Sacrificing Liberty through Bureaucracy

Mises, L. (1944). Bureaucracy. New Haven: Yale University Press. 135 pages. 

Those of us who advocate personal and economic freedom should remind ourselves occasionally not to be surprised anymore if most people we know take the expanding power of the government for granted. To expect otherwise is unrealistic simply because the progressive propaganda has been successful and has already conquered mainstream education and media for so long. Inflation, deficit spending, and bigger welfare package are just few examples of the activities of bigger government that people consider normal. I think this is not only confined in the Philippines; it is a global trend. And the most effective tool that has brought this economic disaster is the growth of bureaucracy. 

In Bureaucracy, Ludwig von Mises argues throughout the book that economic and personal freedom has been consistently coerced by the State through the gradual expansion of bureaucratic management. Though citizens feel this coercion through the subtle squeezing of their pockets, it is very rare to find someone who knows the details how it is being done. I think the book will give us such ability to distinguish the voice of freedom from the counterfeit ones.

Content and Outline of the Book

The book has seven chapters. Chapter 1 introduces the concept of profit management. Chapters 2 to 4 deal with bureaucratic management: the second chapter explains bureaucratic management in general; the third, bureaucratic management of publicly owned enterprises, and; the fourth, bureaucratic management of private enterprises. The following two chapters elaborate about implications and consequences of bureaucratization. The fifth chapter focuses on social and political implications, and the sixth, on psychological consequences. The last chapter is about the remedy to reduce the size of the government

The concept of profit management is explained under four sections: the basic operation of the market, economic calculation, its nature, and the nature of managing personnel. Under basic operation of the market, Mises brings to light two important themes: consumer sovereignty and economic democracy. In explaining economic calculation, Mises identified two additional components, price and profit, which can only be found under free market. Again, about the nature of profit management, two important records are emphasized, profit-and-loss account and the balance sheet. These records serve as the basis in evaluating the performance of personnel.

In chapter 2, Mises discussed the general character of bureaucratic management in relation to five sub-topics: bureaucracy under despotic government, bureaucracy within a democracy, its essential features, the crux of bureaucratic management, and its own unique feature of personnel management. Despotic government, unavoidably kills the eagerness of its personnel through strict compliance to regulations. As a result, the quality of service deteriorates. Within democracy, bureaucracy functions in relation to the rule of law and the budget. And due to the growth of bureaucratic management, in time, judicial arbitrariness threatens the rule of law, and public officers utilize public fund for their own ends. The essential features of bureaucratic management include the limitation of the discretion of subordinates, inability to verify the objectives in monetary terms, disconnection between revenue and expenses, and the absence of market price. This last feature is the crux of bureaucratic management, which is to say that the kind of service provided by the government has no market value. And because of this, poor performance is inevitable. Three additional mechanisms that contribute to the deterioration of government personnnel consist of increasing regulation to protect clerks from their superiors, the existence of superficial machinery for application and promotion, and the role of senior bureaucrats. 

Bureaucratic management of publicly owned enterprises is the subject of Chapter 3. It discusses about the impracticability of government all-round control, and public enterprise within a market economy. Other terms for government all-round control are central planning and socialism. Again, the primary reason why such system did not and will never work is due to the absence of market price that makes economic calculation impossible. Public enterprise within a market economy has numerous flaws such as the goal to provide service ignoring the market price, the transfer of the financial burden to the taxpayers, the absence of criterion to assess the usefulness of government services, and the wasteful expenditures of public fund. 

The focus of Chapter 4 is bureaucratic management of private enterprises. Here, we will find how government intervention created bureaucratization of private enterprises in the first place. This is done in two ways: interfering in company profit and in the choice of personnel. The chapter ends identifying the unfortunate results of this type of bureaucratization. 

Chapter 5 enumerates the social and political implication of bureaucratization. They include contempt for human laws, complacency, increase in government spending, bureaucratization of the mind, and the supremacy of the tyrant's will. 

Chapter 6 is all about psychological consequences. These are the misdirection of the youth, the crisis of progress and civilization, the emergence of elite paternal government, perpetual violence leading to endless civil war, and the disappearance of the critical sense.

The last Chapter shows us the way to reduce the size of the government. The way is not easy due to the popularity of government interference and the intimidation by the professionals. However, Ludwig von Mises was calling the average citizens of the nations of the world to seriously take the responsibility to personally educate themselves how the economy works. This is the only way to stop the bureaucratic invasion of liberty. This is "the first duty of a citizen of a democratic community. . ." (p. 111) for without it, "democracy becomes impracticable" (p. 120). Democracy is not "a good that people can enjoy without trouble", but "a treasure that must be daily defended and conquered anew by strenuous effort" (p. 121). 

Reasons for Writing the Book

Why Ludwig von Mises said all of these? Was his description unique only in his time? Is the message of Bureaucracy no longer applicable in the 21st century? Reading Bureaucracy for yourself will help you find out the answers to these questions.

For Mises, the reason he investigated the growth of bureaucracy in US, France, Germany, and Russia is that he thinks that this is the best way to study the conflict betwen socialism and capitalism. Through this study, one can see whether human society is heading towards "freedom, private initiative, and individual responsibility" (p. iii) or towards a coercive and interventionist state or in other words, towards "individualism and democracy" or "authoritarian totalitarianism" (ibid.). Again in page 10, Mises elaborates more about the nature of this conflict:

"The main issue in present-day political struggles is whether society should be organized on the basis of private ownership of the means of production (capitalism, the market system) or on the basis of public control of the means of production (socialism, communism, planned economy). Capitalism means free enterprise, sovereignty of the consumers in economic matters, and sovereignty of the voters in political matters. Socialism means full government control of every sphere of the individual's life and the unrestricted supremacy of the government in its capacity as central board of production management. There is no compromise possible between these two systems. Contrary to a popular fallacy there is no middle way, no third system possible as a pattern of a permanent social order. The citizens must choose between capitalism and socialism . . . ." 

And so for Mises, socialism utilizes bureaucracy to gradually lead society to totalitarianism. Bureaucracy and totalitarianism are interconnected. In our days, though we do not see full-blown government control of everything yet, but the growing expansion of bureaucracy is a sure indication that nations are heading into that direction. In other words, the most and highly bureaucratized society will experience constant suppression of personal and economic liberty. The reason why our time is more dangerous than the previous ones is because majority of the people do not have this realization. They don't see bureaucratization as a threat to liberty. They think that the compromise between socialism and capitalism is the way to go. They do not see that it is actually this "middle way" that is accomplishing this totalitarian goal. Again, see how Mises explains the correlation between bureaucratism and totalitarianism:

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

Reading Chapters 5 and 6 of the book, you will realize that additional reasons exist in the mind of Ludwig von Mises that caused him to write this book. In Chapter 5, he mentioned one alarming social and political implication of bureaucratization, the bureaucratization of the mind. Mises observes that educational institutions no longer provide the necessary training of the mind, to think liberally, that is, the kind of education that protect personal liberty and the market economy. He laments that economic education has already been expelled from mainstream universities and has been replaced with "wirtschaftliche Staatswissenschaften (economic aspects of political science)" (p. 83). Notice how Mises describes the absence of economics in mainstream education and factors that contributed to such condition: 

"The modern trend toward government omnipotence and totalitarianism would have been nipped in the bud if its advocates had not succeeded in indoctrinating youth with their tenets and in preventing them from becoming acquainted with the teachings of economics" (p. 81). 

"The outstanding fact of the intellectual history of the last hundred years is the struggle against economics. The advocates of government omnipotence did not enter into a discussion of the problems involved. They called the economists names, they cast suspicion upon their motives, they ridiculed them and called down curses upon them" (p. 82). 

