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Advancing Austrian Economics, Liberty, and Peace

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by Ludwig von Mises





The antagonism which the people had to encounter in earlier struggles for freedom was simple and could be understood by everybody. There were on the one side the tyrants and their supporters; there were on the other side the advocates of popular government. The political conflicts were struggles of various groups for supremacy. The question was: Who should rule? We or they? The few or the many? The despot or the aristocracy or the people?

Today the fashionable philosophy of Statolatry has obfuscated the issue. The political conflicts are no longer seen as struggles between groups of men. They are considered a war between two principles, the good and the bad. The good is embodied in the great god State, the materialization of the eternal idea of morality, and the bad in the “rugged individualism” of selfish men.[1] In this antagonism the State is always right and the individual always wrong. The State is the representative of the commonweal, of justice, civilization, and superior wisdom. The individual is a poor wretch, a vicious fool.

When a German says “der Staat” or when a Marxian says “society,” they are overwhelmed by reverential awe. How can a man be so entirely corrupt as to rise in rebellion against this Supreme Being?

Louis XIV was very frank and sincere when he said: I am the State. The modern etatist is modest. He says: I am the servant of the State; but, he implies, the State is God. You could revolt against a Bourbon king, and the French did it. This was, of course, a struggle of man against man. But you cannot revolt against the god State and against his humble handy man, the bureaucrat.

Let us not question the sincerity of the well-intentioned officeholder. He is fully imbued with the idea that it is his sacred duty to fight for his idol against the selfishness of the populace. He is, in his opinion, the champion of the eternal divine law. He does not feel himself morally bound by the human laws which the defenders of individualism have written into the statutes. Men cannot alter the genuine laws of god, the State. The individual citizen, in violating one of the laws of his country, is a criminal deserving punishment. He has acted for his own selfish advantage. But it is quite a different thing if an officeholder evades the duly promulgated laws of the nation for the benefit of the “State.” In the opinion of “reactionary” courts he may be technically guilty of a contravention. But in a higher moral sense he was right. He has broken human laws lest he violate a divine law.

This is the essence of the philosophy of bureaucratism. The written laws are in the eyes of the officials barriers erected for the protection of scoundrels against the fair claims of society. Why should a criminal evade punishment only because the “State” in prosecuting him has violated some frivolous formalities? Why should a man pay lower taxes only because there is a loophole left in the tax law? Why should lawyers make a living advising people how to profit from the imperfections of the written law? What is the use of all these restrictions imposed by the written law upon the government official’s honest endeavors to make the people happy? If only there were no constitutions, bills of rights, laws, parliaments, and courts! No newspapers and no attorneys! How fine the world would be if the “State” were free to cure all ills!

It is one step only from such a mentality to the perfect totalitarianism of Stalin and Hitler.

The answer to be given to these bureaucratic radicals is obvious. The citizen may reply: You may be excellent and lofty men, much better than we other citizens are. We do not question your competence and your intelligence. But you are not the vicars of a god called “the State.” You are servants of the law, the duly passed laws of our nation. It is not your business to criticize the law, still less to violate it. In violating the law you are perhaps worse than a good many of the racketeers, no matter how good your intentions may be. For you are appointed, sworn, and paid to enforce the law, not to break it. The worst law is better than bureaucratic tyranny.

The main difference between a policeman and a kidnaper and between a tax collector and a robber is that the policeman and the tax collector obey and enforce the law, while the kidnaper and robber violate it. Remove the law, and society will be destroyed by anarchy. The State is the only institution entitled to apply coercion and compulsion and to inflict harm upon individuals. This tremendous power cannot be abandoned to the discretion of some men, however competent and clever they may deem themselves. It is necessary to restrict its application. This is the task of the laws.

The officeholders and the bureaucrats are not the State. They are men selected for the application of the laws. One may call such opinions orthodox and doctrinaire. They are indeed the expression of old wisdom. But the alternative to the rule of law is the rule of despots.


The officeholder’s task is to serve the public. His office has been established—directly or indirectly—by a legislative act and by the allocation of the means necessary for its support in the budget. He executes the laws of his country.

In performing his duties he shows himself a useful member of the community, even if the laws which he has to put into practice are detrimental to the commonweal. For it is not he who is responsible for their inadequacy. The sovereign people is to blame, not the faithful executor of the people’s will. As the distillers are not responsible for people getting drunk, so the government’s clerks are not responsible for the undesirable consequences of unwise laws.

