Ludwig von Mises' Planned Chaos

Mises, L. (1951). Planned Chaos: An Excerpt from Socialism: An Economic and Sociological Analysis. (43 pages).

The booklet Planned Chaos is an excerpt from Ludwig von Mises' Socialism: An Economic and Sociological Analysis (1951). Its main thesis is about the influence of socialism using government interventionism to suppress personal liberty and the free enterprise. Mises elaborated this thesis under ten sections. I intentionally left out the two and focus on eight of them - the need to expose and challenge interventionism, the identification of interventionism as German pattern of socialism, the three invisible qualities of interventionism, similarities and differences between socialism and communism, liberation of demonic forces, fascism, Nazism, and the assumed inevitability of socialism as the future destiny of humanity. 

The Need to Expose and Challenge Interventionism

Exposing and challenging interventionism is a difficult task for it claims to dislike tyranny and monopoly. It also asserts fighting for poor's welfare, social justice and fairer distribution of income. However, one distinguishing mark of interventionism is hostility against the free market expressed through economic policies. And then interventionists blame the free market for the outcome of its previous interference and use it to justify further intervention. And not only that, any advantages resulting from free market activity are claimed by interventionism as a proof of its success. This is the reason why Mises emphasized the need to expose and challenge interventionism. 

Moreover, another difficulty is related to the mindset of the majority. According to Mises, most people are "entangled in the superstitions of statism and government omnipotence" and they "expect everything from authoritarian action and very little from the initiative of enterprising citizens." People seem to be blind about the fact that "the only means to increase well-being is to increase the quantity of products", which only the free enterprise is capable of doing. 

So there is a necessity first to identify the spirit behind interventionism that raised the dictators in the past. Notice Mises' description of this spirit: "But the spirit which raised these knaves to autocratic power survives. It permeates textbooks and periodicals, it speaks through the mouths of teachers and politicians, it manifests itself in party programmes and in play and novels. As long as this spirit prevails there cannot be any hope of durable peace, of democracy, of the preservation of freedom or of a steady improvement in the nation's economic well-being."

This spirit is the dominant spirit that controls the existing academic and political institutions, which is no other than but socialism! This is the spirit that prepares the way for dictators. This is the spirit that needs to be exposed and challenged if we want to maintain both our personal and economic freedom. 

Interventionism as German Pattern of Socialism

Reading Planned Chaos, the two dominant patterns of socialism will be obvious to you - the Russian or Marxian pattern and the German pattern. Understanding these two patterns, one will see that interventionism is in reality the German pattern of socialism. 

The first pattern of socialism suffered collapse in 1989. The Russian pattern lost credibility for the world witnessed that it doesn't work in the real world. Putting all private initiatives under the control of the government is the certain path to slavery and poverty. 

However, the second pattern of socialism is subtle. It utilizes government policies to accomplish its goal. The policies appear to be acceptable to the people, but the logical conclusions of these policies are the exact opposite of what they claim to achieve. The existence of these policies explains why today the free enterprise is falsely charged with all kinds of social evils. Blaming capitalism for these social evils confirms its bad reputation in our time and an indication of the present success of socialism through interventionism.

The German pattern is more effective in implementing socialism's agenda. The widespread influence of economic policies such as minimum wage rate, credit expansion, and the idea that the government can create jobs through increased government spending are now popular especially among democratic countries. In Mises' word, "This is socialism with the outward appearance of capitalism."

Mises was confident that similar to the fate of Russian socialism in 1989, the German pattern will allso collapse. We cannot escape the logical economic consequences of interventionism. In 1951, Mises foresaw this interventionist crisis: "No economist ever dared to assert that interventionism could result in anything else than in disaster and chaos. . . . The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism. . . . Our age has to face great economic troubles. But this is not a crisis of capitalism. It is the crisis of interventionism, of policies designed to improve capitalism and to substitute a better system for it."

The Three Invisible Qualities of Interventionism

Interventionism is dictatorial, anti-democratic, and socialistic. This is its real color but most people could not see it. They are either confused or unaware about the basic nature of interventionism. This is understandable for the message of interventionism is subtle and it utilizes popular ideas.

Interventionism claims to oppose tyranny, monopoly and socialism. It also shows concern for the welfare of the poor, social justice and fairer distribution of income. And above all, it claims to preserve capitalism and democracy. Mises states: "Many advocates of interventionism are bewildered when one tells them that in recommending interventionism they themselves are fostering anti-democratic and dictatorial tendencies and the establishment of totalitarian socialism. They protest that they are sincere believers and opposed to tyranny and socialism. What they aim at is only the improvement of the conditions of the poor. They say that they are driven by considerations of social justice, and favor a fairer distribution of income precisely because they are intent upon preserving capitalism and its political corollary or superstructure, viz., democratic government."

Similarities and Differences Between Socialism and Communism

In addition to my realization that socialism has actually two faces (Russian Marxism and German Interventionism), it is also something new for me to understand the relationship between socialism and communism. Mises discussed the historical connection between communism and socialism. 

The year 1917 is significant in understanding the similarity and distinction between communism and socialism. Prior to 1917, no Marxist dared to make a distinction between communism and socialism. The two terms are identical. 1917 was the year Lenin organized a Bolshevist version of Marxism in Europe. He named it as the Communist Party. Its mission is to annihilate members of socialist parties in Europe whom they considered as “social traitors”. They also aimed to liquidate the bourgeois and to seize government power. Lenin believed that the Communist Party was “the only genuine Marxians”. This action resulted to the distinction between communists and socialists. 

Communists and socialists have two things in common. Both have common origin in Marxism and believe in the idea that production and distribution of economic goods must be under public control through central planning. On the other hand, they differ in approach and in the detail of distribution of goods. Socialists rejected the use of violent action, believe in democratic process, and does not uphold the equal distribution of goods.

As to the question which is better between the two political and economic systems, for the European Marxians, socialism is "the third stage" in economic evolution, which to my understanding is considered better than both capitalism and communism. But for both Stalin and Marx, socialism is the lower form of communism. 

Liberation of Demonic Forces

The liberation of demonic forces was closely associated with the legitimate use of violence to advance communism in relation to Lenin's rise into power in 1917. It was introduced first by campaigning against those who advocate for the rule of law. They were accused as "individualistic" and "selfish". Individual interest must give way to national concern. In time, the rule of law was replaced by the legitimate use of violence in the service of national interest. 