"In most countries of the European continent the universities are owned and operated by the government. They are subject to the control of the Ministry of Education . . . The teachers are civil servants like patrolmen and customs officers. Nineteenth-century liberalism tried to limit the right of the Ministry of Education to interfere with the freedom of university professors to teach what they considered true and correct. But as the government appointed the professors, it appointed only trustworthy and reliable men, that is, men who shared the government's viewpoint and were ready to disparage economics, and to teach the doctrine of government omnipotence" (ibid.). 

And here is the end result of the bureaucratization of the mind:

"All that the students of the social sciences learned from their teachers was that economics is a spurious science and that the so-called economists are, as Marx said, sycophantic apologists of the unfair class interests of bourgeois exploiters, ready to sell the people to big business and finance capital. The graduates left the universities convinced advocates of totalitarianism either of the Nazi variety or of the Marxian brand" (p. 86). 

Due to the success of the bureaucratization of the mind, Mises is right in saying, "The universities paved the way for the dictators" (p. 87). 

And so I think, Mises wrote Bureaucracy to counter the trend towards the bureaucratization of the mind and shift it towards liberty. 

Again in Chapter 6, we find that through this book, Ludwig von Mises offers direction to the misguided and activist youth. He desires to stop the crisis of progress and civilization. He hopes for a peaceful society where bureaucratic violence and endless civil war have no place. And finally, he dreams to see the critical sense among the citizens of democratic society restored. 

As a whole, this book is the attempt of Ludwig von Mises to provide the basic training of the mind to understand the critical issues of our time. This is his way to inform the average citizens of democratic nations by providing them fundamental understanding how bureaucracy affects personal and economic liberty. 

Is Mises Correct?

Is Mises correct in his assertion that the conflict between socialism and capitalism being decided in favor of the former through bureaucratic expansion? Is his message still relevant that the struggle between private ownership and state or collective ownership of factors of production being advanced in favor of totalitarianism through bureaucracy? Is he correct that the bureaucratization of the mind has been successful in producing university graduates who advocate totalitarianism either the German or Russian brand? Is he correct that the growth of bureaucracy the primary cause of social unrest, violence, and civil wars? 

Obviously, the answer to the above questions is affirmative. And only basic economic education is the remaining antidote to stop all this insanity. Many other writers agree with this. 

In September 29, 2012, Art Carden of Forbes wrote "The Greatest Thinker You've Never Read: Ludwig von Mises". For Carden, Mises "was the greatest social thinker of the twentieth century." Carden sees that Mises' greatest contribution was the "demonstration that socialism cannot function as a rational economic system and that private ownership of the means of production is necessary if value is going to be maximized and waste is going to be minimized in the production process." And so Carden agrees that Mises "ended the debate over whether an economic system based on common or social ownership of the means of production could function" with the essay Economic Calculation in the Socialist Commonwealth. Carden ends his article with a solemn warning taken from Human Action:

“The body of economic knowledge is an essential element in the structure of human civilization; it is the foundation upon which modern industrialism and all the moral, intellectual, technological, and therapeutical achievements of the last centuries have been built. It rests with men whether they will make the proper use of the rich treasure with which this knowledge provides them or whether they will leave it unused. But if they fail to take the best advantage of it and disregard its teachings and warnings, they will not annul economics; they will stamp out society and the human race.”

Carden is not alone. Mises' wife and other reputable authors and leaders in the not so recent past confirmed the greatness of Mises and his ideas. 

Margit von Mises shared her two aspirations. One, that all presidents of the United States on their inauguration should get "a complete set of Lu's books", and; two, "that every university or college where economics and political science are taught would. . . add a course on freedom of the market to their curriculum" (My Years with Ludwig von Mises, 1976, p. 181). Margit thinks that Mises' "books should be marked for special recommended readings concerning government interference, socialism, and inflation" (ibid.). Doing this, Margit believes that the knowledge of Mises' works "would help to preserve freedom in the United States" (ibid.). 

Sylvester Petro, former professor of labor law at New York University describes Mises' writings as a different kind "from anything I had ever read before" (p. 157). He said this in spite of his wide reading "in the classics, in logic, in philosophy, in epistemology, in law, in economics, in social theory, in politics and all the rest" (ibid.). 

Leonard Read, "the founder of the Foundation for Economic Education" said of Mises' ideas as "a fountain source of new students for generations to come" (p.133). 

And finally Lawrence Fertig, "an American advertising executive and a libertarian journalist and economic commentator" compared Mises with mainstream economists: 

"Great honors were showered on economists whose major accomplishments had been to promote a major inflation which, by the end of the 20th Century, was acknowledged to be the source of tremendous social unrest and economic crises. These were the fashionable economists who were sponsored by wealthy Foundations and indeed by most of the intellectuals of Academe. But when economic historians of the future came to evaluate precisely who had made the most significant contributions to economic theory-to those broad and fundamental principles which explain human actions in the practical world people must live in-their puzzlement increased. For they could find only a meager record of academic honors or monetary prizes by leading ivy-league universities accorded to the one economist who had discovered and formulated some of the most brilliant economic theories of that century. His name was Ludwig von Mises" (p.178).

If Mises and his ideas are really great as the above men described, how come his books are not studied in the universities? Isn't this relegation of Mises' books to the shadow the fulfillment of his foresight, that socialism has been advancing for so long though not easily recognized due to bureaucratic means? I wonder why I never encountered Ludwig von Mises' books during my bachelor and master's degree, and not even when I took some units in my doctoral course in educational leadership. It was only in 2009 through the books of Robert Kiyosaki, the least expected person to arouse my interest to examine the Austrian school. 

If you are still not convinced about the relevance of Mises' ideas, try now to read a newspaper or any article on current economic and political issues anywhere in the world and see how problems are explained. You will always find one common theme: the government has to do something due to market failure. It is as if the government always knows how to solve the problem. It never enters in the mind of most people to question how the problem originates in the first place. If you are curious enough to pick up a particular problem such as income inequality and massive unemployment and dig into the source of the problem, you will always find the State through its bureaucratic agents. In short, the State claims to solve the problem that it created in the first place. 

In the Philippines, we have yet to see a public figure, whether a politician, a political and economic commentator or a journalist who advocates personal responsibility, economic liberty, and limited government. So far, the political and economic stance of most public figures we know are statist, socialist, nationalist, interventionist, and progressive. Filipino citizens do not have to wait for the emergence of a libertarian leader. Why not begin studying the books of Ludwig von Mises? Besides short books like Bureaucracy, Anti-Capitalistic Mentality, and Economic Policy: Thoughts for today and Tomorrow, Mises also wrote The Theory of Money and Credit, Socialism: An Economic And Sociological Analysis, Human Action, and Theory and History. Mises.org offers all these books to anyone for free.

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"

Unacceptable Greatness in an Interventionist Age

Mises, M. (1976). My Years with Ludwig von Mises. New Rochelle, NY: Arlington House. (191 pages).

This review has two major parts. The first part is about the book, which I divided into three sections: writing style, content, and other benefits in reading the book. The second part is about my personal reflection, which I presented Margit's response to the silence of journalists and economists about the influence of Mises, and three reasons for the greatness of the man. And then I concluded with the danger of mainstream ignorance.

About the Book

1. Writing style

I am impressed with the author's writing style, I was hooked, and did not stop reading until I finished it. I think it took me around 10 to 12 hours to complete it. I really enjoyed reading the book. 

While reading, I sense numerous connections between the writer's stories and my world. I cannot enumerate them all. This review will show those connections. 

I like Margit's joke that she is "the human touch" (p. 44) in her husband's life. I need a reminder like that.

I admire Margit's memory and mastery of English language. Her stories were so detailed, and like an artist she beautifully painted her words especially in describing their friends and acquaintances, the places they visited, and the sad stories she narrated. I feel as if I am watching a beautiful movie leaving me with an unusual impression. 

2. Content

• As to Mises' weaknesses

True to her words, Margit von Mises showed us the other side of her husband. She described her man as lonely and mysterious, not a good driver, didn't like to wait, and not interested in money. This last description puzzled me for if I were in his case, I would have used my economic knowledge in a more profitable way. 

