Mises Wire

Looking Back at the Crossroads: Liberty or Socialism

Ludwig von Mises begins his book Bureaucracy by declaring that the main issue facing the West in his time was whether man should surrender his liberty to the “gigantic apparatus of compulsion and coercion, the socialist state.” He rephrases: “Should [man] be deprived of his most precious privilege to choose means and ends and to shape his own life?”

This question is imminently pressing in the modern day as well, save that we in the West, eight decades later, are teetering on the precipice of complete tyranny—the fate that Mises wrote to avoid. Perhaps most tragically, he thought that “America alone” was free to decide its path on the crossroads to either liberty or tyranny. In retrospect, America has chosen the latter. Any man who values liberty and his homeland must therefore work to counteract this march toward tyranny and destruction. To understand how, we must first understand what existed before our modern tyranny, how the modern tyranny operates, and then we can reason out what must be done.

Tyranny in the present day can be aptly described as the water in which we swim; our predecessors would be positively appalled by the naked, extreme coercion of our governments and their commercial cronies. In order to understand accurately how pervasive this corrosive corruption is, we must first understand a free society, and Mises begins Bureaucracy by laying the foundation of such a society: “Market economy is that system of social cooperation and division of labor that is based on private ownership of the means of production.”

Thus, do we have our foundation. The market economy is the free system that cultivates social cooperation through the exchange of valued means, and these exchanges are made possible through the private ownership of those means. In this system, men divide labor and specialize, reaching their fullest productive potential through experience, thereby improving their own and their fellow man’s positions through exchanges of ever greater surpluses.

Through exchange, ever more complex social structures arise to facilitate greater production. These plants, farms, and factories are owned by entrepreneurs, who constitute the animating force within a market. These entrepreneurs act under uncertainty, meaning that they risk their time, effort, and resources to guess the wants of others in their society so that they may exchange with them and thereby profit from the endeavor.

Obtaining profit, then, is the objective of the entrepreneur, and his quest for it guides his decisions within his business. He employs managers tasked with profitably running a subsection of his business. He markets innovations that better serve the wants of consumers, expanding his consumer base and, consequently, his profits. He attempts to trade more products at higher qualities and at lower prices, striving to outcompete anyone else doing the same, to stay in business another day. He has no leeway to indulge in secondary whims, since in so doing, more profits are not gained.

While the entrepreneurial pursuit of profit through exchange is what betters everyone and raises the overall quality of life in this free system, the entrepreneurs do not ultimately dictate the outcomes of the system. Consumers do. By exchanging with others according to their valuations derived from their own morality, tastes, and uncertain estimations of their future, consumers dictate which entrepreneurs fail and succeed. No single consumer has enough power to bestow upon or retract success from an entrepreneur, but the organic process of trade sees consumers as a group rewarding the best entrepreneurs.

This concept of consumer sovereignty allows us to deduce logically that businesses in this free society would reflect the wishes of the consumer, as striving for anything else would end in losses and eventually bankruptcy. In this free society, then, unwanted social agendas could not be pushed by businesses, and the noninterventionist state would likewise be absent from this domain if one even existed at all. “Social engineering” would never exist; communities would discriminate naturally by exercising their property rights and the resultant freedom of association, promoting normality and their particular culture.

We do not live in this conceptual society, however. Our businesses are not naturally forced to compete. Instead, they are often legally compelled to bureaucratize, as in matters of human resources, at the ultimate expense of the consumer. Property rights are corroded, and discrimination, except in all the most inconsequential circumstances, is outlawed. Our freedoms number less and less as generations pass. We exist under a system of tyranny, which must be analyzed in comparison to the earlier, freer system, to understand how and to what degree our communities are affected.

Contrary to the wishes of Mises, our governments are interventionist, and while the extent of their interventions varies, they have always been this way. Our governments are and have always been bureaucratic, especially as the subjects and territories beholden to them have grown more numerous. Moreover, any structure of government necessitates a bureaucracy, though such structures dictate the function and powers of the bureaucracy beyond the simple task of governing.

One can only take issue with bureaucracy if he also takes issue with the underlying cause: governmental intervention and the structure of government. To this point, Mises directs typical conservative outrage against bureaucratization to the root cause—namely, centralization. It is not that bureaucracy appears in any society ex nihilo, ready to strip freedoms from normal people through arbitrary abuses of power, but that bureaucratization is the only way that interventionist governments or far-flung empires develop. They must form administrations beholden to rules and regulations.

