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Omnipotent Government
by Ludwig von Mises

Etatism and Nationalism continued

4. Aggressive Nationalism

Etatism—whether interventionism or socialism—must lead to conflict, war, and totalitarian oppression of large populations. The right and true state, under etatism, is the state in which I or my friends, speaking my language and sharing my opinions, are su­preme. All other states are spurious. One cannot deny that they too exist in this imperfect world. But they are enemies of my state, of the only righteous state, even if this state does not yet exist outside of my dreams and wishes. Our German Nazi state, says Steding, is the Reich; the other states are deviations from it.[i]Politics, says the foremost Nazi jurist, Carl Schmitt, is the discrimination between friend and foe.[ii]

In order to understand these doctrines we must look first at the liberal attitude toward the problem of linguistic antagonisms.

He who lives as a member of a linguistic minority, within a com­munity where another linguistic group forms the majority, is de­prived of the means of influencing the country's politics. (We are not considering the special case in which such a linguistic minority occupies a privileged position and oppresses the majority as, for example, the German-speaking aristocracy in the Baltic duchies in the years preceding the Russianization of these provinces.) Within a democratic community public opinion determines the outcome of elections, and thereby the political decisions. Whoever wants to make his ideas prevalent in political life must try to influence pub­lic opinion through speech and writing. If he succeeds in convinc­ing his fellow citizens, his ideas obtain support and persist.

In this struggle of ideas linguistic minorities cannot take part. They are voiceless spectators of the political debates out of which the deciding vote emerges. They cannot participate in the discus­sions and negotiations. But the result determines their fate too. For them democracy does not mean self-determination; other people control them. They are second-class citizens. This is the reason why men in a democratic world consider it a disadvantage to be members of a linguistic minority. It explains at the same time why there were no linguistic conflicts in earlier ages, where there was no democracy. In this age of democracy people in the main prefer to live in a community where they speak the same language as the majority of their fellow citizens. Therefore in plebiscites concerning the question to which state a province should belong, people as a rule, but not always, vote in favor of the country where they will not be members of a linguistic minority.

But the recognition of this fact by no means leads liberalism to the principle of nationality. Liberalism does not say: Every lin­guistic group should form one state and one state only, and each single man belonging to this group should, if at all possible, belong to this state. Neither does it say: No state should include people of several linguistic groups. Liberalism postulates self-determination. That men in the exercise of this right allow themselves to be guided by linguistic considerations is for liberalism simply a fact, not a principle or a moral law. If men decide in another way, which was the case, for example, with the German-speaking Alsatians, that is their own concern. Such a decision, too, must be respected.

But it is different in our age of etatism. The etatist state must necessarily extend its territory to the utmost. The benefits it can grant to its citizens increase in proportion to its territory. Every­thing that the interventionist state can provide can be provided more abundantly by the larger state than by the smaller one. Privi­leges become more valuable the larger the territory in which they are valid. The essence of etatism is to take from one group in order to give to another. The more it can take the more it can give. It is to the interest of those whom the government wishes to favor that their state become as large as possible. The policy of territorial ex­pansion becomes popular. The people as well as the governments become eager for conquest. Every pretext for aggression is deemed right. Men then recognize but one argument in favor of peace: that the prospective adversary is strong enough to defeat their attack. Woe to the weak!

The domestic policies of a nationalist state are inspired by the aim of improving the conditions of some groups of citizens by in­flicting evils on foreigners and those citizens who use a foreign lan­guage. In foreign policy economic nationalism means discrimina­tion against foreigners. In domestic policy it means discrimination against citizens speaking a language which is not that of the ruling group. These pariahs are not always minority groups in a technical sense. The German-speaking people of Meran, Bozen, and Brixen are majorities in their districts; they are minorities only because their country has been annexed by Italy. The same is true for the Germans of the Egerland, for the Ukrainians in Poland, the Mag­yars of the Szekler district in Transylvania, the Slovenes in Italian-occupied Carniola. He who speaks a foreign mother tongue in a state where another language predominates is an outcast to whom the rights of citizens are virtually denied.

The best example of the political consequences of this aggressive nationalism is provided by conditions in Eastern Europe. If you ask representatives of the linguistic groups of Eastern Europe what they consider would be a fair determination of their national states, and if you mark these boundaries on a map, you will discover that the greater part of this territory is claimed by at least two nations, and not a negligible part by three or even more.[iii]Every linguistic group defends its claims with linguistic, racial, historical, geo­graphical, strategic, economic, social, and religious arguments. No nation is prepared sincerely to renounce the least of its claims for reasons of expediency. Every nation is ready to resort to arms to satisfy its pretensions. Every linguistic group therefore considers its immediate neighbors mortal enemies and relies on its neigh­bor's neighbors for armed support of its own territorial claims against the common foe. Every group tries to profit from every op­portunity to satisfy its claims at the expense of its neighbors. The history of the last decades proves the correctness of this melancholy description.