Mises had other limitations. All his political and economic foresights came true except one, his mistaken assessment of France's strength to resist Hitler's aggressions. As normal man, Mises also had his own share of fears, and among them, I think losing Margit was the greatest of all. He showed it when he met Margit and Gitta at the station in Zurich. His other fears were related to his hesitation and temper. When Margit convinced him to leave Geneva due to Hitler's threat, he was hesitant that time to move to America, and one reason was his fear of language difference (p. 54). And still another fear was connected to his work as an economist. He knew that the world was in serious danger due to its rejection of capitalism and liberalism. And this gave him depression and sense of hopelessness that caused him to flare up even on small things. Margit explained the nature of this fear and outbursts of emotion: 

". . . . I believe I understand the reason for them. Lu wrote some notes in 1940, and I read them again and again. He wrote of Austria and of Carl Menger, who as early as 1910 recognized that not only Austria but the whole world was getting nearer to a catastrophe. Lu, thinking alike, tried to fight this with all the means he had at his disposal. But he recognized the fight would be hopeless, and he got depressed as were all the best minds in Europe in the twenties and thirties. He knew that if the world would turn its back to capitalism and liberalism (in the old sense of the word) it would tumble into wars and destruction that would mean the end of civilization. This terrible fight against corruption, against the foes of liberty and the free market had broken the spirit of Menger, had thrown a dark shadow over the life of Lu's teacher and friend Max Weber, and had destroyed the vitality and the will to live of his friend and collaborator Wilhelm Rosenberg" (pp. 44-45).

"Theirs was a fight for a world that did not want to be helped. Few people recognized the danger, and even fewer were ready to fight alongside Lu. It was like being on a sinking ship on which people were dancing though the end was near. Lu recognized the danger. He knew how to help his fellow passengers. He tried to lead them to the right exit, but they did not follow him-and now doom knocked at the door" (ibid.). 

• Margit as a mother and wife

Ludwig von Mises was a blessed man to have Margit as a wife. As a widow with two children, she managed to support them through her job. She also displayed strength of character by waiting for Mises' decision to marry her despite the existence of other options, which economically speaking would be more advantageous on her part (pp. 29-30). Her love for Mises is far more important to her than material well-being. As a wife aiming for a successful marriage, she was also willing to change her priority to make her husband happy by making her husband's life her life (p. 45). I think Margit achieved such union of life. We know that she possessed her husband's mind by sharing to us her special dream:

"If I myself could realize one special dream, it would be that every president of the United States should get for his inauguration a complete set of Lu's books, destined for the Oval Office in the White House. These books should be marked for special recommended readings concerning government interference, socialism, and inflation. Perhaps they would help to preserve freedom in the United States. My second wish would be that every university or college where economics and political science are taught would - of their own free will - add a course on freedom of the market to their curriculum" (p. 181).

• Other qualities of Mises

Margit saw her husband as punctual and patient with the shortcomings of others. She also described him as "a great defender of women" (p. 141). Many of those who attended his seminar in Vienna were intelligent women who "later became leading figures in economics and education" (ibid.). Proving Mises high regard for women, Margit quoted from Socialism: " 'All mankind would suffer if woman should fail to develop her ego and be unable to unite with man as equal, freeborn companions and comrades . . . . To preserve the freedom of inner life for the woman, is the real problem of women: it is part of the cultural problem of humanity' " (ibid.).

Another interesting aspect of Mises' personality was his concern for the intellectual development of his wife. Prior to their marriage, Mises gave Socialism and The Theory of Money and Credit to Margit. The latter admitted that the content of these two books was difficult for her, and it took her years to understand them (p. 30). Moreover, even after marriage, Margit perceived that travelling with Mises was like taking "a private course in history and art" (p. 49).

3. Other benefits in reading the book 

Besides from what have already been mentioned, other benefits in reading the book include practical suggestion in the use of waiting time, wise advice to students with socialist professors, and insights as to the basic tools for public speakers. Ludwig once told his wife that Boehm-Bawerk gave a suggestion to his male students to bring a book always with them once they decided to get married (p. 50). In this way, they can wisely use their time while waiting for their wives. 

Moreover, in the case of students forced "to read socialist and leftist literature" (p.172), Mises advised them to follow their professors so that they will know "the subject from every point of view, be it socialist-Marxist, liberal, libertarian" (p. 173), and only in that way they can "decide what is right and what is wrong," only then they are prepared to engage in intellectual exchange because they are aware of all questions their opponents will throw at them. 

Furthermore, a public speaker of substance is first of all a thinker and a writer. As a thinker, the role of an active audience or listeners is very important in processing ideas (p. 65). And as a writer, for Ludwig, paper and pen should always be handy to express one's ideas in writing; Margit added peace of mind (pp. 60-61). And still another skill required for public speakers is proper pronunciation of the language being used (pp. 72-73). 

Nevertheless, there are other lessons we can learn in facing critical times. If we fail to learn them, there is a big possibility that the past will be repeated due to absence of awareness about the destructive consequence of the expansion of statist and interventionist ideas. In a time of crisis, the ability to survive is crucial in order to escape the powerful claws of the state. In particular, I remember here the situation of certain Dr. Helene Lieser, a very intelligent woman who married an unknown man in order to avoid Hitler's power. Margit narrated that such unfortunate event was common in Austria: 

"Such marriages were very common. They were marriages in name only and were never consummated. The man who married a woman in this way asked a high price for giving her his name and the opportunity for her to leave Austria. He also consented to immediate divorce once his 'wife' was safely out of the country" (p. 52). 

Finally, I could not erase in my mind the scene of Mises' last day here on earth. I include this here as part of benefits in reading the book to remind us of our own mortality. Margit described this in the last chapter, Our Last Years Together:

"We now lived very quietly, but nevertheless I invited friends every week, for I did not want Lu to feel isolated. The ones he loved to see most were Larry Fertig, Henry Hazlitt, and Percy and Bettina. They all had strong, clear voices, spoke distinctly, and chose subjects that interested Lu, so he could participate in the conversation. But mostly he wanted to be alone with me. 'If it were not for you,' he often said, 'I would not want to live anymore' " (p. 179). 

"Lu's mind was especially clear the day before his death. He held my hand all day long, but he was very weak and his voice was barely audible when he told me in the evening, 'You look so tired; you must go home now and get some rest.' At 9 P. M. the doctor insisted on my leaving. Shortly afterward, Lu went into a coma and never woke up. He died at 8:30 in the morning of October 10, 1973. His doctor and three of the kindest young floor nurses were with him" (p. 180). 

I wish to be reminded by this section of the book or similar to this in facing my own death. However, I want my sons to be with me and one of them reading selected portion of the Bible with a hymn praising God as a background music. 

Personal Reflection

1. Margit's Response

Margit von Mises provided a response to the question about the silence of economists and journalists after Mises' death. Her response will give us a hint about the reason for such silence. I consider this kind of silence really intriguing for there is no question in the mind of those who are familiar with Mises' works about the greatness of the man. 

Margit saw her husband as a great man - "a great thinker, a great scholar, a great teacher" (p. 7). I am not sure if "greatness" is suitable to describe other aspects of Mises' life - his courage, love for his wife, and friendship. But one thing is sure, these aspects of Mises' life contributed to the man that he is. 

In chapter 8, Margit narrated the story of her husband's magnum opus, the Human Action. In it we learn how a coward and an invisible enemy hid behind the impersonality of Yale University Press to sabotage the spread of Mises' ideas, and yet at the same time his enemy refused to reject the publication of Mises' book due to anticipated profit. Such an attack happened during the second revised edition of the book. Margit quoted Henry Hazlitt's explanation of that attack "in 'Mangling a Masterpiece,' an article in the May 5, 1964, National Review":

The Press does not honor Professor Mises in this new edition. And it does not honor itself. The new edition is a typographical disgrace.