Liberty is at the center of this conflict and since with it, the rule of law, capitalism, democracy, and economic development are difficult to confront directly, socialists resort to a different strategy. In their private meetings, they still talk about the coming dictatorship of the proletariat, but before the public, they preach liberty and democracy. However, Russian communism exposed the real face of socialism. The message of salvation through the legitimate use of violence could now be preached openly. For Mises, this was the essence of the liberation of demonic forces and the real significance of Lenin revolution. 

Fascism

Due to the unpopularity of Fascism, both capitalism and socialism disown her as their offspring. However, the prevailing idea is that Fascism is a product of capitalism. This is in agreement with Mises’ statement that such accusation is a result of semantic innovation on the part of communist intellectuals. In fact, together with Nazism, Fascism was described as “the highest and last and most depraved stage of capitalism” (Mises, Planned Chaos, 1951, p. 29). However, examining the seventh section in “Planned Chaos” we find the actual thoughts of Mises on Fascism.

For Mises, Fascism “began with a split in the ranks of Marxist socialism” (p. 32). Such split happened in 1914 in Italy. Benito Mussolini was considered the most “outstanding man in Italian socialism” (p. 30) Mussolini is a great champion of Marxian socialism. Notice how Mises described Mussolini’s Marxian zeal: “Nobody could surpass Mussolini in Marxian zeal. He was the intransigent champion of the pure creed, the unyielding defender of the rights of the exploited proletarians, the eloquent prophet of the socialist bliss to come. He was an adamant adversary of patriotism, nationalism, imperialism, monarchical rule and all religious creeds” (ibid.). 

However, Mussolini faced a problem. The Italian intellectuals were nationalists. Mussolini changed his mind and joined the nationalists and so the Fascists party was organized. As a result of such defection, anti-Fascists attacked Mussolini. But after the communists’ failed in 1920, the masses joined Mussolini’s party. For Mises, Mussolini’s claim “that he had saved Italy from the danger of communism” (p. 31) is not true. Fascism “was not the cause, but the consequence of the communist fiasco” (ibid.). 

The way Mises described the characteristics of Fascism demonstrated its origin not in capitalism, but in socialism. He called it “vehemently anti-capitalistic” (p.31) though “it did not suppress the industrial and financial corporations” (p.32). Other features of Fascism include fanatical nationalism, Nazi interventionism, Russian dictatorship, and German non-Marxian socialistic economic program. It is a hybrid of German and Russian brands of socialism with additional features taken from other non-socialistic ideas. Moreover, it also gave lip-service to liberty of thought and the press and the right of assembly. Though Fascism was buried in history, Mises claimed that the forces behind it is still active and gave his readers a solemn warning about the great possibility of the revival of fascism under a new name.

Nazism

Regarding Nazism, four factors are important to understand it. These are the intellectual influence that shaped Nazism, its anti - capitalistic character, the influence of Soviet version of socialism and eugenics (I did not include in this article Mises' explanation about the relationship between Nazism and eugenics). 

The intellectual influence of Nazism was laid down by learned Marxist professors. Werner Sombart was one of them who helped shaped Hitler's mind. In fact, prior to Hitler's rise into power, the German universities had already been prepared to hate capitalism. "For more than seventy years the German professors of political science, history , law , geography and philosophy eagerly imbued Their disciples with a hysterical hatred of capitalism , and preached the war of 'liberation' against the capitalistic West . . . At the turn of the century the immense majority of the Germans were already supporters of radical socialism and aggressive nationalism. They were then already firmly committed to the principles" that would later be known as Nazism .

The essential ideas of Nazism are not of German origin. Their sources came from Latin, French and Jewish intellectuals. The only German ingredient in Nazism "was its striving after the conquests of lebensraum."

Basically, Nazism was egalitarian. It's aim was to attain "income equality" and "fairer distribution of the earth's natural resources." They "consider themselves as revolutionaries fighting for their inalienable natural rights against the vested interests of a host of reactionary nations." So Nazism, contrary to popular belief, "is the purest and most consistent manifestation of the anticapitalistic and socialistic spirit of our age." Their slogan "condensed their economic philosophy, viz., Gemeinnutz geht vor Eigennutz (i.e., the commonweal ranks above private profit)." The Nazi believes "that profit - seeking business harms the vital interests of the immense majority, and that it is the sacred duty of popular government to prevent the emergence of profits by public control of production and distribution." So Nazism "therefore was more comprehensive and more pernicious than that of the Marxians. It aimed at abolishing laissez - faire not only in the production of material goods, but no less in the production of men."

Furthermore, Nazism found an intellectual justification for mass killing through the example of Soviet version of socialism. The Nazis learned to use violence and "mass extermination of all dissenters" as their methodology to advance Nazism. In fact, Mises described the Nazis as the most submissive disciples of Lenin, Trotsky and Stalin : "They imported from Russia : the one - party system and the pre-eminence of this party in political life; the paramount position assigned to the secret police; the concentration camps; the administrative execution or imprisonment of all opponents; the extermination of the families of suspects and of exiles; the methods of propaganda; the organization of affiliated parties abroad and their employment for fighting governments and their domestic espionage and sabotage; the use of the diplomatic and consular service for fomenting revolution; and many other things besides. There were nowhere more docile disciples of Lenin, Trotsky and Stalin than the Nazis were. "

The Inevitability of Socialism

Mises did not believe in the inevitability of socialism. Socialism to him will result to nothing but waste, chaos, and poverty. Compared to capitalism, it is less efficient and leads to the destruction of economic activity. This is due to the absence of market prices that make economic calculation impossible. 

However, bacause of economic ignorance, socialists believe that no human force could stop mankind's socialistic destiny. For Mises, the only explanation for the growth of socialism was due to the absence of “decided opposition” and “civilian courage”.