Take, for example, the case of the Ukrainians. For hundreds of years they were under the yoke of the Russians and the Poles. There has been no Ukrainian national state in our day. One might assume that the spokesmen of a people which has so fully experienced the hardships of ruthless foreign oppression would be prudent in their pretensions. But nationalists simply cannot renounce. Thus the Ukrainians claim an area of more than 360,000 square miles with a total population of some sixty millions, of whom, according even to their own declaration, only "more than forty millions" are Ukrainians.[iv]These oppressed Ukrainians would not be content with their own liberation; they strive at the oppression of twenty or more millions of non-Ukrainians.

In 1918 the Czechs were not satisfied with the establishment of an independent state of their own. They incorporated into their state millions of German-speaking people, all the Slovaks, tens of thousands of Hungarians, the Ukrainians of Carpatho-Russia and—for considerations of railroad management—some districts of Lower Austria. And what a spectacle was the Polish Republic which in the twenty-one years of its independence tried to rob violently three of its neighbors—Russia, Lithuania, and Czecho­slovakia—of a part of their territories!

These conditions were correctly described by August Strindberg in his trilogy To Damascus[v]:

FATHER MELCHER:    "At the Amsteg station, on the Gotthard line, you have probably seen a tower called the castle of Zwing-Uri; it is celebrated by Schiller in Wilhelm Tell. It stands there as a monument to the inhuman oppression which the inhabitants of Uri suffered at the hands of the German Kaiser! Lovely! On the Italian side of the Saint Gotthard lies the station of Bellinzona, as you know. There are many towers there, but the most remarkable is the Castel d'Uri. It is a monument to the inhuman oppression, which the Italian canton suffered at the hands of the inhabitants of Uri. Do you understand?"

THE STRANGER: "Liberty! Liberty, give us, in order that we may suppress."

However, Strindberg did not add that the three cantons Uri, Schwyz, and Unterwalden under nineteenth-century liberalism peacefully coöperated with the Ticino whose people they had op­pressed for almost three hundred years.

5. Colonial Imperialism

In the fifteenth century the Western nations began to occupy territories in non-European countries peopled by non-Christian populations. They were eager to obtain precious metals and raw materials that could not be produced in Europe. To explain this colonial expansion as a search for markets is to misrepresent the facts. These traders wanted to get colonial products. They had to pay for them; but the profit they sought was the acquisition of commodities that could not be bought elsewhere. As businessmen they were not so foolish as to believe in the absurd teaching of Mercantilism—old and new that the advantage derived from foreign trade lies in exporting and not in importing. They were so little concerned about exporting that they were glad when they could obtain the goods they wanted without any payment at all. They were often more pirates and slavers than merchants. They had no moral inhibitions in their dealings with the heathen.

It was not in the plans of the kings and royal merchants who inaugurated European overseas expansion to settle European farm­ers in the occupied territories. They misprized the vast forests and prairies of North America from which they expected neither pre­cious metals nor spices. The rulers of Great Britain were much less enthusiastic about founding settlements in continental America than about their enterprises in the Caribbean, in Africa, and the East Indies, and their participation in the slave trade. The colo­nists, not the British Government, built up the English‑speaking communities in America, and later in Canada, in Australia, New Zealand, and South Africa.

The colonial expansion of the nineteenth century was very dif­ferent from that of the preceding centuries. It was motivated solely by considerations of national glory and pride. The French officers, poets, and after-dinner speakers—not the rest of the nation—suf­fered deeply from the inferiority complex which the battles of Leipzig and Waterloo, and later those of Metz and Sedan, left with them. They thirsted for glory and fame; and they could quench their thirst neither in liberal Europe nor in an America sheltered by the Monroe Doctrine. It was the great comfort of Louis Philippe that his sons and his generals could reap laurels in Algeria. The Third Republic conquered Tunis, Morocco, Madagascar, and Tonking in order to reëstablish the moral equilibrium of its army and navy. The inferiority complex of Custozza and Lissa drove Italy to Abyssinia, and the inferiority complex of Aduwa to Tripoli. One of the important motives that made Germany embark on colo­nial conquests was the turbulent ambition of shabby adventurers like Dr. Karl Peters.

There were other cases too. King Leopold II of Belgium and Cecil Rhodes were belated conquistadors. But the main incentive of modern colonial conquest was the desire for military glory. The defenselessness of the poor aborigines, whose main weapons were the dreariness and impassableness of their countries, was too tempt­ing. It was easy and not dangerous to defeat them and to return home a hero.