The 1949 edition was originally priced at $10; the revised edition is offered at $15. Yet qualitatively it is cheaper in every respect. It is full of misprints. On page 322 four lines are omitted. Page 468 is missing altogether. Page 469 is printed twice. On page 563 two paragraphs are transposed. On page 615 eight lines are wrong. The running heads that appeared at the top of each page of the 1949 edition are all gone.

In belated reparation, the Yale University Press has printed errata pages (though they are not bound in). But these make wholly inadequate amends for an inexcusable printing job. On page after page one finds some paragraphs printed in a comparatively light type, and others in a blacker, thicker type that can only be described as at least quasi-boldface. The reader will inevitably assume that this marked contrast is intentional, and that the author meant to give special emphasis to the passages printed in Accidental Bold....

I started to note merely the pages on which the contrast in type between various paragraphs was particularly glaring, and got a list of seventy. I leave it to the Yale Press to explain the technical reasons for the type contrasts....

I have said nothing about the uncountable instances in which whole pages of quasi-boldface are found opposite whole pages of lighter type. This must irritate any reader sensitive to typographical tidiness; but it is at least less likely to mislead him into supposing that changes in emphasis are intended. What possible human explanation can there be for this typographical botch, which would disgrace a third-rate commercial publisher? Who reads galley proofs? Who saw page proofs? Who let this mess pass?

I asked Professor Mises what light he could throw on the matter. He was able to supply very little, because the publishers had been extraordinarily reticent. It appears that, in order to do as cheap a job as possible, the press had resorted to some mixture of photo-offset and reset never tried before. When Dr. Mises asked for page proofs, they were denied "for mechanical reasons." When he protested, Chester Kerr, director of the press, replied on Jan. 22, 1963: "We are entirely willing to take responsibility for seeing that the new edition of Human Action is printed without error. I am confident that you will have no cause to regret not having seen page proofs." When the first copies were sent out to the distributors, the author did not receive one.

The Press has conceded in a letter of Sept. 30 that "the general quality of the work is undeniably below our customary standard." But it apparently does not intend to do anything but go on selling the new edition at $15. The least reparation that could be made, to the author and to the readers of Human Action, would be to order the press to start on a new edition immediately (instead of waiting till the present botched edition is exhausted), and meanwhile to sell copies of the present edition at a cut price in candid recognition of their defectiveness.

A final question. Why, in a press that has shown itself capable of producing first-rate work, did this particular book go wrong? Do the present editors of the Yale University Press (who are not those who originally accepted the book) know that this is the most important work on general economic theory that has appeared In our generation? They know it is commercially profitable; they know it sold six printings and brought in revenues from translation and quotation. But if they had any idea of its true greatness, if they even had any real respect for its author and its readers, if they had any respect for their press' own reputation, would they have permitted such a slovenly edition to go out under its imprint? (pp. 110-112). 

The person behind the attack on Mises and his book remained unidentified until his death. His wife knew that ideological differences were the primary reasons. And though Mises' ideas are now gaining increasing number of followers, such differences are still evident today. The common descriptions associated to Austrian school attest to this. Revisionist, alternative, and contrarian are the usual designations given to the school championed by Mises. 

2. Three Reasons for Mises' Greatness

Besides being a great man in the eyes of his wife, the greatness of Mises can also be measured by the size and number of his ideological enemies, and the extent of his intellectual influence. 

Mises' name was on the black list of both the Nazis and the Russians (pp. 35, 53). His writings were hated by all socialists including the American version. Margit recalled what the Nazis did on the night they arrived to Vienna: "They had rushed into the apartment where Lu had lived with his mother, had taken his valuable library, his writings, his documents and everything they found of importance, packed it all into thirty-eight cases, and drove away" (p. 35). Primarily, chapters 2 to 4 gave us an overview of Mises' ideological enemies. The story of Human Action mentioned earlier in chapter 8 also provides us another concrete example of hostility to Mises' ideas. 

Concerning Mises' influence, we can just select here few examples for its extent reaches numerous prominent personalities who became strong defenders of free market in various institutions and different parts of the world. We see here what someone said "the power of compound ideas." The material is scattered throughout the book, and specifically found in chapters 5 to 7, 9, and 10. 

At the end of chapter 8, you will see pictures from pages 115 to 132, which I assume the personalities in those pictures have been influenced by Ludwig von Mises in one way or another. You can see there Wilhelm Roepke, F. A. von Hayek, Philip Cortney, Sylvester Petro, Professor Vernon Carbonari, George Koether, Henry Hazlitt, Otto von Habsburg, Fritz Matchlup, Leonard E. Read, Lawrence Fertig, and Jacques Rueff. I googled each of them, and most of them are influential free market defenders. 

In browsing other chapters of the book, you will gain an overview of Mises' intellectual influence by identifying several key positions that he held. He became "the full-time legal adviser and financial expert of the Chamber of Commerce; he had his lectures at the University of Vienna; he had his seminar; he had conferences and luncheons with visiting authorities . . . . " (pp. 31-32). 

"The Austrian ambassador, Baron von Phuegl," was a frequent visitor (p. 49). In 1940, Mises "delivered a lecture before a banking seminar at the School of Business, Columbia University, on 'Postwar Economic Reconstruction of Europe'; on November 19 he spoke at the Political Economy Club on the 'Non-Neutrality of Money' " (p. 64). On the same year, "he had lunch with Drs. Herbert B. Dorau and J. T. Madden, dean of the School of Commerce and Finance," which both demonstrated "a lively interest in him" (p. 69). 

In 1941, he "met Senor Montes de Oca, former secretary of the treasury of Mexico and at that time president of Mexico's Banco Internationale" (p. 74). This bank president displayed familiarity with all of Mises' books. In 1942, Mises held a lecture in Mexico attended by Dr. Gustavo Velasco, Montes de Oca's relative, and Eduardo Suarez, the Mexican Minister of finance (pp. 78-79). The former "is one of Lu's greatest admirers" and claimed that he "translated at least half a dozen of Mises' writings" (p. 79). (I think translating Mises' books into other languages is another practical project to spread his ideas to greater number of readers). 

Other names influenced by Mises include "Frank Dierson, a prominent lawyer in New York City. . . ." (p. 133); "Jack Holman, who for many years was director of Johnson & Johnson and has a Ph.D. in economics and is a licensed professional engineer in the state of New York, . . . ." (p. 134); Hans Sennholz who "had studied law and political science in Germany, and in 1949" studied economics at NYU, attended Lu's seminar for years, and became the head "of the Economics Department at Grove City College" (p. 136); even the famous Ayn Rand once attended Mises' lecture in 1957-58 (p. 138); and of course not to mention other influential economists such as F. A. Hayek, Israel Kirzner, and Henry Hazlitt. Furthermore, just want to add three unusual students, which include a Filipina, Phebes Tan (p. 139), and two Jesuit priests, William McInnes and Michael Mansfeld who are also both professors of economics (p. 138). 

Reaching chapters 10 and 11, we find Mises remained active even months after his illness. "He wrote articles for The Freeman" and contributed few to "Dr. Howard E. Kershner's Christian Economics" (p. 153). 

Three more people deserve concluding attention due to the importance of their words about the influence of Mises. One is Sylvester Petro, "professor of labor law at NYU" and also served as "director of Wake Forest Institute for Labor Policy Analysis in WinstonSalem, North Carolina" (p. 157). He described Mises intellect and books as follows: 

"I told him in that letter that I had never encountered such a work and thought it should easily rank among the greatest writings of mankind.... The main things that attracted me to Lu were the virtually superhuman qualities of intellect, of judgment, and of wisdom that he possessed in such extraordinary abundance. I have done my fair share of reading in the classics, in logic, in philosophy, in epistemology, in law, in economics, in social theory, in politics and all the rest. In spite of this rather wide reading, Lu's work seemed to stand out sharply and brilliantly. It was on a different level from anything I had ever read before" (ibid.).