Socialism in the eyes of Mises is a formidable enemy and cannot be defeated apart from "painstaking study". It is useless to attack its minor features such as its divorce stand, birth control and other anti-Christian tenets. The role therefore of the intellectuals in this conflict is vital. Mises described this role: “The Socialist propaganda never encountered any decided opposition. The devastating critique by which the economists exploded the futility and impracticability of the socialist schemes and doctrines did not reach the moulders of public opinion. The universities were mostly dominated by socialist or interventionist...The politicians and the statesmen, anxious not to lose popularity, were lukewarm in their defense of freedom...It was this defeatism that made the rising generation believe that the victory of socialism is inevitable” (p. 39).

Mises also opposed the idea that the people aspire for socialism. He explains: “It is not true that the masses are vehemently asking for socialism and that there is no means to resist them. The masses favor socialism because they trust the socialist propaganda of the intellectuals. The intellectuals, not the populace, are molding public opinion. It is a lame excuse of the intellectuals that they must yield to the masses. They themselves have generated the socialist ideas and indoctrinated the masses with them. No proletarian has contributed to the elaboration of the interventionist and socialist programmes. Their authors were all bourgeois background. The esoteric writings of dialectical materialism of Hegel, the father both of Marxism and of German aggressive nationalism, the books of Georges Sorel, of Gentile and of Spengler were not read by the average man; they did not move the masses directly. It was the intellectuals who popularized them “ (pp.39-40).

So for Mises, the intellectuals were responsible for the spread of socialism and genocide that marked the 20th century. The same role remains in our days. It is also the intellectuals who are capable to change the trend and prepare the way for the revival of freedom. 

What is national socialism?

"What is Hitler's national socialism?" asks one member of a Facebook group. I already wrote an article about this several months ago based on the ideas taken from Ludwig von Mises' book "Planned Chaos". However, I lost it when my site encountered a problem. So I thought the question is not that important that I will never return to it. But after reading several responses to that question, I decided to revisit Mises' book and start again from scratch. 

This time it's different. I discovered that Mises has another book, which dealt with national socialism far longer than the one he did in "Planned Chaos". 

In Wikipedia, national socialism is also identified as Nazism. Notable to this definition is the inclusion of the phrase "as well as other related far-right groups." Wikipedia elaborates under the "far right" or "extreme right", political groups or ideologies that support "social inequality and social hierarchy, elements of social conservatism and opposition to most forms of liberalism and socialism." "Religious fundamentalist" is also included. 

From the above definition, national socialism is open for further explanation depending on how you will take the meaning of "far right". If you will include capitalism in it, it is understandable that someone will say that capitalism and Nazism are closely connected. And also the definition shows that the political left or the communist version of socialism has nothing to do with national socialism.

However, Ludwig von Mises has a different interpretation based on "Planned Chaos" and "Omnipotent Government". In fact, anyone interested to know Nazism from Mises' point of view, understanding the whole of "Omnipotent Government" is important. The book has 304 pages, but Mises has a separate section exclusively focusing on "German Nazism" from pages 129-239. 

The material that we can read about national socialism in "Planned Chaos" is just a summary of Mises' thought. There we can read the intellectual influence that shaped Nazism, the anti - capitalistic character of Nazism, the influence of Soviet version of socialism and eugenics (I intentionally did not include here Mises' explanation on eugenics). 

Intellectual Influence

"Hitler was not the founder of Nazism: he was its product." Learned Marxist professors influenced his mind and one of them was Werner Sombart. Sombart once "boasted that his life was devoted to the task of fighting for the ideas of Marx" and he "declared that Führertum means a permanent revelation and that the Führer received his orders directly from God, the supreme Führer of the Universe. "

Before the rise of Hitler into power, the German universities had already been prepared to hate capitalism. "For more than seventy years the German professors of political science, history , law , geography and philosophy eagerly imbued Their disciples with a hysterical hatred of capitalism , and preached the war of 'liberation' against the capitalistic West ... At the turn of the century the immense majority of the Germans were already supporters of radical socialism and aggressive nationalism . They were then already firmly committed to the principles" that would later be known as Nazism .

Essential Ideas of Nazism

According to Mises , the essential ideas of Nazism are not of German origin. Their sources came from Latin, French and Jewish intellectuals. The only German ingredient in Nazism "was its striving after the conquests of lebensraum."

Nazism was basically egalitarian. It's aim was to attain "income equality" and "fairer distribution of the earth's natural resources." The Nazis "consider themselves as revolutionaries fighting for their inalienable natural rights against the vested interests of a host of reactionary nations."

So Nazism, contrary to popular belief, "is the purest and most consistent manifestation of the anticapitalistic and socialistic spirit of our age." Their slogan "condensed their economic philosophy, viz., Gemeinnutz geht vor Eigennutz (i.e., the commonweal ranks above private profit)." The Nazi believes "that profit - seeking business harms the vital interests of the immense majority, and that it is the sacred duty of popular government to prevent the emergence of profits by public control of production and distribution." So Nazism "therefore was more comprehensive and more pernicious than that of the Marxians. It aimed at abolishing laissez - faire not only in the production of material goods, but no less in the production of men."

The Soviet Influence

Nazism found an intellectual justification for mass killing through the example of Soviet version of socialism. The Nazis learned to use violence and "mass extermination of all dissenters" as their methodology to advance Nazism. In fact, Mises described the Nazis as the most submissive disciples of Lenin, Trotsky and Stalin :

"They imported from Russia : the one - party system and the pre-eminence of this party in political life; the paramount position assigned to the secret police; the concentration camps; the administrative execution or imprisonment of all opponents; the extermination of the families of suspects and of exiles; the methods of propaganda; the organization of affiliated parties abroad and their employment for fighting governments and their domestic espionage and sabotage; the use of the diplomatic and consular service for fomenting revolution; and many other things besides. There were nowhere more docile disciples of Lenin, Trotsky and Stalin than the Nazis were. "

So here is the summary of national socialism based on "Planned Chaos". I wish to study it in detail using the "Omnipotent Government".

Planned Chaos

Here is the recovered and ordered list of my summary of "Planned Chaos":

Exposing Interventionism

German Socialism

Invisible Interventionism

Socialism and Communism

Liberation of the Demons

Fascism's Mother

Hitler and Nazism - Since I lost my original summary, the only way to have a complete overview of Mises' "Planned Chaos" is to read the material itself and rewrite the specific sections. 

Socialism - Unfeasible and Not Inevitable


Note: This is the rewritten version of Hitler and Nazism. I rewrote it out of necessity after almost three months. 