The modern world's paramount colonial power was Great Britain. Its East Indian Empire surpassed by far the colonial pos­sessions of all other European nations. In the 1820s it was virtually the only colonial power. Spain and Portugal had lost almost their entire overseas territories. The French and the Dutch retained at the end of the Napoleonic Wars as much as the British were willing to leave them; their colonial rule was at the mercy of the British Navy. But British liberalism has fundamentally reformed the mean­ing of colonial imperialism. It granted autonomy—dominion status—to the British settlers, and ran the East Indies and the remaining Crown colonies on free-trade principles. Long before the Covenant of the League of Nations created the concept of mandates, Great Britain acted virtually as mandatory of European civilization in countries whose population was, as the Britons believed, not qualified for independence. The main blame which can be laid on British East Indian policies is that they respected too much some native customs—that, for example, they were slow to improve the lot of the untouchables. But for the English there would be no India to­day, only a conglomeration of tyrannically misruled petty princi­palities fighting each other on various pretexts; there would be anarchy, famines, epidemics.

The men who represented Europe in the colonies were seldom proof against the specific moral dangers of the exalted positions they occupied among backward populations. Their snobbishness poisoned their personal contact with the natives. The marvelous achievements of the British administration in India were over­shadowed by the vain arrogance and stupid race pride of the white man. Asia is in open revolt against the gentlemen for whom socially there was but little difference between a dog and a native. India is, for the first time in its history, unanimous on one issue—its hatred for the British. This resentment is so strong that it has blinded for some time even those parts of the population who know very well that Indian independence will bring them disaster and oppression: the 80 millions of Moslems, the 40 millions of untouchables, the many millions of Sikhs, Buddhists, and Indian Christians. It is a tragic situation and a menace to the cause of the United Nations. But it is at the same time the manifest failure of the greatest experi­ment in benevolent absolutism ever put to work.

Great Britain did not in the last decades seriously oppose the step-by-step liberation of India. It did not hinder the establishment of an Indian protectionist system whose foremost aim is to lock out British manufactures. It connived at the development of an Indian monetary and fiscal system which sooner or later will result in a virtual annulment of British investments and other claims. The only task of the British administration in India in these last years has been to prevent the various political parties, religious groups, races, linguistic groups, and castes from fighting one another. But the Hindus do not long for British benefits.

British colonial expansion did not stop in the last sixty years. But it was an expansion forced upon Great Britain by other na­tions' lust of conquest. Every annexation of a piece of land by France, Germany, or Italy curtailed the market for the products of all other nations. The British were committed to the principles of free trade and had no desire to exclude other people. But they had to take over large blocks of territory if only to prevent them from falling into the hands of exclusive rivals. It was not their fault that under the conditions brought about by French, German, Italian, and Russian colonial methods only political control could adequately safeguard trade.[vi]

It is a Marxian invention that the nineteenth-century colonial expansion of the European powers was engendered by the economic interests of the pressure groups of finance and business. There have been some cases where governments acted on behalf of their citi­zens who had made foreign investments; the purpose was to protect them against expropriation or default. But historical research has brought evidence that the initiative for the great colonial projects came not from finance and business but from the governments. The alleged economic interest was a mere blind. The root cause of the Russo-Japanese War of 1904 was not the desire of the Russian Gov­ernment to safeguard the interests of a group of investors who wanted to exploit the Yalu timber estates. On the contrary, because the government needed a pretext for intervention, it deployed "a fighting vanguard disguised as lumbermen." The Italian Govern­ment did not conquer Tripoli on behalf of the Banco di Roma. The bank went to Tripoli because the government wanted it to pave the way for conquest. The bank's decision to invest in Tripoli was the result of an incentive offered by the Italian Government—the privilege of rediscount facilities at the Bank of Italy, and further compensation in the form of a subsidy to its navigation service. The Banco di Roma did not like the risky investment from which at best but very poor returns could be expected. The German Reich did not care a whit for the interests of the Mannesmanns in Mo­rocco. It used the case of this unimportant German firm as a lame excuse for its aspirations. German big business and finance were not at all interested. The Foreign Office tried in vain to induce them to invest in Morocco. "As soon as you mention Morocco," said the German Secretary for Foreign Affairs, Herr von Richt­hofen, "the banks all go on strike, every last one of them."[vii]

At the outbreak of the first World War a total of less than 25,000 Germans, most of them soldiers and civil servants and their families, lived in the German colonies. The trade of the mother country with its colonies was negligible; it was less than .5 per cent of Ger­many's total foreign trade. Italy, the most aggressive colonial power, lacked the capital to develop its domestic resources; its investments in Tripoli and in Ethiopia perceptibly increased the capital short­age at home.

The most modern pretense for colonial conquest is condensed in the slogan "raw materials." Hitler and Mussolini tried to justify their plans by pointing out that the natural resources of the earth were not fairly distributed. As have-nots they were eager to get their fair share from those nations which had more than they should have had. How could they be branded aggressors when they wanted nothing but what was—in virtue of natural and divine right—their own?