The second person is Lawrence Fertig. His comparison between mainstream economists and Ludwig von Mises is worthy of attention:

"Economic historians of the 21st Century will undoubtedly bepuzzled by the reception accorded to economic theorists of the 20th Century. They will be particularly puzzled by what occurred in the span of years between World War I and 1970.... Great honors were showered on economists whose major accomplishments had been to promote a major inflation which, by the end of the 20th Century, was acknowledged to be the source of tremendous social unrest and economic crises. These were the fashionable economists who were sponsored by wealthy Foundations and indeed by most of the intellectuals of Academe. But when economic historians of the future came to evaluate precisely who had made the most significant contributions to economic theory-to those broad and fundamental principles which explain human actions in the practical world people must live in-their puzzlement increased. For they could find only a meager record of academic honors or monetary prizes by leading ivy-league universities accorded to the one economist who had discovered and formulated some of the most brilliant economic theories of that century. His name was Ludwig von Mises" (p.178).

And then the third person is Leonard Read. The message of the plaque he presented on the 89th birthday of Ludwig von Mises captured the greatness of Mises' ideas:

"To A Great Teacher: You, Mises, are truly a Teacher. Two generations of students have studied under you, and countless thousands of others have learned from your books. Books and students are enduring monuments of a Teacher, and these monuments are yours. This generation of students will pass away, but the ideas set in motion by your writings will be a fountain source of new students for generations to come" (p.133). 

And of course the most important of all is the personal assessment of the writer herself, the wife of Ludwig von Mises. This is how Margit summed up her husband's character:

"His most eminent qualities were his inflexible honesty, his unhesitating sincerity and his unflinching patriotism. He never yielded. He always freely enunciated what he considered to be true. If he had been prepared to suppress or only to soften his criticism of popular, but obnoxious policies the most influential positions and offices would have been offered to him. But he never compromised. This firmness marks him as one of the outstanding characters in this age" (p. 181).

Conclusion

One time, I read a reputable professor described Mises' ideas as concrete and superb, but old-fashioned, and no longer applicable in guiding us from the maze of present-day problems. I see it as an excuse for laziness and ignorance. 

If Mises' ideas are inapplicable today, what type of answers can we expect in facing critical issues, which are taken for granted by the majority of intellectuals and those in authority? The violation of moral law of existing monetary system, the many faces of socialism, the popularity of the mindset against free-market capitalism, the harm caused by statist and interventionist policies, and the unproductivibility of state bureaucratism are the primary economic issues need to be dealt with if we hope to see a brighter future for our civilization. What will give the entrepreneurs, non-professional economists and writers, or any citizen willing to seriously thinks the necessary mental tools to be able to see the consequences of destructive ideas? Perhaps, it is more appropriate to say that exactly the absence of such analytical tools provided by Mises both in mainstream education and media is the primary reason for the invisibility and widespread influence of those destructive forces. 

Ludwig von Mises' Economic Policy

Mises, M. (1979). Economic Policy: Thoughts for Today and Tomorrow. Chicago: Regnery/Gateway, Inc. (122 pages).


Margit von Mises compiled her husband's lectures in Argentina in 1959. The outcome is the book, Economic Policy: Thoughts for Today and Tomorrow. Regnery/Gateway, Inc., Chicago first published this book in 1979. 

Mises argued in the book that the best economic policy is to limit the government to its proper role and to make it sure that the market environment is conducive to its free operation. The focus of the government should be the protection of life, freedom, and private property of citizens both from domestic and foreign aggression. The author expounded this idea into six lectures on capitalism, socialism, interventionism, inflation, foreign investment, and policies and ideas. 

Capitalism

The first lecture centers on misconceptions about capitalism. It is about interconnected economic facts that are not widely known about capitalism. Examples of these facts include its historical setting and distinction from feudalism, its contribution to population growth, savings and higher standard of living, and the origin of animosity against it. 

1. Feudalism, historical setting of capitalism. Most people do not appreciate capitalism for they fail to compare it from feudalism. Under feudalism, the people did not have access to products and services that aristocrats enjoyed. And add to it the fact, that there was no social mobility. 

Capitalism replaced the socio-economic structure of feudalism. Access to products and services that the elites enjoy was opened to the public and any individual can now climb up to the social ladder through innovative ideas and entrepreneurship. 

2. Improved standard of living, population growth, and benefits of savings. During the previous social structure, mortality rate was so high due to poverty, malnutrition, and starvation. The entrance of capitalism increased the standard of living and contributed to the increase of human population. Savings played an important role to the growth of capital that benefit not only the savers, but other players in the market such as the entrepreneurs, unemployed, producers of raw materials and existing wage-earners (p.11).

3. Origin of animosity. Still another unpopular facts is connected to the origin of animosity against capitalism. People are fooled to believe that hatred towards capitalism originated from the masses, the working class, the "proletariat". This is a "succesful" historical distortion. Enmity against capitalism actually originated among the aristocrats (Even the term "capitalism" did not come from the proletariat. It was actually coined by Karl Marx, a bourgeois and capitalism's strongest enemy, p. 10). They didn't like capitalism for it diminished their economic power. Mises narrated: "It is a fact that the hatred of capitalism originated not with the masses, not among the workers themselves, but among the landed aristocracy—the gentry, the nobility, of England and the European continent. . . . They blamed capitalism for something that was not very pleasant for them: at the beginning of the nineteenth century, the higher wages paid by industry to its workers forced the landed gentry to pay equally higher wages to their agricultural workers. The aristocracy attacked the industries by criticising the standard of living of the masses of the workers." (p. 6).

Another historical distortions include the so-called "unspeakable horror of capitalism", which Mises designates as "one of the greatest falsehoods of history". This is related to the exploitation of women and children. Mises corrected this story: "The mothers who worked in the factories had nothing to cook with; they did not leave their homes and their kitchens to go into the factories, they went into factories because they had no kitchens, and if they had a kitchen they had no food to cook in those kitchens. And the children did not come from comfortable nurseries. They were starving and dying." (pp.6-7).

4. Other misconceptions. Still additional misconceptions concerning capitalism are related to wage rate and socio-economic gap between the rich and the poor. As a result of Marxian influence, people think that employers determine wage rate. They fail to see that ultimately consumers determine the wage rate of employees (p.9). Concerning the alleged widening gap between the rich and the poor inherent in capitalism, Marxists argue that as wealth is concentrated only in the hands of the few, mass revolution is inevitable. 

Mises refused to accept such faulty analysis for facts show that nations that embarced capitalism actually improved the condition of the masses. So the argument is completely mistaken. Mises asserts, "The scornful depiction of capitalism by some people as a system designed to make the rich become richer and the poor become poorer is wrong from beginning to end." (p.12).

And finally, another faulty idea is the belief that labor unions could improve the economic condition of the working class. Mises refuted labor unions' advocacy for higher wage rate, shorter work hours, and public ownership of means of production that they actually make the economic situation of the working class worse. Among numerous Marxist themes, Mises specifically identified "iron law of wages" theory as fallacious for its model was taken from biology. 

After reading the above misconceptions about capitalism, I dream to see increasing number of people listening to the message of the strongest defender of capitalism, Ludwig von Mises himself. 

Socialism

The second lecture is about socialism. The first few pages contained a discussion about economic freedom. It was followed by an explanation of consumer sovereignty. Then the next few pages were devoted to the exposition of the use of state laws and the meaning of irreconcilable conflict of interest. The bulk of the last pages was spent in elaborating about central planning and the fundamental problem of the impossibility of calculation and planning under socialism.

1. Economic freedom. Mises described economic freedom as a system and a process. As a system, "it is the market economy, it is the system in which the cooperation of individuals in the social division of labor is achieved by the market" (p. 17). As a process, "it is the way in which, by selling and buying, by producing and consuming, the individuals contribute to the total workings of society" (ibid.). 

