smaller output per unit of the natural resources and labor employed. To prevent this sort of dissaving and disinvestment, one must dedicate a part of the productive effort to capital maintenance, to the replacement of the capital goods absorbed in the production of usable goods" (p. 84).

"Capital is not a free gift of God or of nature. It is the outcome of a provident restriction of consumption on the part of man. It is created and increased by saving and maintained by the abstention from dissaving" (ibid.). 

Neither have capital or capital goods in themselves the power to raise the productivity of natural resources and of human labor. Only if the fruits of saving are wisely employed or invested, do they increase the output per unit of the input of natural resources and of labor. If this is not the case, they are dissipated or wasted" (pp. 84-85).

"The accumulation of new capital, the maintenance of previously accumulated capital and the utilization of capital for raising the productivity of human effort are the fruits of purposive human action. They are the outcome of the conduct of thrifty people who save and abstain from dissaving. . . ." (p. 85). 

Turning to the relationship between capital growth and population growth, Mises explained: 

"Neither capital (or capital goods) nor the conduct of the capitalists and entrepreneurs in dealing with capital could improve the standard of living for the rest of the people, if these non-capitalists and non-entrepreneurs did not react in a certain way. If the wage earners were to behave in the way which the spurious "iron law of wages" describes and would know of no use for their earnings other than to feed and to procreate more offspring, the increase in capital accumulated would keep pace with the increase in population figures. All the benefits derived from the accumulation of additional capital would be absorbed by multiplying the number of people" (p. 85). 

"Consequently, in the countries of capitalistic civilization, the increase of capital accumulated outruns the increase in population figures. To the extent that this happens, the marginal productivity of labor is increased as against the marginal productivity of the material factors of production. There emerges a tendency toward higher wage rates. The proportion of the total output of production that goes to the wage earners is enhanced as against that which goes as interest to the capitalists and as rent to the land owners" (p. 86).

2. Concerning Production and Wage Rate. Here, two further subjects are elaborated: a necessary distinction between general productivity and marginal productivity, and the role of capital in the growth of productivity. 

Mises distinguished between general productivity of labor and marginal productivity of labor:

"To speak of the productivity of labor makes sense only if one refers to the marginal productivity of labor, i.e., to the deduction in net output to be caused by the elimination of one worker. Then it refers to a definite economic quantity, to a determinate amount of goods or its equivalent in money. The concept of a general productivity of labor as resorted to in popular talk about an allegedly natural right of the workers to claim the total increase in productivity is empty and indefinable. It is based on the illusion that it is possible to determine the shares that each of the various complementary factors of production has physically contributed to the turning out of the product" (ibid.).

Mises explained the question between labor and capital as the primary cause for the increase in productivity and wage rate: 

"What is required to raise, in the absence of an increase in the number of workers employed, the total amount of . . . industrial output is the investment of additional capital that can only be accumulated by new saving. It is those saving and investing to whom credit is to be given for the multiplication of the productivity of the total labor force" (p. 87).

"What raises wage rates and allots to the wage earners an ever increasing portion out of the output which has been enhanced by additional capital accumulation is the fact that the rate of capital accumulation exceeds the rate of increase in population" (p. 88).

"That the increase in wage rates does not depend on the individual worker's "productivity," but on the marginal productivity of labor, is clearly demonstrated by the fact that wage rates are moving upward also for performances in which the "productivity" of the individual has not changed at all" (ibid.).

"All pseudo economic doctrines which depreciate the role of saving and capital accumulation are absurd. What constitutes the greater wealth of a capitalistic society as against the smaller wealth of a non-capitalistic society is the fact that the available supply of capital goods is greater in the former than in the latter. What has improved the wage earners' standard of living is the fact that the capital equipment per head of the men eager to earn wages has increased. It is a consequence of this fact that an ever increasing portion of the total amount of usable goods produced goes to the wage earners. None of the passionate tirades of Marx, Keynes and a host of less well known authors could show a weak point in the statement that there is only one means to raise wage rates permanently and for the benefit of all those eager to earn wages-namely, to accelerate the increase in capital available as against population. If this be "unjust," then the blame rests with nature and not with man" (p. 89).