On the other hand, it is not the merit of the bureaucrats that many benefits are derived from their actions. That the police department’s work is so efficient that the citizens are fairly well protected against murder, robbery, and theft does not oblige the rest of the people to be more grateful to the police officers than to any other fellow citizens rendering useful services. The police officer and the fireman have no better claim to the public’s gratitude than the doctors, the railroad engineers, the welders, the sailors, or the manufacturers of any useful commodity. The traffic cop has no more cause for conceit than the manufacturer of traffic lights. It is not his merit that his superiors assigned him to a duty in which he daily and hourly prevents accidental killing and thus saves many people’s lives.

It is true that society could not do without the services rendered by patrolmen, tax collectors, and clerks of the courts. But it is no less true that everyone would suffer great damage if there were no scavengers, chimney sweepers, dishwashers, and bug exterminators. Within the framework of social cooperation every citizen depends on the services rendered by all his fellow citizens. The great surgeon and the eminent musician would never have been able to concentrate all their efforts upon surgery and music if the division of labor had not freed them from the necessity of taking care of many trifles the performance of which would have prevented them from becoming perfect specialists. The ambassador and the lighthousekeeper have no better claim to the epithet pillar of society than the Pullman porter and the charwoman. For, under the division of labor, the structure of society rests on the shoulders of all men and women.

There are, of course, men and women serving in an altruistic and entirely detached way. Mankind would never have reached the present state of civilization without heroism and self-sacrifice on the part of an elite. Every step forward on the way toward an improvement of moral conditions has been an achievement of men who were ready to sacrifice their own well-being, their health, and their lives for the sake of a cause that they considered just and beneficial. They did what they considered their duty without bothering whether they themselves would not be victimized. These people did not work for the sake of reward, they served their cause unto death.

It was a purposeful confusion on the part of the German metaphysicians of statolatry that they clothed all men in the government service with the gloriole of such altruistic self-sacrifice. From the writings of the German etatists the civil servant emerges as a saintly being, a sort of monk who forsook all earthly pleasures and all personal happiness in order to serve, to the best of his abilities, God’s lieutenant, once the Hohenzollern king and today the Führer. The Staatsbeamte does not work for pay because no salary however large could be considered an adequate reward for the invaluable and priceless benefits that society derives from his self-denying sacrifice. Society owes him not pay but maintenance adequate to his rank in the official hierarchy. It is a misnomer to call this maintenance a salary.[2] Only liberals, biased by the prejudices and errors of commercialism, use such a wrong term. If the Beamtengehalt (the civil servant’s salary) were a real salary, it would be only just and natural to give the holder of the most modest office an income higher than that of anybody outside of the official hierarchy. Every civil servant is, when on duty, a mandatory of the State’s sovereignty and infallibility. His testimony in court counts more than that of the layman.

All this was sheer nonsense. In all countries most people joined the staff of the government offices because the salary and the pension offered were higher than what they could expect to earn in other occupations. They did not renounce anything in serving the government. Civil service was for them the most profitable job they could find.

The incentive offered by the civil service in Europe consisted not only in the level of the salary and the pension; many applicants, and not the best ones, were attracted by the ease of the work and by the security. As a rule government jobs were less exigent than those in business. Besides, the appointments were for life. An employee could be dismissed only when a kind of judicial trial had found him guilty of heinous neglect of his duties. In Germany, Russia, and France, every year many thousands of boys whose life plan was completely fixed entered the lowest grade of the system of secondary education. They would take their degrees, they would get a job in one of the many departments, they would serve thirty or forty years, and then retire with a pension. Life had no surprises and no sensations for them; everything was plain and known beforehand.

The difference between the social prestige of government jobs in continental Europe and in America may be illustrated by an example. In Europe social and political discrimination against a minority group took the form of barring such people from access to all government jobs, no matter how modest the position and the salary. In Germany, in the Austro-Hungarian Empire, and in many other countries all those subordinate jobs that did not require special abilities or training—like attendants, ushers, heralds, beadles, apparitors, messengers, janitors—were legally reserved for ex‑soldiers who had voluntarily given more years of active service in the armed forces than the minimum required by the law. These jobs were considered highly valued rewards for noncommissioned officers. In the eyes of the people, it was a privilege to serve as an attendant in a bureau. If in Germany there had been a class of the social status of the American Negro, such persons would never have ventured to apply for one of these jobs. They would have known that such an ambition was extravagant for them.