Mises made some necessary qualifications in his understanding of economic freedom. I find three: First, in relation to nature, he acknowledged that man is not free but has to follow the regularity of its laws. Second, he also denied perfect freedom from a metaphysical standard. Third, he confined his discussion of economic freedom in the context of society. Within this context, the various types of freedom are interconnected. Economic freedom therefore is vital and cannot be separated from other forms of freedom. He considered it illusory to think that people are really free without economic freedom.

2. Consumer sovereignty. Consumer sovereignty is a corollary theme of economic freedom. In the free market, a capitalist cannot lord over without the support of the people simply because the real sovereign under the free market is the consumer. "The fact is", said Mises, "under the capitalistic system, the ultimate bosses are the consumers. The sovereign is not the state, it is the people" (p. 21). And the proof of such sovereignty is the right to commit mistakes. Slaves do not have such right. 

3. Use of legislation. It is exactly this right to commit mistakes that occasioned the use of legislation to "protect" the people from economic mistakes. But the primary trouble with this kind of idea is that once it is accepted, the question of limitation is difficult to decide. The government could possibly restrict its citizens from reading "revolutionary" books, watching unwholesome movies, and listening to bad music. In fact, this kind of use of legislation is coercing individuals and the opening of the path to slavery. 

4. Irreconcilable conflict of interest. One favorite themes in socialism is the emphasis on irreconcilable conflict of interest between the proletariat and the bourgeois. Mises argued that Marx was mistaken in applying this idea to capitalism for the examples used by the latter were all taken from the pre-capitalistic era. Mises described this pre-capitalistic era as a status society. Marx failed to see the distinction between these two societies. In the status society, the aristocrats could retain their status for hundreds of years regardless of their moral quality. In the capitalist society, social mobility is constant.

Marx took the concept of irreconcilable conflict of interest from status society and misapplied it to a capitalist society. To see the significance of this point, it is best to read two paragraphs from Mises: "In a status society a man was not, for example, born a Frenchman; he was born as a member of the French aristocracy or of the French bourgeoisie or of the French peasantry. In the greater part of the Middle Ages, he was simply a serf. And serfdom, in France, did not disappear completely until after the American Revolution. In other parts of Europe it disappeared even later" (p.24).

And another paragraph: "But the worst form in which serfdom existed—and continued to exist even after the abolition of slavery—was in the British colonies abroad. The individual inherited his status from his parents, and he retained it throughout his life. He transferred it to his children. Every group had privileges and disadvantages. The highest groups had only privileges, the lowest groups only disadvantages. And there was no way a man could rid himself of the legal disadvantages placed upon him by his status other than by fighting a political struggle against the other classes. Under such conditions, you could say that there was an 'irreconcilable conflict of interests between the slave owners and the slaves,' because what the slaves wanted was to be rid of their slavery, of their quality of being slaves. This meant a loss, however, for the owners. Therefore, there is no question that there had to be this irreconcilable conflict of interests between the members of the various classes" (ibid.).

5. Central planning. Central planning is another popular form of socialism. In discussing this subject, Mises mentioned a popular book in his time written by a certain British lady who happened to be a member of the Upper House. The title of her book is "Plan or No Plan". In that book, Mises discerned that the author was advocating the kind of plan originally proposed by Lenin and Stalin. This type of plan covers the entire life of a nation and excludes the personal plans of the people. For Mises, the title of the book was misleading for the contrast actually was not between the existence and absence of national plan, but between two kinds of plan - central plan or personal plans. 

6. Impossibility of calculation and planning. The central weakness inherent in socialism is its inability for economic calculation and planning due to the absence of price system, which can only be provided by the free market. And since socialism is basically an economic system that abolished the free market, it is actually running blind without the price system. 

Interventionism

Those who are not familiar with free market literature would consider interventionism as a strange subject. I hope that by coming to this third lecture such unfamiliarity will be removed and we will begin to realize the crucial played by this economic policy in modern economics and politics.

Interventionism is the most influential economic policy in our time. An interventionist government is characterized by product regulation, price and salary control, business interference, welfare, import and export control. These activities indicate that the government is moving beyond its proper scope and this is not good for the economy. 

So interventionism is all about the government inclination to go beyond its appropriate function into the affairs of the free market. In short, interventionism is all "about government interference with the market" (p.40). Specifically, this means government interference "with prices, with wage rates, interest rates, and profits" (ibid.). Both the immediate and the long-term results of such interference will be the transfer of economic power from the consumers to the state and the bureaucrats.

In Mises' lecture on interventionism, we will see its real nature under three sections: the proper role of the government, mixed economy, and the distinction between mixed economy and interventionism. 

1. Proper role of the government. There are three views about the role of the government in relation to the free market - interventionism, anarchy, and limited government. Unlike Rothbard, Mises advocates limited government. So again limited government means that the primary task of the government is to protect its citizens' life, freedom, and private property. Going beyond this is harmful to the economy. 

2. Mixed economy. Mises did not believe in the existence of third economic system. However, interventionism should not be confused with the existence of the so-called "mixed economy" where both private and public ownership of corporations are allowed. 

3. Distinction between mixed economy and interventionism. In order to clarify the distinction between mixed economy and interventionism, Mises gave three examples - price control, rent control and cartels. 

Under price control, we see two historical examples of failure of price control, an analysis of reasons for such failure, its extension to other products, and its end result. Examples of price control in the past tell us about the response of the government once prices started to increase as a result of inflating the money supply. Mises gave two examples: the Roman Emperor Diocletian and French Revolution.

The Roman emperor debased the silver coins in the second hald of the 3rd century. The government mixed increasing amount of copper into the silver coins. This is currency debasement that resulted into price increase followed by price control. Those who violated the price control law were severely punished. The final outcome "was the disintegration of the Roman Empire and the system of the division of labor" (p.41).

Similar mistake was repeated during the French Revolution. Since printing press had already been invented, the French used a different mode of currency debasement. They increased the money supply by printing huge quanitity of paper currency. The immediate result was price increase and again followed by price control. Even the method in punishing the violators was also changed. This time, it was through guillotine. 

In analyzing the failure of price control, Mises takes milk as an example. It all starts with people's dissatisfaction with the increasing price of milk. As a response, the government decides to fix the maximum price for milk, which is lower than the market price. Two immediate results will follow: the demand for milk will increase and the producers of milk will suffer loss as a result of lower price.

In order to continue and protect the business from the impact of government imposed price, it is natural that producers will do the following action: restrict milk production, reduce the number of cows by selling them and focus instead on other products made out of milk. The long-term results then of price control will be less supply of milk, greater demand, price increase, smaller number of people can avail the product, and rationing. 

Then the government will inquire the reason for less supply of milk. The producers will respond that the cost of production is higher than the government imposed price. And as the government traces other items necessary for production, these items will be subjected also to price control. The same result that happened in the milk supply will also occur to related items. And if the government does the same thing with other basic necessities, similar result will take place. 

The final result of government interference in the market is socialism. This happened both in Germany and Great Britain in World War 1. Both countries inflated their money supply, which resulted to price increase and imposition of price controls. The government of Germany controlled the entire national economy through the "Hindenburg Plan" that resulted to the collapse of bureaucratic apparatus and bloody end. England would also about to suffer the same fate, if not for the entrance of the US into war that provided the necessary supply. 

During the 2nd World War, the same process was repeated. Price control was already present before Hitler came to power. During Hitler's time, the free enterprise was still allowed to operate but no longer under the control of entrepreneurs. Instead, they were called shop keepers. The entire operation of the free market is but a show. Everything is regulated from the kind and quantity of products, source and price of raw materials, buyers and price of goods to the designated works for people and amount of salary. This is the free market under German socialism. 

Great Britain followed the same pattern. It became socialist during the time of Sir Winston Churchill. Nationalization was the game of the day. For Mises, the difference between the two countries is unimportant for in both cases, it was the government's order, which had to be obeyed in all areas. 