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

Socialists' Novels and Plays: The Dogmatism of Progressivism

I got the idea for the title of this article from chapter 3 of Ludwig von Mises' book, "The Anti-Capitalistic Mentality." In this chapter, Mises discussed about the "Literature Under Capitalism" under six separate sections where he mentioned about "The 'Social' Novels and Plays" in section 6 and the phrase "progressive dogmatist" (p. 61) under "The Bigotry of the Literati" in section 5. In this article, I plan to focus on the last two sections particularly the fifth one, and just give brief comments on the first four sections. 

The First Four Sections

After giving the basic feature of capitalism, Mises introduced that a broad market for literary products occurred with the advent of capitalism. Such market did not exist prior to the advent of capitalism. As a result of this development, a new profession emerged, people who make a living from writing.

Under feudalism, one vital prerequisite to devote time in writing was financial independence. It was never a source of livelihood. Writing "was a noble pursuit of wealthy people, of kings, grandees and statesmen, of patricians and other gentlemen of independent means," and "it was practiced in spare time by bishops and monks, university teachers and soldiers" (p. 50). Mises discussed this under section 1. 

Sections 2 to 4 deserve brief attention. In section 2, Mises explained the meaning of "Success on the Book Market." By this, he distinguished between popular reception of the writer and the dissenter. The books of the dissenter are considered of primary importance, but the public fails to appreciate their value. Majority of the people does not buy such books perhaps because the dissenter is "by necessity anti-authoritarian and anti-governmental, irreconcilably opposed to the immense majority of his contemporaries" (p. 51).

When we come to section 3, "Remarks about the Detective Stories," Mises mentioned that the emergence of this literary genre was a result of anti-capitalistic mentality. Investigations have been made to explain this phenomenon. Mises thinks that the works of Professor W. O. Aydelotte was the most profound among those investigations. Professor Aydelotte found the value of detective story in providing a reader who failed in his ambition an avenue to identify himself with the detective in exposing the misdeeds of those at the top, who are crooked, but rewarded in a capitalist society. 

"Freedom of the Press" is the subject in section 4. Here I stumbled for the first time with two important books on civil liberty, "John Milton's Areopagitica, 1644, and John Stuart Mills' On Liberty, 1859" (p. 55). According to Mises, private property is a necessary prerequisite for freedom of the press to exist; it cannot exist under a socialist society. In a free society, "Everybody is free to abstain from reading books, magazines, and newspapers he dislikes and to recommend to other people to shun these books, magazines, and newspapers" (p. 56). But to threaten people "in case they should not stop patronizing certain publications and their publishers" (ibid.) is an indication that a society is heading towards socialism. 

Socialists' Novels and Plays

In section 6, "The 'Social' Novels and Plays," Mises describes that since both the public and the authors are under the spell of socialism, the usual plot of popular novels and plays evolves around the evil of capitalism. Class conflict is a favorite theme where the wickedness of the exploiting class is punished and the virtue of the exploited class is exalted. Two classes of authors write about this type of novels and plays, those who were raised in a "bourgeois" background and those who came from a "proletarian" family. 

Mises observed that due to the "elite" background of the first class of authors, "the enviornment in which they place the characters of their plays and novels is strange" (p. 66). And this happens despite of the fact, that this class conducts prior research. On the other hand, the second class of authors doesn't need such reasearch for "they can draw from their own experience" (p. 69). 

The methodology of the first class of authors has already been predetermined. "They know beforehand what they will discover" (p. 67). They select materials that confirmed their prior notion, and avoid those outside of their preconception. They have been trained to think that capitalism is evil. "Their novels and plays are designed as case studies for the demonstration of this Marxian dogma" (p. 67).

