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Mises's Vision of the Free Society

July 16, 2010

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Liberalism by Ludwig von Mises

[Foreword to Liberalism by Ludwig von Mises]

Any political philosophy must address itself to a central question: under what conditions is the initiation of violence to be considered legitimate? One philosophy may endorse such violence on behalf of the interests of a majority racial group, as with the National Socialists of Germany. Another may endorse it on behalf of a particular economic class, as with the Bolsheviks of Soviet Russia. Still another may prefer to avoid a doctrinaire position one way or another, leaving it to the good judgment of those who administer the state to decide when the common good demands the initiation of violence and when it does not. This is the stance of the social democracies.

The liberal sets a very high threshold for the initiation of violence. Beyond the minimal taxation necessary to maintain legal and defense services — and some liberals shrink even from this — he denies to the state the power to initiate violence and seeks only peaceful remedies to perceived social ills. He opposes violence for the sake of redistributing wealth, of enriching influential pressure groups, or trying to improve man's moral condition. Civilized people, says the liberal, interact with each other not according to the law of the jungle, but by means of reason and discussion. Man is not to be made good by means of the prison guard and the hangman; should they be necessary to make him good, his moral condition is already beyond salvage. As Ludwig von Mises puts it in this seminal book, modern man "must free himself from the habit, just as soon as something does not please him, of calling for the police."

There has been something of a renaissance in Misesian studies in the wake of the financial crisis that first gripped the world in 2007 and 2008, since it was followers of Mises who had the most compelling explanations for economic phenomena that left most so-called experts stammering. The importance of Mises's economic contributions to modern-day discussion is apt to make us overlook his contributions as a social theorist and political philosopher. The republication of Liberalism helps to rectify this oversight.

The liberalism that Mises describes here is, of course, not the "liberalism" of the United States today, but rather classical liberalism, which is how the term continues to be understood in Europe. Classical liberalism stands for individual liberty, private property, free trade, and peace, fundamental principles from which the rest of the liberal program can be deduced. (When the first English edition of Liberalism appeared in 1962, Mises published it under the title The Free and Prosperous Commonwealth, in order not to confuse American readers who associated liberalism with a creed very different from the one he championed.)

It is no insult to Mises to describe his defense of liberalism as parsimonious, in the sense that, following Occam's razor, he employs on its behalf no concepts not strictly necessary to his argument. Thus Mises makes no reference to natural rights, a concept that plays a central role in so many other expositions of liberalism. He focuses primarily on the necessity of large-scale social cooperation. This social cooperation, by which complex chains of production function to improve the general standard of living, can be brought about only by an economic system based on private property. Private property in the means of production, coupled with the progressive extension of the division of labor, has helped to free mankind from the horrific afflictions that once confronted the human race: disease, grinding poverty, appalling rates of infant mortality, general squalor and filth, and radical economic insecurity, with people often living one bad harvest away from starvation. Until the market economy illustrated the wealth-creating possibilities of the division of labor, it was taken for granted that these grotesque features of man's condition were the fixed dictates of a cold and merciless nature, and thus unlikely to be substantially alleviated, much less conquered entirely, by human effort.

Students have been taught for many generations to think of property as a dirty word, the very embodiment of avarice. Mises will have none of it. "If history could prove anything in regard to this question, it could only be that nowhere and at no time has there ever been a people which has raised itself without private property above a condition of the most oppressive penury and savagery scarcely distinguishable from animal existence." Social cooperation, Mises shows, is impossible in the absence of private property, and any attempts to curtail the right of property undermine the central pillar of modern civilization.

Indeed Mises firmly anchors liberalism to private property. He is all too aware that to champion property is to invite the accusation that liberalism is merely a veiled apologia for capital. "The enemies of liberalism have branded it as the party of the special interests of the capitalists," Mises observes. "This is characteristic of their mentality. They simply cannot understand a political ideology as anything but the advocacy of certain special privileges opposed to the general welfare." Mises shows in this book and throughout his corpus of work that the system of private ownership of the means of production redounds to the benefit not merely of the direct owners of capital but indeed to all of society.