The bureaucrat is not only a government employee. He is, under a democratic constitution, at the same time a voter and as such a part of the sovereign, his employer. He is in a peculiar position: he is both employer and employee. And his pecuniary interest as employee towers above his interest as employer, as he gets much more from the public funds than he contributes to them.

This double relationship becomes more important as the people on the government’s payroll increase. The bureaucrat as voter is more eager to get a raise than to keep the budget balanced. His main concern is to swell the payroll.

The political structure of Germany and France, in the last years preceding the fall of their democratic constitutions, was to a very great extent influenced by the fact that for a considerable part of the electorate the state was the source of income. There were not only the hosts of public employees, and those employed in the nationalized branches of business (e.g., railroad, post, telegraph, and telephone), there were the receivers of the unemployment dole and of social security benefits, as well as the farmers and some other groups which the government directly or indirectly subsidized. Their main concern was to get more out of the public funds. They did not care for “ideal” issues like liberty, justice, the supremacy of the law, and good government. They asked for more money, that was all. No candidate for parliament, provincial diets, or town councils could risk opposing the appetite of the public employees for a raise. The various political parties were eager to outdo one another in munificence. In the nineteenth century the parliaments were intent on restricting public expenditures as much as possible. But now thrift became despicable. Boundless spending was considered a wise policy. Both the party in power and the opposition strove for popularity by openhandedness. To create new offices with new employees was called a “positive” policy, and every attempt to prevent squandering public funds was disparaged as “negativism.”

Representative democracy cannot subsist if a great part of the voters are on the government pay roll. If the members of parliament no longer consider themselves mandatories of the taxpayers but deputies of those receiving salaries, wages, subsidies, doles, and other benefits from the treasury, democracy is done for.

This is one of the antinomies inherent in present-day constitutional issues. It has made many people despair of the future of democracy. As they became convinced that the trend toward more government interference with business, toward more offices with more employees, toward more doles and subsidies is inevitable, they could not help losing confidence in government by the people.


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.

Economics is a theoretical science and as such does not tell man what values he should prefer and what ends he should aim at. It does not establish ultimate ends. This is not the task of the thinking man but that of the acting man. Science is a product of thought, action a product of will. In this sense we may say that economics as a science is neutral with regard to the ultimate ends of human endeavor.

But it is different with regard to the means to be applied for the attainment of given social ends. There economics is the only reliable guide of action. If men are eager to succeed in the pursuit of any social ends, they must adjust their conduct to the results of economic thinking.

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, and they ridiculed them and called down curses upon them.

It is, however, not the task of this book to deal with this phenomenon. We have to limit ourselves to the description of the role that bureaucracy played in this development.

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 as a police station is subject to the head of the police department. 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.

As in all other fields of bureaucratization, nineteenth-century Germany was far ahead of other nations in this matter too. Nothing characterizes the spirit of the German universities better than a passage of an oration that the physiologist Emil du Bois-Reymond delivered in 1870 in his double capacity as Rector of the University of Berlin and as President of the Prussian Academy of Science: “We, the University of Berlin, quartered opposite the King’s palace, are, by the deed of our foundation, the intellectual bodyguard of the House of Hohenzollern.” The idea that such a royal henchman should profess views contrary to the tenets of the government, his employer, was incomprehensible to the Prussian mind. To maintain the theory that there are such things as economic laws was deemed a kind of rebellion. For if there are economic laws, then governments cannot be regarded as omnipotent, as their policies could only succeed when adjusted to the operation of these laws. Thus the main concern of the German professors of the social sciences was to denounce the scandalous heresy that there is a regularity in economic phenomena. The teaching of economics was anathematized and wirtschaftliche Staatswissenschaften (economic aspects of political science) put in its place. The only qualities required in an academic teacher of the social sciences were disparagement of the operation of the market system and enthusiastic support of government control. Under the Kaiser radical Marxians who openly advocated a revolutionary upheaval and the violent overthrow of the government were not appointed to full-time professorships; the Weimar Republic virtually abolished this discrimination.