The Unfeasibility and Inevitability of Socialism

Among the eight articles I made based on Mises' "Planned Chaos", the only one I could not recover is the seventh, "Hitler and Nazism". Even a Filipino version of it is missing. I have no more energy left to rework that article. 

The present article is the 8th and last article. It is about the unfeasibility and inevitability of socialism. It's a combination of sections 9 and 10. 

The title is confusing. It is contradictory. How can you maintain the inevitability of something unfeasible? If one of them is true, the other is false. They cannot be both true. 

The Unfeasibility of Socialism

The unfeasibility of socialism is based on the idea that the method adopted by socialist thinkers is inapplicable to social sciences. This method as exemplified through Soviet revolutionary experiment was considered an evidence of the success of socialism. However, the method used in Soviet experiment was derived from the natural sciences and cannot be applied in the field of economics, which Mises categorized under the science of human action.

The science of human action cannot be manipulated towards a desired single end. It is complex. It is a historical experience of intricate phenomena. As such, it is open to diverse interpretations. Its legitimate use can only be found on the basis of a particular theoretical construct. 

According to Mises, if there is one thing that history tells us, it is this: “that private ownership of the means of production is a necessary requisite of civilization and material well-being” (p. 35).

He further claimed that human civilizations have been based on private property and none could identify any historical experience that other social system works. 

However, for socialist intellectuals, the historical evidence in favor of private property is insufficient on the ground that humanity has already advanced. Since this is the case, sticking with a system that worked in the past can no longer be justified. This kind of reasoning can only be sustained on the basis of aprioristic thinking. For socialists, the viability of their system cannot be discredited by human reason. Actual and global experience of socialism is the only way to test its feasibility. 

Mises raised two primary objections as to the feasibility of socialism:

First, in socialism, economic calculation is impossible. This is due to the absence of market prices. Prices are missing “for the factors of production are neither bought nor sold” (p. 36). Because of such absence, planning for the future and determining the result of past action is impossible. Socialism in this way “will operate in the dark” (ibid.). It will waste both human and natural resources. It will result to nothing, but chaos and poverty. For Mises, the primary problem among socialist thinkers is economic ignorance. As such it is intellectually bankrupt and its “claims are as vain as those of the astrologers and the magicians” (p. 37). 

The second objection to socialism is in terms of its efficiency compared to capitalism. It is less efficient and will only destroy human economic activity. 

Of course, socialists have their own way to explain the “alleged” bankruptcy and still to maintain their idealism. 

The Inevitability of Socialism

Since the feasibility of socialism cannot be maintained, it is therefore not inevitable. The claim to socialism’s inevitability is due to the absence of “decided opposition”. “Civilian courage” is largely missing, that is, the courage to resist a popular movement. 

For Mises, the way to fight socialism is not by attacking its minor features such as its stand on divorce, birth control and other anti-Christian tenets. “Painstaking study” is required. 

The role therefore of the intellectuals in this conflict is vital. Mises described this role as follows:

“The Socialist propaganda never encountered any decided opposition. The devastating critique by which the economists exploded the futility and impracticability of the socialist schemes and doctrines did not reach the moulders of public opinion. The universities were mostly dominated by socialist or interventionist...The politicians and the statesmen, anxious not to lose popularity, were lukewarm in their defense of freedom...It was this defeatism that made the rising generation believe that the victory of socialism is inevitable” (p. 39).

“It is not true that the masses are vehemently asking for socialism and that there is no means to resist them. The masses favor socialism because they trust the socialist propaganda of the intellectuals. The intellectuals, not the populace, are molding public opinion. It is a lame excuse of the intellectuals that they must yield to the masses. They themselves have generated the socialist ideas and indoctrinated the masses with them. No proletarian has contributed to the elaboration of the interventionist and socialist programmes. Their authors were all bourgeois background. The esoteric writings of dialectical materialism of Hegel, the father both of Marxism and of German aggressive nationalism, the books of Georges Sorel, of Gentile and of Spengler were not read by the average man; they did not move the masses directly. It was the intellectuals who popularized them “ (pp.39-40).

“The intellectuals alone are responsible for the mass slaughters which are the characteristic mark of our century. They alone can reverse the trend and pave the way for a resurrection of freedom” (p. 40). 

Fascism's Mother and the Libertarian Leftist

If Fascism is a person, we could directly ask her about the identity of her mother. No one wants to accept her as a daughter. Both capitalism and socialism disown her due to the bad reputation she had in history. 

This “Libertarian Leftist” claims that Fascism is a product of capitalism. The writer’s claim is in agreement with Mises’ statement that such accusation is a result of semantic innovation on the part of communist intellectuals. In fact, together with Nazism, Fascism was described as “the highest and last and most depraved stage of capitalism” (Mises, Planned Chaos, 1951, p. 29). However, examining the seventh section in “Planned Chaos” we find the actual thoughts of Mises on Fascism.

For Mises, Fascism “began with a split in the ranks of Marxist socialism” (p. 32). Such split happened in 1914 in Italy. Benito Mussolini was considered the most “outstanding man in Italian socialism” (p. 30) Mussolini is a great champion of Marxian socialism. Notice how Mises described Mussolini’s Marxian zeal:

“Nobody could surpass Mussolini in Marxian zeal. He was the intransigent champion of the pure creed, the unyielding defender of the rights of the exploited proletarians, the eloquent prophet of the socialist bliss to come. He was an adamant adversary of patriotism, nationalism, imperialism, monarchical rule and all religious creeds” (ibid.).  

But Mussolini faced a problem. The Italian intellectuals were nationalists. Mussolini changed his mind and joined the nationalists and so the Fascists party was organized. 

Anti-Fascists attacked Mussolini’s defection from Marxism, but after the communists’ failure in 1920, the masses joined Mussolini’s party. For Mises, Mussolini’s claim “that he had saved Italy from the danger of communism” (p. 31) is not true. Fascism “was not the cause, but the consequence of the communist fiasco” (ibid.). 

The way Mises described the characteristics of Fascism demonstrated its origin not in capitalism, but in socialism. He called it “vehemently anti-capitalistic” (p.31) though “it did not suppress the industrial and financial corporations” (p.32). Maybe, this was the reason why the “Libertarian leftist” mentioned above identified Fascism with capitalism. Or maybe, another reason was the fascist scholars’ formulation of “corporativism”.