In the world of capitalism raw materials can be bought and sold like all other commodities. It does not matter whether they have to be imported from abroad or bought at home. It is of no ad­vantage for an English buyer of Australian wool that Australia is a part of the British Empire; he must pay the same price that his Italian or German competitor pays.

The countries producing the raw materials that cannot be pro­duced in Germany or in Italy are not empty. There are people living in them; and these inhabitants are not ready to become sub­jects of the European dictators. The citizens of Texas and Louisiana are eager to sell their cotton crops to anyone who wants to pay for them; but they do not long for German or Italian domination. It is the same with other countries and other raw materials. The Brazilians do not consider themselves an appurtenance of their coffee plantations. The Swedes do not believe that their supply of iron ore justifies Germany's aspirations. The Italians would them­selves consider the Danes lunatics if they were to ask for an Italian province in order to get their fair share of citrus fruits, red wine, and olive oil.

It would be reasonable if Germany and Italy were to ask for a general return to free trade and laissez passer and for an abandon­ment of the—up to now unsuccessful—endeavors of many govern­ments to raise the price of raw materials by a compulsory restric­tion of output. But such ideas are strange to the dictators, who do not want freedom but Zwangswirtschaft and self-sufficiency.

Modern colonial imperialism is a phenomenon by itself. It should not be confused with European nationalism. The great wars of our age did not originate from colonial conflicts but from nationalist aspirations in Europe. Colonial antagonisms kindled colonial campaigns without disturbing the peace between the Western nations. For all the saber rattling, neither Fashoda nor Morocco nor Ethiopia resulted in European war. In the complex of German, Italian, and French foreign affairs, colonial plans were mere byplay. Colonial aspirations were not much more than a peacetime outdoor sport, the colonies a tilting ground for ambitious young officers.

6. Foreign Investment and Foreign Loans

The main requisite of the industrial changes which transformed the world of handicraftsmen and artisans, of horses, sailing ships, and windmills into the world of steam power, electricity, and mass production was the accumulation of capital. The nations of West­ern Europe brought forth the political and institutional condi­tions for safeguarding saving and investment on a broader scale, and thus provided the entrepreneurs with the capital needed. On the eve of the industrial revolution the technological and economic structure of Western economy did not differ essentially from con­ditions in the other parts of the inhabited surface of the earth. By the second quarter of the nineteenth century a broad gulf sepa­rated the advanced countries of the West from the backward coun­tries of the East. While the West was on the road of quick progress, in the East there was stagnation.

Mere acquaintance with Western methods of production, trans­portation, and marketing would have proved useless for the back­ward nations. They did not have the capital for the adoption of the new processes. It was not difficult to imitate the technique of the West. But it was almost impossible to transplant the mental­ities and ideologies which had created the social, legal, constitu­tional, and political milieu from which these modern technological improvements had sprung. An environment which could make for domestic capital accumulation was not so easy to produce as a modern factory. The new industrial system was but the effect of the new spirit of liberalism and capitalism. It was the outcome of a mentality which cared more about serving the consumer than about wars, conquest, and the preservation of old customs. The essential feature of the advanced West was not its technique but its moral atmosphere which encouraged saving, capital formation, entrepreneurship, business, and peaceful competition.

The backward nations perhaps might have come to understand this basic problem and might have started to transform their social structures in such a way that autochthonous capital accumulation would have resulted. Even then it would have been a slow and troublesome process.  It would have required a long time. The gulf between West and East, between advanced nations and backward nations, would have broadened more and more.  It would have been hopeless for the East to overtake the head start gained by the West.

But history took another course.  A new phenomenon appeared—the internationalization of the capital market. The advanced West provided all parts of the world with the capital needed for the new investments. Loans and direct investments made it pos­sible to outfit all countries with the paraphernalia of modern civili­zation. Mahatma Gandhi expresses a loathing for the devices of the petty West and of devilish capitalism. But he travels by railroad or by motor car and, when ill, goes for treatment to a hospital equipped with the most refined instruments of Western surgery. It does not seem to occur to him that Western capital alone made it possible for the Hindus to enjoy these facilities.

The enormous transfer of capital from Western Europe to the rest of the world was one of the outstanding events of the age of capi-talism. It has developed natural resources in the remotest areas. It has raised the standard of living of peoples who from time immemorial had not achieved any improvement in their material conditions. It was, of course, not charity but self-interest which pushed the advanced nations to the export of capital. But the profit was not unilateral; it was mutual. The once backward nations have no sound reason to complain because foreign capitalists provided them with machinery and transportation facilities.

Yet in this age of anticapitalism hostility to foreign capital has become general. All debtor nations are eager to expropriate the foreign capitalist. Loans are repudiated, either openly or by the more tricky means of foreign exchange control. Foreign property is liable to discriminatory taxation which reaches the level of con­fiscation. Even undisguised expropriation without any indemnifica­tion is practiced.