The same process in controlling the price of milk is applicable in housing. Housing shortage is an outcome of similar mechanism, but this time, it is rent control. 

Mises identifies a series of results from rent control: people will not choose to transfer to smaller apartments when their conditions changed, many cities in the US suffered financial difficulty, shortage in housing, and then the government spent billions for building of new houses. 

Another economic consequence of interventionism in the form of "protectionism" is the formation of cartels. Mises describes the formation of cartels as a result of government's attempt "to isolate the domestic market from the world market" (pp. 51-52). Then the government "introduces tariffs which raise the domestic price of a commodity above the world market price, making it possible for domestic producers to form cartels" (p.52). Once cartels are formed, the government will call for anti-cartel legislation. Observing the process, you will see the absurdity of the government's call for legislation while in fact, cartels are formed due to its intervention. So if the government really wants to stop cartels, it must stop intervening in the affairs of the market. 

Interventionism is not a new development. It is a revival of an old idea that a king was the "messenger of God" with supernatural powers. It came back to the modern times through the influence of a German professor, Werner Sombart. This professor believes that Hitler's orders directly came from God Himself, "the Fuhrer of the Universe". For Mises, the return of this belief is inexcusable in modern times and in a country recognized "as the nation of philosophers and poets" (p.54). The only remedy to interventionism is the power of the citizens.

Inflation

The fourth lecture is about inflation. In addition to interventionism, inflation is the other tool of socialism. Under this lecture, I see five interconnected topics: solution to government's financial problem, most affected sector by inflation, duration of inflation, labor unions, and full employment.

1. Solution to the financial problems of the government. There are two ways to solve the government's financial problems. The legitimate way to do it is by taxing the citizens. But since taxing the people is considered not good for political career, another way of addressing the government's financial difficulties was made. This time it is by printing paper money.

In directly taxing the people, at least the people are aware about the deduction in their salary and they can adjust their expenses to a new financial situation brought about by new taxes. And another advantage of direct tax compared to printing paper money is that the price of goods and services is not affected. The only negative repercussion of such an act is the increase in buying power for the government and less on the part of private citizens. 

This is not the case when government decides to print paper money to solve its financial trouble. It is also a tax, but people do not see it for it is done indirectly. And it also does not affect anyone's political career. 

What's detrimental in this form of indirect tax is that since people do not see any reduction in their income, they think that they can still buy the same amount of goods that they previously buy when the quantity of money is not yet increased. They do not realize that the purchasing power of their money has been reduced since the certain consequence of printing more money is price increase. And since prices of goods and services have already increased as a result of additional money, those who receive the same amount of salary when the new money was not yet introduced will suffer. And since most people do not know how their money lost its value, they simply consider it as something natural.

2. Most affected sector by inflation. The fact is, price increase and the lost of purchasing power are not natural. It is an inescapable outcome of government's act of printing money to address its financial problems. So the financial burden is transferred from the government to the citizens without them knowing it. 

The problem here is the way the government obtains money. Due to the preference of the government to use printed money rather than direct tax, some people will have greater advantage than others. Those who receive the new money earlier are in a better position than those who receive it late. This reminds me of Ron Paul's words about “speculators, bureaucrats, and the special interests favored by the government” (Pillars of Prosperity, 2008, p.110) as early beneficiaries. The sufferers are the laborers and savers. Among them are the teachers and ministers (p.61).

3. Duration of inflation. The Roman Empire, Han Dynasty, and Germany are used as typical examples to demonstrate the catasthropic end of continually increasing the supply of money. Mises thinks that inflation will stay "as long as people are convinced that the government, sooner or later,...will stop printing money..." (pp.63-64). When people do not believe this anymore, then they will realize that prices will continue to increase. As a response, they will start "buying at any price, causing prices to go up to such heights that the monetary system breaks down" (ibid. p. 64). 

Under inflationary monetary system, becoming a debtor is considered wise. Anyone who understands the system could take advantage of it and could utilize it to attain easy wealth. Another feature of inflationary policy is the perception about the government's power. It is looked upon by the people as all-powerful. People ask the government to take care of them for with an unlimited supply of money, the government can do anything. 

In order to correct the wasteful spending of the government, Mises believed in returning to the gold standard. He argued that the gold standard is a form of protection from extravagant government. One great advantage of it is that "the quantity of money under the gold standard is independent of the policies of governments and political parties" (p.65). 

4. Labor Unions. Next to the government, labor unions possess the power to influence wage rates. The problem with the wage rate demanded by unions is that it is above the level of wage in free market. As a result laborers are only employed by industries prepared to suffer loss. When businesses could no longer afford losses, they shut down resulting to more unemployment.

5. Full Employment. John Maynard Keynes was a strong advocate of inflationary policy. For him, this is the only way to solve unemployment. For Mises, there is no need to resort to Keynes' strategy of "cheating the workers" (p.70). Instead, the market should be allowed to operate freely without the interference coming from both the governments and the labor unions. This is the only way to achieve full employment (pp.70-71). 

Mises concluded this lecture by emphasizing that inflation is a monetary policy and it can be changed. And the only way to change it is for the intellectuals to do their role in shaping public opinion. Once the public are informed about the disastrous results of inflation, Mises was confident that politicians will abandon this monetary policy.

Foreign Investment

The fifth lecture is about foreign investment. It tells us that increasing the capital is the only key for developing nations to attain prosperity. This is Ludwig von Mises' central argument in this lecture. Mises explained this topic under five headings - reason for lower income, three important events, numerous enemies of capital growth, situation in many countries, and the key to the prosperity of developing countries. 

1. Lower income. In developing countries, the standard of living is lower simply because the average income is also lower compared to similar type of work in developed countries. And the reason for this is not inferiority of workers or business ignorance. Instead, it is dependent on economic situation and availability of capital in the country, both foreign and domestic. 

2. Three important events. Mises identified three important events in the economic history of the world. These are the introduction of foreign investment in the 19th century, the story of American subsidies in between and after two world wars, and the development of anti-capitalist mentality after World War 1. Without the aid of British capital in the 19th century, the development of US economic system is unintelligible. In addition to British capital, US economic policy during those times was friendly to foreign investment. This explains the unprecendeted growth of American economy. But after World War 1, economic climate changed with the development of anti-capitalist mentality. Countries were no longer friendly to foreign investment. The previous condition that encouraged foreign investment was removed. Expropriation of investments became the norm. Mises described this backwardness: "Starting with the First World War, there began a period of worldwide open warfare against foreign investments. Since there is no remedy to prevent a government from expropriating invested capital, there is practically no legal protection for foreign investments in the world today. The capitalists did not foresee this. If the capitalists of the capital exporting countries had realized it, all foreign investments would have come to an end forty or fifty years ago. But the capitalists did not believe that any country would be so unethical as to renege on a debt, to expropriate and confiscate foreign capital. With these acts, a new chapter began in the economic history of the world" (p.82).

3. Enemies of capital growth. Aside from direct expropriation, "innovative" way of expropriating capital also exists. And this problem is rampant in developing countries. Mises mentioned two ways of doing this - foreign exchange control and tax discrimination. And then referring to tax system, he described the existing policy in the US as insane, and should not be followed by other countries. He called it double taxation and progressive (p.84).

Two additional forces that prevent capital growth are protectionism and labor unionism. Protectionism prevents "the importation of capital and industrialization into the country" (p.87). Labor unions on the other hand "use violence against entrepreneurs and against people they call strikebreakers" (ibid.). They "cannot industrialize the country, they cannot raise the standard of living of the workers", and they bring nothing but "permanent, lasting unemployment" (ibid.).