Economics deals with the operation of the whole system of social cooperation, with the interplay of all its determinants, and with the interdependence of the various branches of production. It cannot be broken up into separate fields open to treatment by specialists who neglect the rest. It is simply nonsensical to study money or labor or foreign trade with the same kind of specialization which historians apply when dividing human history into various compartments. The history of Sweden can be treated with almost no reference to the history of Peru. But you cannot deal with wage rates without dealing at the same time with commodity prices, interest rates, and profits. Every change occurring in one of the economic elements affects all other elements. One will never discover what a definite policy or change brings about if one limits his investigation to a special segment of the whole system.

It is precisely this interdependence that the government does not want to see when it meddles in economic affairs. The government pretends to be endowed with the mystical power to accord favors out of an inexhaustible horn of plenty. It is both omniscient and omnipotent. It can by a magic wand create happiness and abundance.

The truth is that the government cannot give if it does not take from somebody. A subsidy is never paid by the government out of its own funds; it is at the expense of the taxpayer that the state grants subsidies. Inflation and credit expansion, the preferred methods of present day government openhandedness, do not add anything to the amount of resources available. They make some people more prosperous, but only to the extent that they make others poorer. Interference with the market, with commodity prices, wage rates, and interest rates as determined by demand and supply, may in the short run attain the ends aimed at by the government. But in the long run such measures always result in a state of affairs which—from the viewpoint of the government—is more unsatisfactory than the previous state they were intended to alter.

It is not in the power of the government to make everybody more prosperous. It can raise the income of the farmers by forcibly restricting domestic agricultural production. But the higher prices of farm products are paid by the consumers, not by the state. The counterpart of the farmers’ higher standard of living is the lowering of the standard of living of the rest of the nation. The government can protect the small shops against the competition of department stores and chain stores. But here again the consumers foot the bill. The state can improve the conditions of a part of the wage earners by allegedly pro-labor legislation or by giving a free hand to labor union pressure and compulsion. But if this policy does not result in a corresponding rise in the prices of manufactures, thereby bringing real wage rates back to the market level, it brings about unemployment of a considerable part of those willing to earn wages.

A scrutiny of such policies from the viewpoint of economic theory must necessarily show their futility. This is why economics is tabooed by the bureaucrats. But the governments encourage the specialists who limit their observations to a narrow field without bothering about the further consequences of a policy. The labor economist deals only with the immediate results of pro-labor policies, the farm economist only with the rise of agricultural prices. They both view the problems only from the angle of those pressure groups which are immediately favored by the measure in question and disregard its ultimate social consequences. They are not economists, but expounders of government activities in a particular branch of the administration.

For under government interference with business the unity of government policies has long since disintegrated into badly coordinated parts. Gone are the days when it was still possible to speak of a government’s policy. Today in most countries each department follows its own course, working against the endeavors of the other departments. The department of labor aims at higher wage rates and at lower living costs. But the same administration’s department of agriculture aims at higher food prices, and the department of commerce tries to raise domestic commodity prices by tariffs. One department fights against monopoly, but other departments are eager to bring about—by tariffs, patents, and other means—the conditions required for the building of monopolistic restraint. And each department refers to the expert opinion of those specialized in their respective fields.

Thus the students no longer receive an initiation into economics. They learn incoherent and disconnected facts about various government measures thwarting one another. Their doctor’s theses and their graduate research work deal not with economics but with various topics of economic history and various instances of government interference with business. Such detailed and well-documented statistical studies of the conditions of the immediate past (mistakenly often labeled studies about “present-day” conditions) are of great value for the future historian. They are no less important for the vocational tasks of lawyers and office clerks. But they are certainly not a substitute for the lack of instruction in economics. It is amazing that Stresemann’s doctoral thesis dealt with the conditions of the bottled beer trade in Berlin. Under the conditions of the German university curriculum this meant that he devoted a considerable part of his university work to the study of the marketing of beer and of the drinking habits of the population. This was the intellectual equipment that the glorified German university system gave to a man who later acted as the Reich’s chancellor in the most critical years of German history.

After the old professors who had got their chairs in the short flowering of German liberalism had died, it became impossible to hear anything about economics at the universities of the Reich. There were no longer any German economists, and the books of foreign economists could not be found in the libraries of the university seminars. The social scientists did not follow the example of the professors of theology who acquainted their students with the tenets and dogmas of other churches and sects and with the philosophy of atheism because they were eager to refute the creeds they deemed heretical. 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.[3] The graduates left the universities convinced advocates of totalitarianism either of the Nazi variety or of the Marxian brand.