There has been much talk about the alleged exploitation of the debtor nations by the creditor nations. But if the concept of exploitation is to be applied to these relations, it is rather an ex­ploitation of the investing by the receiving nations. These loans and investments were not intended as gifts. The loans were made upon solemn stipulation of payment of principal and interest. The investments were made in the expectation that property rights would be respected. With the exception of the bulk of the invest­ments made in the United States, in some of the British dominions, and in some smaller countries, these expectations have been disap­pointed. Bonds have been defaulted or will be in the next few years. Direct investments have been confiscated or soon will be. The capital-exporting countries can do nothing but wipe off their balances.

Let us look at the problem from the point of view of the predomi­nantly industrial countries of Europe. These comparatively over­populated countries are poorly endowed by nature. In order to pay for badly needed foodstuffs and raw materials they must export manufactures. The economic nationalism of the nations which are in a position to sell them these foodstuffs and raw materials shuts the doors in their face. For Europe the restriction of exports means misery and starvation. Yet there was one safety valve left, as long as the foreign investments could be relied upon. The debtor nations were obliged to export some quantities of their products as pay­ment of interest and dividends. Even if the goal of present-day foreign-trade policies, the complete prevention of any import of manufactures, were to be attained, the debtor nations would still have to provide the creditor nations with the means to pay for a part of the formers' excess production of food and raw materials. The consumers of the creditor nations would be in a position to buy these goods on the sheltered home market, as it were, from the hands of those receiving the payments from abroad. These foreign investments represented in a certain manner the share of the credi­tor nations in the rich resources of the debtor nations. The exist­ence of these investments softened to some extent the inequality between the haves and the have-nots.

In what sense was prewar Great Britain a have nation? Surely not in the sense that it "owned" the Empire. But the British capitalists owned a considerable amount of foreign investments, whose yield made it possible for the country to buy a corresponding quantity of foreign products in excess of that quantity which was the equivalent of current British exports. The difference in the economic struc­tures of prewar Great Britain and Austria was precisely that Austria did not own such foreign assets. The British worker could provide for a considerable quantity of foreign food and raw materials by working in factories which sold their products on the sheltered British market to those people who received these payments from abroad. It was as if these foreign wheat fields, cotton and rubber plantations, oil wells and mines had been situated within Great Britain.

After the present war, with their foreign assets gone either through the methods applied in financing the war expenditure or by default and confiscation on the part of the governments of the debtor nations, Great Britain and some other countries of Western Europe will be reduced to the status of comparatively poor nations. This change will affect very seriously the conditions of British labor. Those quantities of foreign food and raw materials which the country could previously procure by means of the interest and dividend payments received from abroad will in the future be sought by desperate attempts to sell manufactures to which every country wants to bar access.

7. Total War

The princes of the ancien régime were eager for aggrandizement. They seized every opportunity to wage war and to conquer. They organized—comparatively small—armies. These armies fought their battles. The citizens detested the wars, which brought mischief to them and burdened them with taxes. But they were not interested in the outcome of the campaigns. It was more or less immaterial to them whether they were ruled by a Habsburg or by a Bourbon. In those days Voltaire declared: "The peoples are indifferent to their rulers' wars."[viii]

Modern war is not a war of royal armies. It is a war of the peoples, a total war. It is a war of states which do not leave to their subjects any private sphere; they consider the whole population a part of the armed forces. Whoever does not fight must work for the sup­port and equipment of the army. Army and people are one and the same. The citizens passionately participate in the war. For it is their state, their God, who fights.

Wars of aggression are popular nowadays with those nations which are convinced that only victory and conquest could improve their material well-being. On the other hand the citizens of the na­tions assaulted know very well that they must fight for their own survival. Thus every individual in both camps has a burning inter­est in the outcome of the battles.

The annexation of Alsace-Lorraine by Germany in 1871 did not bring about any change in the wealth or income of the average German citizen. The inhabitants of the annexed province retained their property rights. They became citizens of the Reich, and re­turned deputies to the Reichstag. The German Treasury collected taxes in the newly acquired territory. But it was, on the other hand, burdened with the expense of its administration. This was in the days of laissez faire.

The old liberals were right in asserting that no citizen of a liberal and democratic nation profits from a victorious war. But it is different in this age of migration and trade barriers. Every wage earner and every peasant is hurt by the policy of a foreign govern­ment, barring his access to countries in which natural conditions of production are more favorable than in his native country. Every toiler is hurt by a foreign country's import duties penalizing the sale of the products of his work. If a victorious war destroys such trade and migration walls, the material well-being of the masses concerned is favored. Pressure on the domestic labor market can be relieved by the emigration of a part of the workers. The emigrants earn more in their new country, and the restriction of the supply on the domestic labor market tends to raise wage rates at home too. The abolition of foreign tariffs increases exports and thereby the demand on the domestic labor market. Production on the least fertile soil is discontinued at home, and the farmers go to countries in which better soil is still available. The average productivity of labor all over the world increases because production under the least favorable conditions is curtailed in the emigration countries and replaced by an expansion of production in the immigration countries offering more favorable physical opportunities.