Corporativism is the concept of “industrial self-government” (p.31) borrowed from the British. Mossolini and his scholars formulated this concept in their search for an economic philosophy to justify fascism. However, corporativism was only good in paper. 

Fascism is characterized by fanatical nationalism. It is a kind of hybrid formed primarily from German and Russian brands of socialism with additional features taken from other non-socialistic ideas. Its interventionist policy was patterned after Nazism. Its aggressiveness was copied from the forerunners of the Nazis. Its government style was a copy of Russian dictatorship. Its economic program was borrowed from German non-Marxian socialism. Moreover, it also gave lip-service to liberty of thought and the press and the right of assembly.

Fascism was buried in history, but Mises claimed that the forces behind it still live. He gave his readers a solemn warning about the great possibility of the revival of fascism under a new name.

Concluding this post, let us ask, “Who do you think is the mother of Fascism?” You can choose to believe the words of the “Libertarian Leftist” or the words of Mises. 

I admire the Libertarian Leftist for recommending Mises’ “Human Action” as “the undisputed cornerstone of libertarian economic thought.” To me, this shows his respect for Mises and I appreciate his admission of the influence of Human Action in political economy. As for me, the leftists that I encounter in the web so far dismissed Mises’ treatise as baseless. I suspect this is either due to arrogance or ignorance. 

Liberation of the Demons

This is the fifth article I made based on "Planned Chaos". I lost the original article when my  site, Studies in Economics went down. The only copy I have is a Filipino version and that is why that's the one I am posting here.

Using Google Translate is frustrating. To come up with the original content would require an amount of time that I think I cannot make it this time.

So here is the Filipino version:

Sa artikulong ito batay sa "Planned Chaos", iminumungkahi ko na huwag niyong masyadong seryosohin ang mga sinusulat ko. Batid ko ang kabigatan ng paksa. Dangan nga lamang ay hindi ko maiwasan ang hilig sa pagbabasa lalo na sa napapanahong paksang tulad nito. Ito ay libangan ko na.

Nababatid ko din na ang ilang mga impormasyon sa materyales na aking binasa ay maaaring hindi na angkop  sa kontemporaryong talakayan sa ekonomiya at politika. Isa lang akong baguhang mag-aaral sa larangang ito at wala pa akong sapat na kakayanan upang kritikal na tasahin ang mga panitikan hango sa Austrianong paaralan ng ekonomiya at libertariang ekonomyang pampulitika. Ang aking mithiin sa kasalukuyan ay tungo sa landas ng pagkaunawa at kung bibigyan daan ng Diyos na lumago ang aking pagkaunawa sa paglipas ng mga taon,  nasa ko rin na magsulat tungkol sa aking tunay na layunin, ang maka-Kristiyanong pananaw sa ekonomiya at may kinalaman sa Reformed libertarianism.

Kamakailan lamang, natagpuan ko ang blog na ito. Nagpapasalamat ako C. Jay Enjel sa muling pagbabalik sa aking atensiyon kanila Gordon Haddon Clark at John William Robbins. Wala akong kabatiran ukol sa kanilang mga kontribusyon sa pang-ekonomiya at pampulitikang talakayan. Humanga ako sa profile ni Robbins. Ang kanyang mga degree sa akademya mula sa kanyang bachelor hanggang sa kanyang doctoral ay may kaugnayan sa teoryang pampulitika. 

Mga demonyo, ang Bibliya at Reason

Pagkatapos ng mahabang panimula, hayaan niyong balikan ko ang aking paksa, "Ang Paglaya ng mga Demonyo". Batid ko na ito ay isang napaka-kontrobersyal na paksa. Gayunpaman, ang “mga demonyo” na tinutukoy ni Mises ay walang kinalaman sa pananaw ng karamihan na tumutukoy sa espirituwal na mga nilalang. 

Ang paniniwala sa mga bagay na ito ay maituturing na kahibangan sa panahon na kung saan ang larangan ng akademya ay pinaghaharian ng mga naturalista at mga hindi naniniwala sa Diyos. Ang mga kuwento sa Bibliya na nagpapatunay ng ganitong klaseng mga nilalang ay walang puwang para sa lohikal na talakayan.

Ang simpleng pagbabasa ng Bibliya lalo na ang mga Ebanghelyo, matatagpuan natin dito ang maraming mga salaysay ukol sa pagkakaroon ng mga demonyo. Bukod dito, mula sa pananaw ng kamatayan ni Cristo sa krus ng kalbaryo, si Satanas at ang kanyang mga kampon ay nalupig ng ganap.

Gayunpaman, kung tayo ay titingin sa umiiral na mga pangyayari sa pulitika at ekonomiya, madaling ipagwalang bahala ang paniniwalang nabanggit na ito ay isa lamang pamahiin. Maaaring tiisin ng karamihan ang ganitong pamahiin bilang bahagi ng personal na paniniwala, subalit tiyak na hindi ka papayagan kung iyong igigiit na ang tagumpay na nabanggit ay may kinalaman sa politika at ekonomiya. Wala tayong makikitang koneksiyon sa pagitan ng espirituwal na mundo at natural na mundo.

Sa aking pagkaunawa, ganito mangatuwiran ang mga tao sa ngayon. Hindi ko na nais talakayin ang detalye ukol sa likas na katangian ng pangangatwiran ng tao. Sa mga interesado, basahin na lamang ang pangkalahatang pananaw ng Reformed sa pangangatwiran ng tao na matatagpuan sa mga links na ito:

Pananampalataya at Pangangatwiran 1

Pananampalataya at Pangangatwiran 2 

Ang Kahulugan ng Rebolusyon ni Lenin

"Ang Kalayaan ng mga Demonyo" ay ang ikaanim na bahagi sa "Planned Chaos". Sadyang nilaktawan ko ang dalawang bahagi - "Ang Kapusukan ng Russia" at "Ang Hidwang Paniniwala ni Trotsky". Nagbigay sila ng mga mahalagang impormasyon sa kasaysayan, subalit sa tingin ko ay higit na mahalaga ang impormasyon ng ika-anim na bahagi. 

