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The Education of an Austro-Marxist

January 23, 2012Ludwig von Mises

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By around 1900, most people in German-speaking countries were either etatists or state socialists. The dark episode of history known to us as capitalism had run its course once and for all. The future belonged to the state. The state would take over all enterprise suitable for nationalization and the rest would be regulated in a way that would prevent businessmen from exploiting workers and consumers. Since the fundamental laws of economics were as yet unknown, the problems presented by interventionism could not be seen. Had they been recognized, everyone would have opted for socialism. But without this knowledge it remained unclear if interventionism or state socialism was more desirable.

The program of the Marxist Social Democrats was much clearer. Marxists rejected interventionism theoretically as mere bourgeois reformism; in actuality, however, they freely promoted a theory of reformism that was all encompassing. Their work had long emphasized labor unions, thereby flouting doubts raised by Marx and his strictest disciples. Even so, they jealously guarded every bit of their master's orthodoxy. The party rejected Bernstein's attempt to revise the theory, which sought to lessen the glaring contradictions between Marxism and party policy. The victory of orthodoxy was not complete, however. A revisionist group did survive, and it found its expression in the Socialist Monthly.

Middle-class opposition to the Social Democratic Party was not aroused because of the party's economic program, but because of its simplistic description of extant institutions and its denegation of all facts that did not fit into its scheme. According to the latter, all evil in the world stemmed from capitalism and this evil would be eradicated through socialism. Alcoholism was caused by a free market for liquor, and a free armaments market was to blame for war. Prostitution existed only in capitalist societies, and religion was the clever invention of priests intended to render compliance from the proletariat. Capitalism alone caused scarcity of goods, whereas socialism would bring unknown wealth to all. Nothing, however, excited the opposition of the middle class more than the social-democratic program of free love.

And yet everyone found that the social-democratic program contained a kernel of truth. This was seen in the demand for social reform and a continued push toward socialization. The Marxist spirit animated all governments and political parties. They differed from the Social Democratic Party in that they did not take into consideration the state's expropriation of all owners and its purely bureaucratic management of all enterprise. Their socialism was not that of Lenin, who wanted to organize all industry according to the model of the state-run postal service. Theirs was a socialism that corresponded to the state-controlled economy of the Hindenburg program of the second period of the First World War, and the "German" socialism of Hitler. Private property and ownership should be formally retained, but business was to be managed according to government directives. Church socialists wanted to retain a preferred position for the Christian church; likewise, state socialists supported the monarchy and the army.

Upon entering the university, I too was an etatist, through and through. I differed from my fellow students, however, in that I was consciously anti-Marxist. At the time I knew little of Marx's writings, but was acquainted with most important works of Kautsky. I was an avid reader of the Neue Zeit, and had followed the revisionist debate with great attention. The platitudes of Marxist literature repelled me. I found Kautsky almost ridiculous. As I entered into a more detailed study of the most important works of Marx, Engels, and Lassalle, I was incited to contradiction on all sides. It seemed incomprehensible to me that this garbled Hegelianism could have such enormous influence. I realized only later that party Marxists fell into two categories: those who had never studied Marx at all and were acquainted with only a few of the better known passages from his books, and those who knew of Marx only from textbooks, or, as autodidacts, had read none of the world's literature beyond that of Marx. Max Adler, for example, belonged to the former group. His knowledge of Marx was limited to the few pages in which the "super structure theory" had been developed. Prominent among the latter group were the Eastern Europeans, who led Marxism's ideological charge.

I have encountered nearly all of the Marxian theorists in western and central Europe during the course of my life, and among them I've found but one man who rises above modest mediocrity. Otto Bauer was the son of a wealthy north Bohemian manufacturer. While at Reichenberger Gymnasium,1 he found himself under the influence of the same teacher who had introduced Heinrich Herkner to the ideas of social reform nearly two decades before.

Bauer came to the University of Vienna as a staunch Marxist. Equipped with untiring diligence and a glowing facility for ideas, he became conversant in German idealistic philosophy and classical economics. He had an unusually broad knowledge of history including that of Slavic and oriental nations. He was well versed in current research in the natural sciences, was an excellent speaker, and could quickly and easily familiarize himself with the most difficult of problems. He was not a born trailblazer, to be sure, and one could not expect him to come up with new theories or ideas. But had he not been a Marxist, he could have become a statesman.

As a young man, Otto Bauer had made up his mind never to be untrue to his Marxian convictions, never to make concessions to reformism or socialist revisionism, and never to become a Millerand or a Miquel. No one was to outclass him in his Marxian radicalism. He was later strengthened in his resolve by his wife Helene Gumplowicz. He remained faithful to his intentions until the winter of 1918/19. At that time I was successful in convincing the Bauers that the collapse of a Bolshevist experiment in Austria would be inevitable in a very short time, perhaps within days. The supply of food in Austria was dependent on imports made possible only by the relief assistance of former enemies. Vienna's food supply would not have lasted more than eight or ten days on any given day during the nine months following the armistice. The Allies could have forced a surrender of a Bolshevist regime in Vienna without lifting a finger. There were few who recognized the state of affairs clearly. People were so convinced of the inevitability of Bolshevism that their main concern was securing a favorable place for themselves in the new order. The Catholic Church and its followers, the Christian Social Party, were prepared to befriend the Bolshevists with the same eagerness with which the bishops and archbishops would embrace National Socialism 20 years later. Bank directors and industrialists hoped to make good livings as managers under the Bolshevists. A certain Mr. Guenther, an industrial consultant to the Bodenkreditanstalt,2 assured Otto Bauer, in my presence, that he would prefer serving the people to serving a group of stockholders. The effect of this kind of declaration can be appreciated when one understands that this man was considered, although mistakenly, the best industrial manager in Austria.

I knew what was at stake. Bolshevism would lead Vienna to starvation and terror within a few days. Plundering hordes would take to the streets and a second blood bath would destroy what was left of Viennese culture. After discussing these problems with the Bauers over the course of many evenings, I was finally able to persuade them of my view. Bauer's resulting moderation was a determining factor in Vienna's fate.

Bauer was too intelligent not to realize that I had been right, but he never forgave me for having turned him into a Millerand. The attacks of his fellow Bolshevists hit close to home. But he directed his animosity toward me instead of toward his opponents. A powerful loather, he opted for ignoble means to destroy me. He tried to cause the nationalistic students and professors at the University of Vienna to turn against me. The attempt failed. I have not spoken with the Bauers since. I had always held Bauer's character in an unwarranted high esteem, by the way. When, during the civil unrest of February 1934, Secretary Fay announced on the radio that Otto Bauer had deserted the fighting workers and fled abroad with party funds, I considered the statement slanderous. I would have not believed Bauer capable of such cowardice.

  • 1. A Gymnasium in the German-speaking world is roughly equivalent to a high school in the United States in terms of the age range of its students. With its rigorous admissions policies, however, it is more academic in orientation.
  • 2. Bodenkreditanstalt translates literally into “land bank.” The Bodenkreditanstalt began as a privileged bank in the Austrian mortgage market, but also turned to industrial investments and eventually functioned as a vehicle for a semi-public industrial policy. It was the most powerful bank in Austria with very large holdings in almost all sectors of industry. It went bankrupt in September of 1929.

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