Conditions in other countries were similar. The most eminent establishment of French learning was the Ecole Normale Supérieure in Paris; its graduates filled the most important posts in public administration, politics and higher education. This school was dominated by Marxians and other supporters of full government control. In Russia the Imperial Government did not admit to a university chair anybody suspected of the liberal ideas of “Western” economics. But, on the other hand, it appointed many Marxians of the “loyal” wing of Marxism, i.e., those who kept out of the way of the revolutionary fanatics. Thus the Czars themselves contributed to the later triumph of Marxism.

European totalitarianism is an upshot of bureaucracy’s preeminence in the field of education. The universities paved the way for the dictators.

Today both in Russia and in Germany the universities are the main strongholds of the one-party system. Not only the social sciences, history, and philosophy, but all other branches of knowledge, of art, and of literature are regimented or, as the Nazis say, gleichgeschaltet. Even Sidney and Beatrice Webb, naive and uncritical admirers of the Soviets as they are, were shocked when they discovered that the Journal for Marxist-Leninist Natural Sciences stands “for party in mathematics” and “for the purity of Marxist-Leninist theory in surgery” and that the Soviet Herald of Venereology and Dermatology aims at considering all problems that it discusses from the point of view of dialectical materialism.[4]


Under any system of the division of labor a principle for the coordination of the activities of the various specialists is needed. The specialist’s effort would be aimless and contrary to purpose if he were not to find a guide in the supremacy of the public. Of course, production’s only end is to serve the consumers.

Under a market society the profit motive is the directing principle. Under government control it is regimentation. There is no third possibility left. To a man not driven by the impulse to make money on the market some code must say what to do and how.

One of the most frequent objections raised against the liberal and democratic system of capitalism is that it stresses mainly the individual’s rights, to the neglect of his duties. People stand on their rights and forget their obligations. However, from the social viewpoint the duties of the citizens are more important than their rights.

There is no need for us to dwell upon the political and constitutional aspect of this antidemocratic critique. The rights of man as codified in the various bills of rights are promulgated for the protection of the individual against governmental arbitrariness. But for them all people would be slaves of despotic rulers.

In the economic sphere the right to acquire and to own property is not a privilege. It is the principle that safeguards the best satisfaction of the wants of the consumers. He who is eager to earn, to acquire, and to hold wealth is under the necessity of serving the consumers. The profit motive is the means of making the public supreme. The better a man succeeds in supplying the consumers, the greater become his earnings. It is to everybody’s advantage that the entrepreneur who produces good shoes at the cheapest cost becomes rich; most people would suffer some loss if a law were to limit his right to get richer. Such a law would only favor his less efficient competitors. It would not lower but raise the price of shoes.

Profit is the reward for the best fulfillment of some voluntarily assumed duties. It is the instrument that makes the masses supreme. The common man is the customer for whom the captains of industry and all their aides are working.

It has been objected that this is not true as far as big business is concerned. The consumer has no other choice than either to patronize the business or to forego the satisfaction of a vital need. He is thus forced to submit to any price asked by the entrepreneur. Big business is no longer a supplier and purveyor but a master. It is not under the necessity of improving and cheapening its service.

Let us consider the case of a railroad connecting two cities not connected by any other rail line. We may even ignore the fact that other means of transportation are in competition with the railroad: busses, passenger cars, aeroplanes, and river boats. Under these assumptions it is true that whoever wants to travel is forced to patronize the railroad. But this does not remove the company’s interest in good and cheap service. Not all those who consider traveling are forced to make the journey under any conditions. The number of passengers both for pleasure and for business depends on the efficiency of the service and on the rates charged. Some people will travel in any case. Others will travel only if the quality and speed of the service and cheap rates make traveling attractive. It is precisely this second group whose patronage means for the company the difference between dull or even bad business and profitable business. If this is true for a railroad under the extreme assumptions made above, it is much more true for any other branch of business.

All specialists, whether businessmen or professional people, are fully aware of their dependence on the consumers’ directives. Daily experience teaches them that, under capitalism, their main task is to serve the consumers. Those specialists who lack an understanding of the fundamental social problems resent very deeply this “servitude” and want to be freed. The revolt of narrow-minded experts is one of the powerful forces pushing toward general bureaucratization.