Si Lenin ay umakyat sa kapangyarihan noong 1917. Kakaiba ang pagtatasa ni Mises sa kahalagahan ng rebolusyon ni Lenin kung ihahambing sa pananaw ng mga komyunista. Para sa kanya, walang gaanong ginampanan na mahalagang papel si Lenin sa paglaganap ng impluwensiya ng sosyalismo. Ang Gitna at Kanlurang mga bahagi ng Europa ay nasa ilalim na ng mga patakarang sosyalista bago pa man malagay sa kapangyarihan si Lenin. Kung magkagayon, ang konrtibusyon ni Lenin ay matatagpuan sa binanggit ni Mises ukol sa "pagpapalaya ng mga demonyo". 

Ang tinutukoy ni Mises sa mga salitang ito ay ang "pagsabog ng hindi mapipigilang prinsipiyo ng karahasan at paninikil." Ito ay ang pagbibigay ng lehitimong saligan sa paniniil at paggamit ng dahas laban sa lahat ng mga sumasalungat sa diktadura. 

Paano ito isinagawa ni Lenin? Bago dumating si Lenin, ang sibilisayon ng tao ay naniniwala sa lehitimong gampanin ng pamahalaan at sa panuntunan ng batas. Bahagi ng disenyo ng batas ay maprotektahan ang mga mamamayan mula sa pag-abuso sa kapangyarihan ng pamahalaan. Gayunpaman, dahil sa likas sa tao ang gumawa ng mga pagkakamali, kapwa ang gobyerno at batas ay maaaring gamitin sa maling kaparaanan. Nakalulungkot ang ganitong mga pangyayari. Subalit higit na kalunus-lunos kung gagawing lehitimo ang "walang limitasyong kapangyarihan" ng isang diktador. Ito ay higit na mapanganib kaysa sa maling paggamit ng pamahalaan at batas. 

Sa ganang akin, ang lunas sa pang-aabuso ng pamahalaan at maling paggamit ng mga batas ay wala sa rebolusyon o diktadura, kundi nasa wastong paggamit. 

Ang kampanya at estratehiya upang palaganapin ang ideya ng lehitimong paggamit ng dahas ay pinasimulan sa pamamagitan ng pagpapasama sa paningin ng publiko sa sinumang naninindigan sa panuntunan ng batas. Sila ay inakusahan na "individualistic" at "makasarili". Ang pitagan sa batas ay pinalitan ng mga sumasamba sa karahasan at pagdanak ng dugo. Ang layunin ay upang maitaguyod ang isang estado para sa kapakanan ng mga mamamayan.

Ang kalayaan ay sentro sa labanan sa pagitan ng panuntunan ng batas at estado para sa kapakanan ng mga mamayan. Sa dahilang kaakibat ng paniniwala sa panuntunan ng batas ang kapitalismo, demokrasya at pang-ekonomiyang kaunlaran, mahirap itong labanan ng harapan. Ang mga sosyalista ay nag-isip ng isang paraan.

Sa kanilang mga sariling pagtitipon, sila ay nag-uusap pa rin ukol sa pagdating ng diktadura ng mga manggagawa. Ngunit sa publiko, ipinangangaral nila ang kalayaan at demokrasya. Gayunpaman, inilantad ng komunistang mga Russiano ang tunay na mukha ng sosyalismo. Ang mensahe ng kaligtasan sa pamamagitan ng lehitimong paggamit ng pagdanak ng dugo ay maaari ng ipangaral ng hayagan. Para kay Mises, ito ang tunay na kabuluhan ng rebolusyon ni Lenin at ang kahulugan ng paglaya ng mga demonyo. 

Sa pagbabasa ng bahaging ito, natanto ko na isa pang anyo ng sosyalismo ang umiiral - ang pasismo. Kung magkagayon tatlo ang mga anak ng sosyalismo - komunismo, pasismo at Nasismo. Subalit ang mga komyunista ay tumututol na ikategorya ang Nasismo at pasismo bilang anyo ng sosyalismo. Sa halip, naniniwala sila na ang mga ito ay "ang pinakamataas at huli at pinakamasamang yugto ng kapitalismo." Ito ang dahilan kung bakit hanggang sa kasalukuyan ay bukas ang talakayan sa pinagmulan ng pasismo at Nasismo. Kaninong mga anak ang mga ito? Sa sosyalismo o sa kapitalismo? Sa kaliwa o sa kanan? Ngunit isang bagay ang sigurado: ang pasismo, Nasismo at komunismo ay kakikitaan ng iisang diktatoryal na ambisyon. 

Ang pag-uugnay ng pasismo at Nasismo sa kapitalismo ay bunga ng pagbabago sa semantiko ng mga komunistang intelektwal. Umabot sila sa punto na kanilang tinatagurian na pasista ang "bawat tagapagtaguyod ng malayang sistema ng pakikipagkalakalan". 

Sa huling parte ng bahaging ito, tinanggap ni Mises ang katotohanan na mayroon ding mga hindi kabilang sa grupo ng mga sosyalista ang nangarap ng isang rebolusyon. Subalit napakaliit ng grupong ito. Sila ay walang sapat na kapangyarihan dahilan sa kaliitan ng kanilang bilang at kawalan ng ideyolohiya. Maliban sa mga Stahlhelm na mga Aleman at mga Cagolards na Pranses, ang oligarkiyang anyo ng rebolusyon ay wala ng karagdagan pang impluwensiya.

Similarities and Differences Between Socialism and Communism

My reading of “Planned Chaos” changed the way I see current events. Blaming capitalism as the source of economic crisis is an evidence that the public knows nothing about Mises’ ideas concerning the widespread influence of socialism. 

Similar misinformation that happened during WW2 is still with us in the 21st century. Nazi Germany then was described as the worst form of capitalism as far as the Russian Marxians were concerned. They denied Hitler’s regime as the embodiment of socialism. However, for Mises, socialism prepared the way for Hitler through interventionists policies.

In addition to my realization that socialism has actually two faces (Russian Marxism and German Interventionism), it is also something new for me to understand the relationship between socialism and communism. As a new comer into the field of political economy, I have almost zero knowledge as to the real nature of both communism and socialism. All I know is that both of them are political and economic terms in which the first has an ugly reputation at present while the second is gaining increasing popularity especially in the academe. 