The error among this class is that they misrepresent what's really going on in the society. Due to socialistic mindset, they are incapable to see that economic deprivation of the poor is due to "the absence of capitalism, the remnants of the pre-capitalistic past or the effects of policies sabotaging the operation of capitalism" (ibid.). They could not understand that capitalism is exactly the economic system that could wipe "out penury as much as possible" (ibid.). They omitted the fact that a "proletariat" is not only a worker, but also a consumer. 

The claim that these authors simply write the pure facts of society is not true. "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 pseudo-economic constructions" (ibid.). 

Turning to the second class of authors, their personal experience shows a different data from those of the socialists. They have proven from their own experience that industrious and skilled workers can climb up to the social ladder. They know the reason for their success. And as they meet the "bourgeois," they now realize that the resentment of the socialists is wrong. They discover that many of the businessmen "are self-made men who, like themselves, started poor" (p. 70). After this discovery, if this class of writer persists "in writing what is in fact prosocialist homiletics, they are insincere. Their novels and plays are unveracious and therefore nothing but trash. They are far below the standards of the books of their colleagues of 'bourgeois' origin who at least believe in what they are writing" (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 perceived 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 

In the early part of chapter 3, under the first section, Mises described the "literati" as the "people making a living from writing" (p. 49). In standard English dictionary, the word refers to "persons of scholarly or literary attainments" or the "intellectuals." Here under section 5, I understand the term as pertaining to the "progressives" or the socialists. 

The original sub-title of section 5 is "The Bigotry of the Literati." Under this section, Mises discussed about the internal strife among three dominant schools, and then he singled out the "progressives," and then he finally identified three fundamental errors in the idea of those who advocate for "mixed economy."

1. Internal Strife. Mises was referring to communists, socialists, and interventionists as the three dominant schools during his time. He argued that these three schools together with diverse sects under them were quarreling against each other. Such quarrel diverts the attention from the basic dogmas that are common among them, which are centralized economic planning and various statist economic policies. "On the other hand, the few independent thinkers who have the courage to question these dogmas are virtually outlawed, and their ideas cannot reach the reading public" (p. 58). This indicates the success of the propaganda machineries of the "progressive" "in enforcing its taboos" (ibid.). At this point, Mises mentioned a very unusual and unpopular concept. He talks about the dominance of "the intolerant orthodoxy of the self-styled 'unorthodox' schools" (ibid.). He describes it further as " 'unorthodox' dogmatism" (ibid.).

2. The Progressives. "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 basic dogma of progressivism declares that economic deprivation of the masses is an outcome of unjust social institutions based on private property that gave birth to capitalism. Under this economic system, the masses are doomed to povery, and only the selfish interests of "rugged individuals" or "greedy exploiters" are being served. And therefore, it is the role of the State to intervene in economic affairs to create prosperity for all and convert profit motive into service motive (p. 59). It further teaches that "central planning is inevitable" for it is "in accordance with the inexorable laws of historical evolution" (ibid.). 

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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.). 

The progressives' basic accusation "against capitalism is that the recurrence of crisis and depressions and mass unemployment are its inherent features" (ibid.). Exposing these economic problems as products of government intervention silence the progressives, and since they cannot give a credible response to "economists, they try to conceal them from the people and especially also from the intellectuals and the university students. Any mentioning of these heresies is strictly forbidden. Their authors are called names, and the students are dissuaded from reading their 'crazy stuff' " (pp. 60-61). 

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). 

Based on the foregoing observation, Mises and those who advocate policies rooted in sound economic analysis are considered heretics. What's difficult to believe is the noise created by the above intellectuals who are advocating for economic reforms and their audacity to call themselves "progressives." Due to their refusal to submit their proposal to economic scrutiny, they are unaware that the answers they propose are far worse than the problems they aim to solve. 