The architect must adjust his blueprints to the wishes of those for whom he builds homes; or—in the case of apartment houses—of the proprietors who want to own a building that suits the tastes of the prospective tenants and can therefore be easily rented. There is no need to find out whether the architect is right in believing that he knows better what a fine house should look like than the foolish laymen who lack good taste. He may foam with rage when he is forced to debase his wonderful projects in order to please his customers. And he yearns for an ideal state of affairs in which he could build homes that meet his own artistic standards. He longs for a government housing office and sees himself in his daydreams at the top of this bureau. Then he will construct dwellings according to his own fashion.

This architect would be highly offended if somebody were to call him a would-be dictator. My only aim, he could retort, is to make people happy by providing them with finer houses; these people are too ignorant to know what would best promote their own well-being; the expert, under the auspices of the government, must take care of them; there should be a law against ugly buildings. But, let us ask, who is to decide which kind of architectural style has to be considered good and which bad? Our architect will answer: Of course, I, the expert. He boldly disregards the fact that there is, even among the architects, very considerable dissent with regard to styles and artistic values.

We do not want to stress the point that this architect, even under a bureaucratic dictatorship and precisely under such a totalitarianism, will not be free to build according to his own ideas. He will have to comply with the tastes of his bureaucratic superiors, and they themselves will be subject to the whims of the supreme dictator. In Nazi Germany the architects are not free either. They have to accommodate themselves to the plans of the frustrated artist Hitler.

Still more important is this. There are, in the field of esthetics as in all other fields of human endeavor, no absolute criteria of what is beautiful and what is not. If a man forces his fellow citizens to submit to his own standards of value, he does not make them any happier. They themselves alone can decide what makes them happy and what they like. You do not increase the happiness of a man eager to attend a performance of Abies Irish Rose by forcing him to attend a perfect performance of Hamlet instead. You may deride his poor taste. But he alone is supreme in matters of his own satisfaction.

The dictatorial nutrition expert wants to feed his fellow citizens according to his own ideas about perfect alimentation. He wants to deal with men as the cattle breeder deals with his cows. He fails to realize that nutrition is not an end in itself but the means for the attainment of other ends. The farmer does not feed his cow in order to make it happy but in order to attain some end which the well-fed cow should serve. There are various schemes for feeding cows. Which one of them he chooses depends on whether he wants to get as much milk as possible or as much meat as possible or something else. Every dictator plans to rear, raise, feed, and train his fellow men as the breeder does his cattle. His aim is not to make the people happy but to bring them into a condition which renders him, the dictator, happy. He wants to domesticate them, to give them cattle status. The cattle breeder also is a benevolent despot.

The question is: Who should be the master? Should man be free to choose his own road toward what he thinks will make him happy? Or should a dictator use his fellow men as pawns in his endeavors to make himself, the dictator, happier?

We may admit that some experts are right in telling us that most people behave foolishly in their pursuit of happiness. But you cannot make a man happier by putting him under guardianship. The experts of the various government agencies are certainly fine men. But they are not right in becoming indignant whenever the legislature frustrates their carefully elaborated designs. What is the use of representative government, they ask; it merely thwarts our good intentions. But the only question is: Who should run the country? The voters or the bureaucrats?

Every half-wit can use a whip and force other people to obey. But it requires brains and diligence to serve the public. Only a few people succeed in producing shoes better and cheaper than their competitors. The inefficient expert will always aim at bureaucratic supremacy. He is fully aware of the fact that he cannot succeed within a competitive system. For him all-round bureaucratization is a refuge. Equipped with the power of an office he will enforce his rulings with the aid of the police.

At the bottom of all this fanatical advocacy of planning and socialism there is often nothing else than the intimate consciousness of one’s own inferiority and inefficiency. The man who is aware of his inability to stand competition scorns “this mad competitive system.” He who is unfit to serve his fellow citizens wants to rule them.

[1]Such is the political interpretation of the issue. For the current economic interpretation see below pp. 117‑119.

[2]Cf. Laband, Das Staatsrecht des Deutschen Reiches (5th ed. Tübingen, 1911), I, 500.

[3]Cf. Pohle, Die Gegenwärtige Krise der deutschen Volkswirtschaftslehre (2d ed. Leipzig, 1921).

[4]Sidney and Beatrice Webb, Soviet Communism: A New Civilization? (New York, 1936), II, 1000.

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