I hope that by understanding the nature of relationship between these two ideologies, one can now see better what’s happening around the world. Hopefully, this would also result into a new appreciation of capitalism. And I think the third section of Mises’ “Planned Action” can help us achieve this goal. He discussed here historically the relationship between communism and socialism. 

The year 1917 is significant in understanding the similarity and distinction between communism and socialism. According to Mises, prior to 1917, no Marxist dared to make a distinction between communism and socialism. The two terms are identical. Even though Marx distinguished between the two levels of communist society in the future, he did not attempt to make any distinction between communism and socialism. 

We can see the historical development for the difference between socialism and communism by restating Mises’ understanding of Marxist political economic theory. In the mind of Marx, two trains of thought exist. He believes that socialism is the natural negation of capitalism. By this, I understand that socialism will naturally result out of the highest development of capitalism. Marx believes in this natural transition from capitalism to socialism, at least in words:

"The bourgeoisie forces all nations to become capitalist nations. When the final hour of capitalism sounds, the whole world will be uniformly in the stage of mature capitalism, ripe for the transition to socialism. Socialism will emerge at the same time in all parts of the world."

However, when it comes to political action, Marx believes otherwise. He considers violent action through revolution and civil war as necessary for the transition. The use of violence is justified in order “to establish the dictatorship of the proletarians and to exterminate mercilessly all bourgeois.” 

Moreover, Marx’s followers in Europe did not trust both the natural transition idealism and the use of violent action. They recoursed to “democratic” procedures to influence the government. They believe in election and parliamentary procedures. This “interventionist” development is absent in Marx’s teaching. Marx himself “did not believe that interventionism could benefit the masses.”

As noted, violent action is inconsistent with Marxist natural transition idealism. However, Russian Marxians selected this as their tactic. They were known in history as the “Bolshevists”. Nevertheless, there is another brand of Russian Marxism that believes in winning the support of the majority. They were known as the “Mensheviks”. 

Lenin organized a Bolshevist version of Marxism in Europe in 1917. He named it as the Communist Party. Its mission is to annihilate members of socialist parties in Europe whom they considered as “social traitors”. They also aimed to liquidate the bourgeois and to seize government power. Lenin believed that the Communist Party was “the only genuine Marxians”. This action resulted to the distinction between communists and socialists. 

Communists and socialists have two things in common. Both have common origin in Marxism and believe in the idea that production and distribution of economic goods must be under public control through central planning. On the other hand, they differ in approach and in the detail of distribution of goods. Socialists rejected the use of violent action, believe in democratic process, and does not uphold the equal distribution of goods.

As to the question which is better between the two political and economic systems, for the European Marxians, socialism is "the third stage" in economic evolution, which to my understanding is considered better than both capitalism and communism. But for both Stalin and Marx, socialism is the lower form of communism. 

The Three Invisible Qualities of Interventionism

In the second section of "Planned Chaos", Ludwig von Mises described interventionism as dictatorial, anti-democratic and socialistic. If these descriptions are true, why is it that interventionist policies keep on growing? One reason perhaps is that people are not aware about the real nature of interventionism.

I think even if just one of these charges is true, it is enough to discourage the people to support interventionism. The reason why it keeps succeeding is because people are confused about its existence and unaware about its real nature. Its message is subtle and utilizes popular ideas to achieve its own end. 

Interventionism claims to oppose what people oppose - tyranny, monopoly and socialism. It also shows concern for the things that people are concerned about - the welfare of the poor, social justice and fairer distribution of income. And above all, it claims to preserve capitalism and democracy. Mises states:

"Many advocates of interventionism are bewildered when one tells them that in recommending interventionism they themselves are fostering anti-democratic and dictatorial tendencies and the establishment of totalitarian socialism. They protest that they are sincere believers and opposed to tyranny and socialism. What they aim at is only the improvement of the conditions of the poor. They say that they are driven by considerations of social justice, and favor a fairer distribution of income precisely because they are intent upon preserving capitalism and its political corollary or superstructure, viz., democratic government."

The above paragraph explains why the public find it difficult to decipher the real color of interventionism. People are hearing messages they want to hear, but seeing things they do not want to see. The dictatorial end is the logical conclusion of a series of interventionists policies aimed to satisfy people's immediate concerns. This is a typical example of simply looking at the short-term consequence of a specific policy without considering its long-term impact.  

In the following paragraphs, I just want to cite Ludwig von Mises' other statements proving the socialistic, undemocratic and dictatorial qualities of interventionism.

Mises spoke about interventionism's failure to fulfill its promises and its unnoticeable and gradual step towards dictatorship:

"What these people fail to realize is that the various measures they suggest are not capable of bringing about the beneficial results aimed at. On the contrary they produce a state of affairs which from the point of view of their advocates is worse than the previous state which they were designed to alter. If the government, faced with this failure of its first intervention, is not prepared to undo its interference with the market and to return to a free economy, it must add to its first measure more and more regulations and restrictions. Proceeding step by step on this way it finally reaches a point in which all economic freedom of individuals has disappeared."

Mises emphasized once again the difference between two forms of socialism. Knowing this difference is important in identifying the character of interventionism:

"But when this state of all-round control of business is achieved, the market economy has been replaced by a system of planned economy, by socialism. Of course, this is not the socialism of immediate state management of every plant by the government as in Russia, but the socialism of the German or Nazi pattern."

Again, we read Mises described the enforcement of the will of the police state upon its people.

"What the interventionist aims at is the substitution of police pressure for the choice of the consumers. All this talk: the state should do this or that, ultimately means: the police should force consumers to behave otherwise than they would behave spontaneously. In such proposals as: let us raise farm prices, let us raise wage rates, let us lower profits, let us curtail the salaries of executives,the us ultimately refers to the police. Yet the authors of these projects protest that they are planning for freedom and industrial democracy."

This dictatorial character of interventionism is best illustrated by replacing the plan of individual consumers with a centralized plan. Read how Mises described such replacement: 

"Whatever people do in the market economy, is the execution of their own plans. In this sense every human action means planning. What those calling themselves planners advocate is not the substitution of planned action for letting things go. It is the substitution of the planner's own plan for the plans of his fellow-men. The planner is a potential dictator who wants to deprive all other people of the power to plan and act according to their own plans. he aims at one thing only: the exclusive absolute preeminence of his own plan."