But, on the other hand, the interests of the workers and farmers in the comparatively underpopulated countries are injured. For them the tendency toward an equalization of wage rates and farm yields (per capita of the men tilling a unit of land), inherent in a world of free mobility of labor, results, for the immediate future, in a drop of income, no matter how beneficial the later conse­quences of this free mobility may be.

It would be futile to object that there is unemployment in the comparatively underpopulated countries, foremost among them Australia and America, and that immigration would only result in an increase of unemployment figures, not in an improvement of the conditions of the immigrants. Unemployment as a mass phenome­non is always due to the enforcement of minimum wages higher than the potential wages which the unhampered labor market would have fixed. If the labor unions did not persistently try to raise wage rates above the potential market rates there would be no lasting unemployment of many workers. The problem is not the differences in union minimum rates in different countries, but those in potential market wage rates. If there were no trade-union manip­ulation of wages, Australia and America could absorb many mil­lions of immigrant workers until an equalization of wages was reached. The market wage rates both in manufacturing and in agriculture are many times higher in Australia, in New Zealand, and in northern America than in continental Europe. This is due to the fact that in Europe poor mines are still exploited while much richer mining facilities remain unused in overseas countries. The farmers of Europe are tilling the rocky and barren soil in the Alps, the Carpathians, the Apennines, and the Balkan Mountains, and the sandy soil of the plains of northeastern Germany, while millions of acres of more fertile soil lie untouched in America and Australia. All these peoples are prevented from moving to places where their toil and trouble would be much more productive and where they could render better services to the consumers.

We can now realize why etatism must result in war whenever the underprivileged believe that they will be victorious. As things are in this age of etatism the Germans, the Italians, and the Japanese could possibly derive profit from a victorious war. It is not a warrior caste which drives Japan into ruthless aggression but considera­tions of wage policies which do not differ from those of the trade-unions. The Australian trade-unions wish to close their ports to immigration in order to raise wage rates in Australia. The Japanese workers wish to open the Australian ports in order to raise wage rates for the workers of their own race.

Pacifism is doomed in an age of etatism. In the old days of royal absolutism philanthropists thus addressed the kings: "Take pity on suffering mankind; be generous and merciful! You, of course, may profit from victory and conquest. But think of the grief of the widows and orphans, the desolation of those maimed, mutilated and crippled, the misery of those whose homes have been destroyed! Remember the commandment: Thou shalt not kill! Renounce glory and aggrandizement! Keep peace! " They preached to deaf ears. Then came liberalism. It did not declaim against war; it sought to establish conditions, in which war would not pay, to abolish war by doing away with the causes. It did not succeed be­cause along came etatism. When the pacifists of our day tell the peoples that war cannot improve their well-being, they are mis­taken. The aggressor nations remain convinced that a victorious war could improve the fate of their citizens.

These considerations are not a plea for opening America and the British Dominions to German, Italian, and Japanese immi­grants. Under present conditions America and Australia would simply commit suicide by admitting Nazis, Fascists, and Japanese. They could as well directly surrender to the Führer and to the Mikado. Immigrants from the totalitarian countries are today the vanguard of their armies, a fifth column whose invasion would render all measures of defense useless. America and Australia can preserve their freedom, their civilizations, and their economic institutions only by rigidly barring access to the subjects of the dic­tators. But these conditions are the outcome of etatism. In the liberal past the immigrants came not as pacemakers of conquest but as loyal citizens of their new country.

However, it would be a serious omission not to mention the fact that immigration barriers are recommended by many contempo­raries without any reference to the problem of wage rates and farm yields. Their aim is the preservation of the existing geographical segregation of various races. They argue this: Western civilization is an achievement of the Caucasian races of Western and Central Europe and their descendants in overseas countries. It would perish if the countries peopled by these Westerners were to be overflowed by the natives of Asia and Africa. Such an invasion would harm both the Westerners and the Asiatics and Africans. The segregation of various races is beneficial to all mankind because it prevents a disintegration of Western civilization. If the Asiatics and Africans remain in that part of the earth in which they have been living for many thousands of years, they will be benefited by the further prog­ress of the white man's civilization. They will always have a model before their eyes to imitate and to adapt to their own conditions. Perhaps in a distant future they themselves will contribute their share to the further advancement of culture. Perhaps at that time it will be feasible to remove the barriers of segregation. In our day—they say—such plans are out of the question.