3. Three Fundamental Errors. Instead of giving a detailed analysis of the mentioned "moderate" stance, Mises just focused on giving an overview of the three fundamental errors inherent in it. 

a. The first mistake is related to the erroneous diagnosis of the nature of ideological problem in our time. "The great ideological conflict of our age" (p. 62) says Mises is neither about the distribution of business profit, nor about class warfare. Instead, it is about the struggle "concerning the choice of the most adequate system of society's economic organization" (ibid.). Mises explains the nature of this struggle: 

"The question is, which of the two systems, capitalism or socialism, warrants a higher productivity of human efforts to improve people's standard of living. The question is, also, whether socialism can be considered as a substitute for capitalism, whether any rational conduct of production activities, i.e., conduct based on economic calculation, can be accomplished under socialist conditions" (ibid.).

This is the reason why I think Mises described the progressives as dogmatic. They do not want to subject socialism under economic investigation. For them, the issue has long been settled "that capitalism is the worst of all evils and socialism the incarnation of everything that is good" (ibid.) And any "attempt to analyze the economic problems of a socialist commonwealth is considered as a crime of lese majeste" (ibid.). 

b. The second error is the failure to see the similarity of the economic system of both socialism and communism. Yes, it is true that under socialism, the "anticommunist bourgeois" are not assassinated and that the secret documents of a nation is not submitted to a "superior" socialist nation. In this instance, socialism is more moderate than communism. But besides this, there is no difference between the two especially when it comes "to the ultimate goal of political action;" both socialism and communism are aiming for "public control of all the means of production" (p. 63). 

The confusing aspect in the similarity of economic system of both socialism and communism is the hostility between them. Mises elaborated both the commonality and the nature of hostility between these two systems. Concerning commonality: 

"The two terms, socialism and communism, are synonyms. The document which all Marxian socialists consider as the unshakable foundation of their creed is called the Communist Manifesto. On the other hand, the official name of the communist Russian empire is Union of the Socialist Soviet Republics (U.S.S.R.)" (ibid.).

"Neither do the terms 'planning' and 'welfare state' as they are used in the language of economists, statesmen, politicians and all other people signify something different from the final goal of socialism and communism. Planning means that the plan of the government should be substituted for the plans of the individual citizens. It means that the entrepreneurs and capitalists should be deprived of the discretion to employ their capital according to their own designs and should be obliged to comply unconditionally with the orders issued by a central planning board or office. This amounts to the transfer of control from the entrepreneurs and capitalists to the government." (p. 64).

And then about hostility between them: 

"The antagonism between the present-day communist and socialist parties does not concern the ultimate goal of their policies. It refers mainly to the attitude of the Russian dictators to subjugate as many countries as possible, first of all the United States. It refers, furthermore, to the question of whether the realization of public control of the means of production should be achieved by constitutional methods or by a violent overthrow of the government in power" (pp. 63-64). 

Therefore, expecting that socialism with its central planning and welfare program will provide us a better economic system than the one offered by communism is believing in a false hope. It is a serious mistake, and contrary to the message of the progressives, it is not a remedy to communism.

c. The third error is the naive belief about the possibility of a third economic system resulting from a combination of both socialism and capitalism. Affirming this possibility springs from an ignorance to understand the real nature of both socialism and capitalism. They "are two distinct patterns of social organization" (pp. 64-65) for socialism is based on public control of the means of production, whereas capitalism can only exist if "private control of the means of production" is protected. There cannot be a reconciliation between these two. Economists call this form of economic system as "interventionism" (p. 65) and for Marx and Engels, when they "advocated definite interventionist measures, they did not mean to recommend a compromise between socialism and capitalism" (ibid. ). Mises perceives them as stepping stones on the way to "the establishment of full communism" (ibid.). Therefore, "the social and economic philosophy of the progressives is a plea for socialism and communism" (p. 66). "Mixed economy" or "a middle-of-the-road solution" (p. 65) does not exist. Expecting it to be so is to believe in illusion. 

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