In closing the section, Mises issued a call for everyone to take a definite stand between capitalism and socialism. Interventionism is not the compromise between these two. It is the other face of socialism.

Believing in economic neutrality will not help simply because it does not exist. Let us listen to Mises' solemn warning:

"In this conflict of opinions everybody must make up his mind and take a definite stand. Everybody must side either with the advocates of economic freedom or with those of totalitarian socialism. One cannot evade this dilemma by adopting an allegedly middle-of-the-road position, namely interventionism. For interventionism is neither a middle way nor a compromise between capitalism and socialism. It is a third system. It is a system the absurdity and futility of which is agreed upon not only by all economists but even by the Marxians."

To respond to this call, the role of the intellectuals is critical. Only them have the capability to educate the public about the real identity and nature of interventionism. 

Interventionism as German Pattern of Socialism

In the first section of "Planned Chaos" where Ludwig von Mises explains about "The Failure of Interventionism", it is my first time to realize that socialism has two patterns - the Russian or Marxian pattern and the German pattern. Understanding these two patterns, one will see that interventionism is in reality the German pattern of socialism. Of course, rhetoric and appearances can make this association difficult. And this kind of argument could be considered ridiculous. But that's how I read and understand this section. 

The first pattern of socialism suffered collapse in 1989. This caused the Marxian pattern of socialism difficult to convince the world. The world obviously witnessed that this form of socialism does not work in the real world. Putting all private initiatives under the control of the government is the certain path to slavery and poverty.  

However, the second pattern of socialism is subtle. It utilizes government policies to accomplish its goal. The policies appear to be acceptable to the people, but the logical conclusions of these policies are the exact opposite of what they claim to achieve.

The existence of these policies explains why today the free enterprise is falsely charged with all kinds of social evils that to a thinking person would appear unbelievable and contradictory simply because they cancel out each other. Mises gave a list of these charges:

• The atheists make capitalism responsible for the survival of Christianity. 

• The papal encyclicals blame capitalism for the spread of irreligion ...

• The protestant churches and sects are no less vigorous in their indictment of capitalist greed.

• Friends of peace consider our wars as an offshoot of capitalist imperialism. 

• The adamant nationalist warmongers of Germany and Italy indicted capitalism for its 'bourgeois' pacifism,...

• Sermonizers accuse capitalism of disrupting the family and fostering licentiousness. 

• The 'progressives' blame capitalism for the preservation of allegedly outdated rules ...

• Almost all men agree that poverty is an outcome of capitalism.

The above list demonstrates the bad reputation of capitalism in our time and an indication of the present success of socialism through interventionist policies.

As you can see the German pattern is more effective in implementing socialism's agenda.  The widespread influence of economic policies such as minimum wage rate, credit expansion, and the idea that the government can create jobs through increased government spending are now popular especially among democratic countries. Mises describes several features of this type of socialism:

• It still "maintains private ownership of the means of production, entrepreneurship, and market exchange." 
• The "entrepreneurs do the buying and selling...But they are no longer entrepreneurs." They were shop keepers.
• The government tells them "what and how to produce, at what prices and from whom to buy, at what prices and to whom to sell."
• "This is socialism with the outward appearance of capitalism."

Similar to the fate of Russian socialism in 1989, the German type will certainly suffer similar failure. We cannot escape the logical economic consequences of interventionist policies. Since the date of the writing of "Socialism: An Economic and Sociological Analysis" (1951), Mises foresaw this interventionist crisis:

"No economist ever dared to assert that interventionism could result in anything else than in disaster and chaos."

 "The failure of interventionism does not demonstrate the necessity of adopting socialism. It merely exposes the futility of interventionism."

 "Our age has to face great economic troubles. But this is not a crisis of capitalism. It is the crisis of interventionism, of policies designed to improve capitalism and to substitute a better system for it."

Exposing and Challenging the Spirit Behind Interventionism

In the "Introductory Remarks" of "Planned Chaos", an excerpt from Ludwig von Mises' book "Socialism: An Economic and Sociological Analysis" (1951), you will have an overview of what to expect in reading the material. As for me, after reading the entire material once (it only has 43 pages) and rereading it again while taking down notes and relevant quotes for writing, I see that the whole message of "Planned Chaos" is all about the influence of socialism using government interventionism to suppress personal liberty and the free enterprise. 

Of course, interventionists will not admit that. They claim to dislike tyranny and monopoly. They also claim to be fighting for poor's welfare, social justice and fairer distribution of income. 

But Mises' "Planned Chaos" tells a different story. He actually describes our time as an "age of dictators, wars and revolutions". In fact, he said that "History will call our age the age of the dictators and tyrants."

One distinguishing mark of our dictatorial age is hostility against capitalism. Such hostility has been expressed through interventionist policies. This explains the co-existence of free enterprise and anti-free market policies. 

However, despite of interventionist policies, people still reap the advantages from the free enterprise. Unfortunately, interventionists claim credit to these advantages. This is the reason why Mises emphasized the need to expose and challenge the interventionist policies of the government. 

Most people according to Mises are "Entangled in the superstitions of statism and government omnipotence". He adds, people "expect everything from authoritarian action and very little from the initiative of enterprising citizens." They appear to be blind about the fact that "the only means to increase well-being is to increase the quantity of products", which only the free enterprise is capable of doing. 

For us to challenge interventionism, we need to identify first the spirit that raised the dictators in the past for interventionism is leading to nothing but tyranny. Mises describes that spirit as follows:

"But the spirit which raised these knaves to autocratic power survives. It permeates textbooks and periodicals, it speaks through the mouths of teachers and politicians, it manifests itself in party programmes and in play and novels. As long as this spirit prevails there cannot be any hope of durable peace, of democracy, of the preservation of freedom or of a steady improvement in the nation's economic well-being."

In other words, the above spirit is the dominant spirit that controls the existing academic and political institutions, which is no other than but socialism! This is the spirit that prepares the way for dictators. This is the spirit that needs to be exposed and challenged if we want to maintain both our personal and economic freedom. 

Note: First posted last February 8, 2013.