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The Political Chances of Genuine Liberalism

Tags Free MarketsGlobal EconomyHistory of the Austrian School of EconomicsPhilosophy and MethodologyPolitical Theory

03/13/2009Ludwig von Mises

[From Planning for Freedom. Originally published in Farmand, February 17, 1951, Oslo, Norway. An MP3 audio file of this article, read by Floy Lilley, is available for download.]


The outlook of many eminent champions of genuine liberalism is rather pessimistic today. As they see it, the vitriolic slogans of the socialists and interventionists call forth a better response from the masses than the cool reasoning of judicious men.

The majority of the voters are just dull and mentally inert people who dislike thinking and are easily deceived by the enticing promises of irresponsible pied pipers. Subconscious inferiority complexes and envy push people toward the parties of the Left. They rejoice in the policies of confiscating the greater part of the income and wealth of successful businessmen without grasping the fact that these policies harm their own material interests. Disregarding all the objections raised by economists, they firmly believe that they can get many good things for nothing.

Even in the United States, people — although enjoying the highest standard of living ever attained in history — are prepared to condemn capitalism as a vile economy of scarcity and to indulge in daydreams about an economy of abundance in which everybody will get everything "according to his needs." The case for freedom and material prosperity is hopeless. The future belongs to the demagogues who know nothing else than to dissipate the capital accumulated by previous generations. Mankind is plunging into a return to the Dark Ages. Western civilization is doomed.

The main error of this widespread pessimism is the belief that the destructionist ideas and policies of our age sprang from the proletarians and are a "revolt of the masses." In fact, the masses — precisely because they are not creative and do not develop philosophies of their own — follow the leaders. The ideologies which produced all the mischief and catastrophes of our century are not an achievement of the mob. They are the feat of pseudoscholars and pseudointellectuals. They were propagated from the chairs of universities and from the pulpit, they were disseminated by the press, by novels and plays and by the movies and the radio. The intellectuals converted the masses to socialism and interventionism. These ideologies owe the power they have today to the fact that all means of communication have been turned over to their supporters and almost all dissenters have been virtually silenced.

What is needed to turn the flood is to change the mentality of the intellectuals. Then the masses will follow suit.

Furthermore, it is not true that the ideas of genuine liberalism are too complicated to appeal to the untutored mind of the average voter. It is not a hopeless task to explain to the wage earners that the only means to raise wage rates for all those eager to find jobs and to earn wages is to increase the per-head quota of capital invested. The pessimists underrate the mental abilities of the "common man" when they assert that he cannot grasp the disastrous consequences of policies resulting in capital decumulation. Why do all "underdeveloped countries" ask for American aid and American capital? Why do they not rather expect aid from socialist Russia?

The acme of the policies of all self-styled progressive parties and governments is to raise artificially the prices of vital commodities above the height they would have attained on the markets of unhampered laissez-faire capitalism. Only an infinitesimal fraction of the American people is interested in the preservation of a high price for sugar. The immense majority of the American voters are buyers and consumers, not producers and sellers, of sugar. Nonetheless the American government is firmly committed to a policy of high sugar prices by rigorously restricting both the importation of sugar from abroad and domestic production.

Similar policies are adopted with regard to the prices of bread, meat, butter, eggs, potatoes, cotton, and many other agricultural products. It is a serious blunder to call this procedure indiscriminately a profarmers policy. Less than one fifth of the United States' total population is dependent upon agriculture for a living. Yet the interests of these people with regard to the prices of various agricultural products are not identical. The dairyman is not interested in a high, but in a low price for wheat, fodder, sugar and cotton. The owners of chicken farms are hurt by high prices of any agricultural product but chickens and eggs. It is obvious that the growers of cotton, grapes, oranges, apples, grapefruit, and cranberries are prejudiced by a system which raises the prices of staple foods. Most of the items of the so-called profarm policy favor only a minority of the total farming population at the expense of the majority, not only of the nonfarming but also of the farming population.

Things are hardly different in other fields. When the railroadmen or the workers of the building trades, supported by laws and administrative practises which are admittedly loaded against their employers, indulge in feather-bedding and other devices allegedly destined to "create more jobs," they are unfairly fleecing the immense majority of their fellow citizens. The unions of the printers enhance the prices of books and periodicals and thus affect all people eager to read and to learn. The so-called prolabor policies bring about a state of affairs under which each group of wage earners is intent upon improving their own conditions at the expense of the consumers, viz., the enormous majority.

Nobody knows today whether he wins more from those policies which are favoring the group to which he himself belongs than he loses on account of the policies which favor all the other groups. But it is certain that all are adversely affected by the general drop in the productivity of industrial effort and output which these allegedly beneficial policies inevitably bring about.

Until a few years ago, the advocates of these unsuitable policies tried to defend them by pointing out that their incidence reduces only the wealth and income of the rich and benefits the masses at the sole expense of useless parasites. There is no need to explode the fallacies of this reasoning. Even if we admit its conclusiveness for the sake of argument, we must realize that, with the exception of a few countries, this "surplus" fund of the rich has already been exhausted. Even Mr. Hugh Gaitskell, Sir Stafford Cripps's successor as the Fuhrer of Great Britain's economy, could not help declaring that "there is not enough money to take away from England's rich to raise standards of living any further."

In the United States the policy of "soaking the rich" has not yet gone so far as that. But if the trend of American politics is not entirely reversed very soon, this richest of all countries will have to face the same situation in a few years.

Conditions being such, the prospects for a genuinely liberal revival may appear propitious. At least fifty percent of the voters are women, most of them housewives or prospective housewives. To the common sense of these women a program of low prices will make a strong appeal. They will certainly cast their ballot for candidates who proclaim, "Do away peremptorily with all policies and measures destined to enhance prices above the height of the unhampered market! Do away with all this dismal stuff of price supports, parity prices, tariffs and quotas, intergovernmental commodity-control agreements, and so on! Abstain from increasing the quantity of money in circulation and from credit expansion, from all illusory attempts to lower the rate of interest and from deficit spending! What we want is low prices."

In the end these judicious householders will even succeed in convincing their husbands.

In the Communist Manifesto, Karl Marx and Frederick Engels asserted, "The cheap prices of its commodities are the heavy artillery with which capitalism batters down all Chinese walls." We may hope that these cheap prices will also batter down the highest of all Chinese walls, viz., those erected by the folly of bad economic policies.

To express such hopes is not merely wishful thinking.


Ludwig von Mises

Ludwig von Mises was the acknowledged leader of the Austrian school of economic thought, a prodigious originator in economic theory, and a prolific author. Mises's writings and lectures encompassed economic theory, history, epistemology, government, and political philosophy. His contributions to economic theory include important clarifications on the quantity theory of money, the theory of the trade cycle, the integration of monetary theory with economic theory in general, and a demonstration that socialism must fail because it cannot solve the problem of economic calculation. Mises was the first scholar to recognize that economics is part of a larger science in human action, a science that he called praxeology.