4. Situation in many countries. Many countries are in serious trouble due to these anti-investment policies. The end result of this is harmful to national economy. It destroys confidence that cause the retreat of foreign investment. For Mises, his proposed solution was to establish an international law that remove foreign investments from national jurisdiction. Mises explained the seriousness of this problem: "But in many other countries the problem is very critical. There is no—or not sufficient—domestic saving, and capital investment from abroad is seriously reduced by the fact that these countries are openly hostile to foreign investment. How can they talk about industrialization, about the necessity to develop new plants, to improve conditions, to raise the standard of living, to have higher wage rates, better means of transportation, if they are doing things that will have precisely the opposite effect? What their policies actually accomplish is to prevent or to slow down the accumulation of domestic capital and to put obstacles in the way of foreign capital" (p.85).

5. The key to prosperity. Mises emphasized that the only thing missing among developing countries for them to improve their standard of living is capital accumulation operating not under the control of the government, but under the discipline of the free market. And to achieve the desired result, capital requires a stable monetary unit. This would mean total absence of any kind of monetary inflation. 

So at the end of the day, the key to the prosperity for developing countries is all about economic policy and for Mises this is the decisive point: "One must realize that all the policies of a country that wants to improve its standard of living must be directed toward an increase in the capital invested per capita" (pp.87-88). "As I said before, there is only one way a nation can achieve prosperity: if you increase capital, you increase the marginal productivity of labor, and the effect will be that real wages will rise" (p.88).

Two questions come to mind while reading this lecture. What is the economic situation in the country? And what prevents the availability of both domestic and foreign capital? Dr. John V. C. Nye of George Mason University described the existing economic policy in the country as "Badly distorted micro-economic price situation", "poor and unreliable property rights and contracting", "legalistic bureaucracy" and "policies and institutional constraints that are anti-investment and anti-competitive". 

Policies and Ideas

In this final lecture, Ludwig von Mises answered these two questions: What caused the collapse of the Roman Empire during the 3rd century that is also threatening our civilization now? Is the collapse of Western civilization really inevitable as various thinkers and critics argue? We divide our answer to these questions under four sections: internal corruption, shift to interventionism, similarities and differences, and the need for better ideas. 

1. Internal corruption. Ludwig von Mises strongly acknowledged that the internal forces that corrupted the Roman Empire are also present within Western civilization. He identified them as economic interventionism and monetary inflation. However, he strongly contradicted the opinions of influential scholars such as the German teacher Oswald Spengler and the British historian Arnold Toynbee who predicted the inevitability of the collapse of Western civilization. For him, the metaphorical comparison between the death of "civilization to a plant is completely arbitrary" (p.101). Though he admitted that there are similarities between the Roman Empire and Western civilization, he also argued about the existence of differences. And in these differences, better ideas play a critical role to change the direction of present civilization. 

What follows next is a narration how this process of internal corruption started. In order to trace the economic root of existing political troubles, we need to see the significance of the frustration of the hopes of 18th century Enlightenment. Thinkers during that time was characterized by strong optimism as to the dawn of the new age of freedom, prosperity, and progress. Such optimism was indeed followed by unprecedented economic improvement for the following two centuries. However, in the 20th century, a "warlike spirit" started to return alongside with humanity's disappointment with the constitutional system developed at the end of the 18th century. Most people did not see the connection between the change in economic policy and the growing political problems. 

Mises argued that you cannot separate the two. In fact, political turmoils that time were just natural consequences of replacing the previous economic policy with a new one. And it was exactly at this point, that interventionism started to appear. Mises stated that the so-called, "...decay of freedom, of constitutional government and representative institutions, is the consequence of the radical change in economic and political ideas. The political events are the inevitable consequence of the change in economic policies" (p.94). 

2. The shift to interventionism. With the shift to interventionism, everything changed. A new entity has emerged out of interventionist climate. The classical meaning of political parties has been lost and replaced by special interest groups or "pressure groups" (p.96). Mises understands this new entity as "a group of people who want to attain for themselves a special privilege at the expense of the rest of the nation" (ibid). Under interventionism, it is considered "the duty of the government to support, to subsidize, and to give privileges" (ibid.) to these groups. Special privileges may include "tariff on competing imports", "subsidy", or making of laws to prevent other groups "from competing with the members of the pressure group" (ibid.). 

Mises even observed that the retention of the two-party system in the US is just "a camouflage of the real situation" (ibid.). Both parties have their own pressure groups representing various economic interests such as silver, wheat, meat, oil, and many more. In this kind of political atmosphere, the interest of the nation as a whole is sacrificed. In fact, pressure groups are so powerful that it influences even the nation's foreign policy. 

Other consequences of interventionism include the weakening of nations' power and of representatives to resist tyranny, constant increase in public consumption, incapability of governments to stop inflation, and the decline of Western civilization. It was at this point that Mises mentioned the names of Spengler and Toynbee who wrote about the inevitability of the collapse of Western civilization. 

3. Similarities and differences. Mises acknowledged the similarities between the Roman Empire and the Western civilization. He described how interventionism and inflation destroyed the Roman Empire from within: "The result, of course, was that the supply of foodstuffs in the cities declined. The people in the cities were forced to go back to the country and to return to agricultural life. The Romans never realized what was happening. They did not understand it. They had not developed the mental tools to interpret the problems of the division of labor and the consequences of inflation upon market prices. That this currency inflation, currency debasement, was bad, this they knew of course very well. . . . Consequently, the emperors made laws against this movement. There were laws preventing the city dweller from moving to the country, but such laws were ineffective. As the people did not have anything to eat in the city, as they were starving, no law could keep them from leaving the city and going back into agriculture. The city dweller could no longer work in the processing industries of the cities as an artisan. And, with the loss of the markets in the cities, no one could buy anything there anymore" (p. 103). 

So what Mises was saying was that as a result of interventionism and inflation, the supply of food declined, people abandoned the cities and returned to countryside and to agriculture, and markets disappeared from the cities. The emperor's decree to stop the migration was powerless when people had nothing to eat. In fact, during the last stage of the empire's decline, emperors were assassinated "on the average of every three years" (ibid.).

An interesting part in Mises' description was the absence of people's awareness about what was happening to them. They lacked the necessary "mental tools" to interpret their struggle. I think it is in this part where we can see the differences between the Roman Empire and Western civilization. For Mises, we are in a more advantageous situation than the people during the 3rd century simply because more and more people are becoming aware about the real problem of present civilization. Unlike, in those days, nobody dared to contradict the Roman government. But today, centers promoting free market ideas are increasing in number all over the world.

4. The need for better ideas. For Mises, the real struggle lies in providing better ideas. And in this struggle, the role of intellectuals is vital. In the first place, the crisis in current civilization is an offshoot of the labors of the intellectuals under Marxist's spell. It is them who shaped the mind of the policy makers. 

Marxism must be replaced with free market ideas. It is not true that this ideology works for the good of the masses simply because none of its formulators came from the masses. All the intellectuals that developed anti-free market ideas including Marx himself came not from the proletariat, but from the bourgeois. For Mises, the free enterprise provides better ideas. See how he described such need: "Everything that happens in the social world in our time is the result of ideas. Good things and bad things. What is needed is to fight bad ideas...We must substitute better ideas for wrong ideas. We must refute the doctrines that promote union violence. We must oppose the confiscation of property, the control of prices, inflation, and all those evils from which we suffer. . . .These ideas must be brought to the public in such a way that they persuade people. We must convince them that these ideas are the right ideas and not the wrong ones. The great age of the nineteenth century, the great achievements of capitalism, were the result of the ideas of the classical economists, of Adam Smith and David Ricardo, of Bastiat and others. . . . What we need is nothing else than to substitute better ideas for bad ideas. This, I hope and am confident, will be done by the rising generation. Our civilization is not doomed, as Spengler and Toynbee tell us. Our civilization will not be conquered by the spirit of Moscow. Our civilization will and must survive. And it will survive through better ideas than those which now govern most of the world today, and these better ideas will be developed by the rising generation" (p. 105).

Mises concluded this final lecture with a positive attitude: "I hope that in a few years the number of those who are supporting ideas for freedom in this country, and in other countries, will increase considerably. I myself have full confidence in the future of freedom, both political and economic" (p. 105).