Critique of Interventionism by Ludwig von Mises

A Critique of Interventionism
by Ludwig von Mises

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INTRODUCTION

We may grow in knowledge of truth, but its great princi­ples are forever the same. The economic principles that Lud­wig von Mises expounded in these six essays during the 1920s have endured the test of time, being as valid today as they were in the past. Surely, the names and places have changed, but the inescapable interdependence of market phenomena is the same today, during the 1970s, as it was during the 1920s, and as valid for present-day Americans as it was for the Germans of the Weimar Republic.

And yet, most social scientists today are as ignorant of this interdependence of economic phenomena as they were during the 1920s. They are statists, or as Professor Mises preferred to call them, “etatists,” who are calling upon gov­ernment to assume ever more responsibilities for the eco­nomic well-being of its citizens. No matter what modern economists have written about the general validity of eco­nomic laws, the statists prefer their ethical judgments over economic principles, and political power over voluntary cooperation. Without government control and regulation, central planning and authority, they are convinced, eco­nomic life would be brutal and chaotic.

In this collection of essays Ludwig von Mises emphasizes again and again that society must choose between two sys­tems of social organization: either it can create a social order that is built on private property in the means of production, or it can establish a command system in which government owns or manages all production and distribution. There is no logical third system of a private property order subject to government regulation. The “middle of the road” leads to socialism because government intervention is not only su­perfluous and useless, but also harmful. It is superfluous because the interdependence of market phenomena narrowly circumscribes individual action and economic relations. It is useless because government regulation cannot achieve the objectives it is supposed to achieve. And it is harmful be­cause it hampers man’s productive efforts where, from the consumers’ viewpoint, they are most useful and valuable. It lowers labor productivity and redirects production along lines of political command, rather than consumer satisfac­tion.

And yet, most American economists tenaciously cling to their faith in the middle of the road with all its government regulations and controls. Like the German “Socialists of the Chair,” whose doctrines face Professor von Mises’ incisive critique in these pages, American “mainstream” economists are seeking the safety of an impartial middle position be­tween classical liberalism and communism. But while they may feel safe on the middle of the road, hopefully equally distant from the competing systems, they are actually pav­ing the way for socialism.

Paul A. Samuelson, the “mainstream economist” par ex­cellence, devotes his Economics (New York: McGraw-Hill Book Co., 1976), the textbook for millions of students, to modern post-Keynesian political economy, whose fruits, ac­cording to the author, are “the better working of the mixed economy” (p. 845). Like the Socialists of the Chair long be­fore him, he simply ignores “conservative counterattacks against mainstream economics.” He neither defines nor de­scribes these attacks, which he repels with a four-line ges­ture of disgust after he announces them in a boldface title. With selfishness, ignornace, and malice “there is not much intellectual arguing that can be done” (p. 847).

He devotes half a page to the “Chicago School Libertar­ianism” of men like Frank Knight, Henry C. Simons, Friedrich Hayek, and Milton Friedman. And like the Socialists of the Chair, he merely labels pleas for individual freedom and the private property order as “provocative negations.” His favorite target, Milton Friedman, is dispatched with an ugly joke: “If Milton Friedman had never existed, it would have been necessary to invent him” (p. 848).

But the champions of all-round government ownership or control in the means of production are treated with utmost courtesy and respect. He devotes eight pages of text supple­mented by eight pages of appendix to “eminent,” “competent,” and “eloquent” advocates of radical economics from Karl Marx to John G. Gurley. He quotes extensively from their writings without refuting any of their arguments. To Samuelson, as to the Socialists of the Chair, Karl Marx “was as much a philosopher, historian, sociologist, and revolu­tionist. And make no mistake. He was a learned man” (p. 855). In fact, Samuelson echoes Engels: “Marx was a genius . . . the rest of us were talented at best” (p. 853).

If this is the middle of the road, or “mainstream econom­ics,” the future of the American private property system is overshadowed by the dark clouds of Marxian doctrine and policy. This is why Ludwig von Mises’ Critique of Interven­tionism is as pertinent and timely today as it was half a cen­tury ago.

Hans F. Sennholz

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