We must not close our eyes to the fact that such views meet with the consent of the vast majority. It would be useless to deny that there exists a repugnance to abandoning the geographical segrega­tion of various races. Even men who are fair in their appraisal of the qualities and cultural achievements of the colored races and severely object to any discrimination against those members of these races who are already living in the midst of white populations, are opposed to a mass immigration of colored people. There are few white men who would not shudder at the picture of many mil­lions of black or yellow people living in their own countries.

The elaboration of a system making for harmonious coexistence and peaceful economic and political coöperation among the vari­ous races is a task to be accomplished by coming generations. But mankind will certainly fail to solve this problem if it does not en­tirely discard etatism. Let us not forget that the actual menace to our civilization does not originate from a conflict between the white and colored races but from conflicts among the various peoples of Europe and of European ancestry. Some writers have prophesied the coming of a decisive struggle between the white race and the colored races. The reality of our time, however, is war between groups of white nations and between the Japanese and the Chinese who are both Mongolians. These wars are the outcome of etatism.

8. Socialism and War

The socialists insist that war is but one of the many mischiefs of capitalism. In the coming paradise of socialism, they hold, there will no longer be any wars. Of course, between us and this peaceful utopia there are still some bloody civil wars to be fought. But with the inevitable triumph of communism all conflicts will disappear.

It is obvious enough that with the conquest of the whole surface of the earth by a single ruler all struggles between states and nations would disappear. If a socialist dictator should succeed in conquer­ing every country there would no longer be external wars, pro­vided that the O.G.P.U. were strong enough to hinder the disinte­gration of this World State. But the same holds true for any other conqueror. If the Mongol Great Khans had accomplished their ends, they too would have made the world safe for eternal peace. It is too bad that Christian Europe was so obstinate as not to surrender voluntarily to their claims of world supremacy.[ix]

However, we are not considering projects for world pacification through universal conquest and enslavement, but how to achieve a world where there are no longer any causes of conflict. Such a pos­sibility was implied in liberalism's project for the smooth coöperation of democratic nations under capitalism. It failed because the world abandoned both liberalism and capitalism.

There are two possibilities for world-embracing socialism: the coexistence of independent socialist states on the one hand, or the establishment of a unitary world-embracing socialist government on the other.

The first system would stabilize existing inequalities. There would be richer nations and poorer ones, countries both under­populated and overpopulated. If mankind had introduced this system a hundred years ago, it would have been impossible to ex­ploit the oil fields of Mexico or Venezuela, to establish the rubber plantations in Malaya, or to develop the banana production of Central America. The nations concerned lacked both the capital and trained men to utilize their own natural resources. A socialist scheme is not compatible with foreign investment, international loans, payments of dividends and interest, and all such capitalist institutions.

Let us consider what some of the conditions would be in such a world of coördinate socialist nations. There are some overcrowded countries peopled by white workers. They labor to improve their standard of living, but their endeavors are handicapped by inade­quate natural resources. They badly need raw materials and food­stuffs that could be produced in other, better endowed countries. But these countries which nature has favored are thinly populated and lack the capital required to develop their resources. Their in­habitants are neither industrious nor skillful enough to profit from the riches which nature has lavished upon them. They are without initiative; they cling to old-fashioned methods of production; they are not interested in improvement. They are not eager to produce more rubber, tin, copra, and jute and to exchange these products for goods manufactured abroad. By this attitude they affect the standard of living of those peoples whose chief asset is their skill and diligence. Will these peoples of countries neglected by nature be prepared to endure such a state of things? Will they be willing to work harder and to produce less because the favored children of nature stubbornly abstain from exploiting their treasures in a more efficient way?

Inevitably war and conquest result. The workers of the compara­tively overpopulated areas invade the comparatively underpopu­lated areas, conquer these countries, and annex them. And then follow wars between the conquerors for the distribution of the booty. Every nation is prepared to believe that it has not obtained its fair share, that other nations have got too much and should be forced to abandon a part of their plunder. Socialism in independ­ent nations would result in endless wars.

These considerations prepare for a disclosure of the nonsensical Marxian theories of imperialism. All these theories, however much they conflict with each other, have one feature in common: they all maintain that the capitalists are eager for foreign investment be­cause production at home tends, with the progress of capitalism, to a reduction in the rate of profit, and because the home market un­der capitalism is too narrow to absorb the whole volume of produc­tion. This desire of capitalists for exports and for foreign in­vestment, it is held, is detrimental to the class interests of the proletarians. Besides, it leads to international conflict and war.