There is, in fact, no particular reason that people in possession of great wealth should favor the liberal system of free competition, in which continuous effort must be exerted on behalf of the desires of the consumers if that wealth is not to be whittled away. Those who possess great wealth — especially those who inherited that wealth — may in fact prefer to inhabit a system of intervention, which is more likely to keep existing patterns of wealth frozen. Little wonder that American business magazines during the Progressive Era are replete with calls for replacing laissez-faire, a system in which no one's profits are protected, with government-sanctioned cartel and collusion devices.

Naturally, given Mises's emphasis on the centrality of the division of labor to the maintenance and progress of civilization, he is particularly outspoken regarding the evils of aggressive war, which on top of its physical and human toll brings about the progressive impoverishment of mankind by its radical disruption of a harmonious structure of production that spans the entire globe. Mises, who rarely minces words but whose prose is generally elegant and restrained, speaks with indignation and outrage when the subject turns to European imperialism, a cause on whose behalf he will admit no arguments whatever. Just as his student, Murray Rothbard, would later identify war and peace as the foundational issue of the whole liberal program, Mises likewise insists that these questions cannot be neglected — as they so often are by classical liberals in our own time — in favor of safer, less politically sensitive issues.

The principal tool of liberalism, Mises maintained, was reason. That does not mean Mises thought its entire program must be carried through by means of dense and elaborate academic treatises. He greatly admired those who brought its ideas to the stage, the silver screen, and to the world of published fiction. But it does mean that the cause must remain rooted in rational argument, a much sounder foundation than the fickle irrationalism of emotion and hysteria by which other ideologies seek to stir the masses. "Liberalism has nothing to do with all this," Mises insists. "It has no party flower and no party color, no party song and no party idols, no symbols and no slogans. It has the substance and the arguments. These must lead it to victory."

Finally, a brief word on the translation. Ralph Raico's elegant rendering of Mises's words not only conveys the author's ideas with precision and care but also preserves his unique and captivating prose style. Readers of Mises's later works, many of which appeared originally in English rather than in translation, will be struck by how skillfully Raico has captured the voice they discover in those books.

We ought to rejoice at the publication of the Mises Institute's new edition of this old classic, particularly at such a perilous moment in history. With fiscal crises and the hard choices they demand threatening a wave of civil unrest across Europe, the impossible promises made by cash-strapped welfare states are becoming increasingly obvious. As Mises argued, there is no stable, long-term substitute for the free economy. Interventionism, even on behalf of such an ostensibly good cause as social welfare, creates more problems than it solves, thereby leading to still more intervention until the system is entirely socialized, if the collapse does not occur before then.

Mises's position runs counter to those who held that the market was indeed a place of rivalry and strife in which the gain of some implied losses to others. One thinks, for example, of David Ricardo, and his contention that wages and profits necessarily move in opposite directions. Thomas Malthus warned of a population catastrophe, which implied a conflict between some individuals (those already born) and others (namely, the alleged excess who followed later). Then, of course, there was the entire mercantilist tradition, which viewed trade and exchange as a kind of low-intensity warfare that yielded a definite set of winners and losers. Karl Marx set forth a classic statement of inherent class antagonism on the market in the Communist Manifesto. Even older than these figures was Michel de Montaigne (1533–1592), who argued in his essay "The Plight of One Man Is the Benefit of Another" that "no profit can possibly be made but at the expense of another." Mises later called this view the "Montaigne fallacy."

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For the sake of civilization itself, Mises urges us to discard the mercantilist myths that pit the prosperity of one people against that of another, the socialist myths that describe the various social classes as mortal enemies, and the interventionist myths that seek prosperity through mutual plunder. In place of these juvenile and destructive misconceptions Mises advances a compelling argument for classical liberalism, which sees "economic harmonies" — to borrow Frédéric Bastiat's formulation — where others see antagonism and strife. Classical liberalism, so ably defended here by Mises, seeks no coercively derived advantage for anyone, and for that very reason brings about the most satisfactory long-run results for everyone.

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