Yet the capitalists did not invest abroad in order to withhold goods from home consumption. On the contrary, they did so in order to supply the home market with raw materials and foodstuffs which could otherwise not be obtained at all, or only in insufficient quantities or at higher costs. Without export trade and foreign in­vestment European and American consumers would never have enjoyed the high standard of living that capitalism gave them. It was the wants of the domestic consumers that pushed the capitalists and entrepreneurs toward foreign markets and foreign investment. If the consumers had been more eager for the acquisition of a greater quantity of goods that could be produced at home without the aid of foreign raw materials than for imported food and raw materials, it would have been more profitable to expand home pro­duction further than to invest abroad.

The Marxian doctrinaires shut their eyes purposely to the in­equality of natural resources in different parts of the world. And yet these inequalities are the essential problem of international relations.[x]*But for them the Teutonic tribes and later the Mongols would not have invaded Europe. They would have turned toward the vast empty areas of the Tundra or of northern Scandinavia. If we do not take into account these inequalities of natural resources and climates we can discover no motive for war but some devilish spell, for example—as the Marxians say—the sinister machinations of capitalists, or—as the Nazis say—the intrigues of world Jewry.

These inequalities are natural and can never disappear. They would present an insoluble problem for a unitary world socialism also. A socialist world-embracing management could, of course, consider a policy under which all human beings are treated alike; it could try to ship workers and capital from one area to another, without considering the vested interests of the labor groups of dif­ferent countries or of different linguistic groups. But nothing can justify the illusion that these labor groups, whose per capita income and standard of living would be reduced by such a policy, would be prepared to tolerate it. No socialist of the Western nations con­siders socialism to be a scheme which (even if we were to grant the fallacious expectations that socialist production would increase the productivity of labor) must result in lowering living standards in those nations. The workers of the West are not striving for equaliza­tion of their earnings with those of the more than l,000 million ex­tremely poor peasants and workers of Asia and Africa. For the same reason that they oppose immigration under capitalism, these work­ers would oppose such a policy of labor transfer on the part of a socialist world management. They would rather fight than agree to abolition of the existing discriminations between the lucky in­habitants of comparatively underpopulated areas and the unfortu­nate inhabitants of the overpopulated areas. Whether we call such struggles civil wars or foreign wars is immaterial.

The workers of the West favor socialism because they hope to improve their condition by the abolition of what they describe as unearned incomes. We are not concerned with the fallacies of these expectations. We have only to emphasize that these Western social­ists do not want to share their incomes with the underprivileged masses of the East. They are not prepared to renounce the most valuable privilege which they enjoy under etatism and economic nationalism—the exclusion of foreign labor. The American work­ers are for the maintenance of what they call "the American way of life," not for a world socialist way of life, which would lie somewhere between the present American and the coolie level, probably much nearer to the latter than to the former. This is stark reality that no socialist rhetoric can conjure away.

The same selfish group interests which through migration bar­riers have frustrated the liberal plans for world-wide peaceful coöperation of nations, states, and individuals would destroy the in­ternal peace within a socialist world state. The peace argument is just as baseless and erroneous as all the other arguments brought forward to demonstrate the practicability and expediency of socialism.

[i]Steding, Das Reich und die Krankheit der Kultur (Hamburg, 1938).

[ii]Carl Schmitt-Dorotic, Der Begriff des Politischen (Munich, 1932).

[iii]e.g., the city of Fiume is claimed by the Hungarians, Croats, Yugoslavs, and Italians.

[iv]Hrushevsky, A History of the Ukraine (published for the Ukranian National Association by Yale University Press, New Haven, 1941), p. 574.

[v]Part III, Act IV, Scene ii. Authorized translation by Sam E. Davidson, Poet Lore, XLII, No. 3 (Boston, Bruce Humphries, Inc., 1935), 259.

[vi]W. L. Langer, The Diplomacy of Imperialism (New York, 1935), I, 75, 95; L. Robbins, The Economic Causes of War (London, 1939), pp. 81, 82.

[vii]Stanley, War and the Private Investor (New York, 1935); Robbins, op. cit.; Sulzbach, "Capitalist Warmongers," A Modern Superstition (Chicago, 1942). Charles Beard (A Foreign Policy for America, New York, 1930, p. 72) says with regard to America: "Loyalty to the facts of historical record must ascribe the idea of imperialist expansion mainly to naval officers and politicians rather than to business men." That is valid for all other nations too.

[viii]Benda, La Trahison des clercs (Paris, 1927), p. 253.

[ix]Voegelin, "The Mongol Orders of Submission to the European Powers 1245–1255," Byzantion, XV, 378–413.

[x]We have dealt only with those types of foreign investment that were intended to develop the natural resources of the backward countries, i.e., investment in mining and agriculture and their auxiliaries such as transportation facilities, public utilities, and so on. The investment in foreign manufacturing was to a great extent due to the influence of economic nationalism; it would not have happened within a world of free trade. It was protectionism that forced the American motor-car producers and the German electrical plants to establish branch factories abroad.

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