Beyond the usual conservative arguments against bureaucracy, Mises takes to task the progressives. These progressives, according to Mises, view bureaucracy as an outcropping of unregulated commerce, the natural result of letting businesses grow to the point of outshining all competition. This immutable reality, the progressives argue, allows businesses to tyrannize normal people and really represents the extinguishing of capitalism as it transitions to the next stage of human development. Understanding that entrepreneurs in a free market could not seek anything other than management by profit, Mises dismantles the argument by demonstrating that corporate bureaucratization, management by rules, and guidelines over profit can only exist through economic intervention.

Taxation and steep hurdles of regulation may deprive the preexisting enterprises of additional capital, but they obliterate new competitors. This allows the once successful enterprises, now the establishment, to atrophy, indulging in bloated excesses like bureaucratization and the pushing of unpopular social agendas. The consumer’s sovereignty has been eroded, as the possible exchanges in which he or she could have engaged have been preselected by an external authority.

Further intensifying this situation is the fact that the options for exchange which do make it to the consumer are not produced purely out of a drive for profit—i.e., the mechanism which ensures that businesses conform to the wants of consumers. Rather, since the businesses have now been protected from the competition that would have otherwise existed on the free market, the products offered to the consumer now could be there simply to fulfill a social agenda or to comply with regulations, not necessarily to bring satisfaction to that consumer.

Alongside this is the increased power of managers to act according to their own whims separate from the entrepreneur’s drive for profit, brought about by the entrepreneurs’ weakened property rights and inability to fire and hire at will. There is no more guarantee that entrepreneurs are working to satisfy consumers in the pursuit of profit, and thus the consumer has been subjugated.

To pretend that progressives today bristle against bureaucracy would be anachronistic. Every new progressive initiative is the harbinger for a subsequently new wave of increasingly tyrannical progressives ready to take radical action. When allowed the powers of state, an entity whose only tendency is to centralize, a love of exercising arbitrary power is fostered. The ever-expansive bureaucracies are staffed primarily by the progressives, since it is they who advocate the policies which grow the bureaucracies. This then propagates progressivism further, bolstering their ranks.

Most people across political divides recognize this pattern, implicitly or otherwise, which is why nary a word is said against bureaucracy by many on the Left now. They are nurtured from the government’s illusionary “inexhaustible horn of plenty,” enacting their tyranny by regulating the lives of normal people according to draconian rules housed in increasingly gargantuan tomes of statutes and ordinances. They must, to ensure their dominance over the nation, subjugate the consumer by establishing rules and bureaucracy designed to govern every minute action within human life. The suffocation of personal talents and initiative, the deprivation of the ability “to contribute something new to the old inventory of civilization,” just makes the process all the better for the mad crusaders of egalitarianism.

The inevitable consequence of progressive economic centralization, the root cause of bureaucracy, is what animated Mises to write on this specific subject. It is the march toward socialism, the most total form of tyranny, destitution, and social engineering, that is the greatest threat. Bureaucracy, maintains Mises, is only a reflection of a society’s economic centralization. While the greatest charges against bureaucracy are reflected onto the separate-but-related threat of economic centralization, it is still bureaucracy that is itself an indicator of the threat.

Under our middle-of-the-road policies of interventionism—though they increasingly lean toward socialism—we get some stifled benefits from market activity. Our living standards can still feasibly increase, albeit less than they would have been in an unhampered market. However, at the end of our middle-of-the-road path lies socialism. Under this propertyless system of no exchange and no prices, the devastation of human life and the human spirit is guaranteed. Every man who makes decisions for his betterment is without the common denominator of money and is relegated to making his decisions in the dark. Economic calculation becomes impossible, and lines of production, recipes, and resources are pursued based on guesswork. Most go without, while parasitic party men and psychopathic warlords reign.

As mentioned in the beginning, when Mises warned of this impending threat, he recognized that America was at a crossroads between liberty and socialism. In his time, there was still hope that the economic centralization of the early twentieth century could be reversed, and the resulting bureaucracy with it. There was still a charade of working democracy at play, and the Republican Party was poised to, and in fact promised to, save the country from the New Deal. The Republican Party ignored these promises, with administration after administration instead strengthening the interventionist policies.

As the twentieth century marched on and turned to the twenty-first, it became clear that America was a hostage to a consensus of its only two parties, united in the pursuit of welfare and warfare. Looking back, we see the crossroads well behind us, and the country is on the path to socialism and greater bureaucracy.

What are we to do? Being as the path toward the elimination of property and civilization has been chosen for us by our elites, we will act accordingly. The governmental bureaucracy is the domain of leftists and other such enemies of civilization, and staying within it will, by design, smother one’s innovativeness and ambition. Capturing the bureaucracy is out of the question. Rather, it must be bypassed, and the root from which it springs, the state, must be delegitimized and dismantled. Defenders of liberty must strengthen each other through trade and cooperation, denying official channels legitimacy and resources.

The power of youth, something in abundance for us, must be harnessed. As Mises says, “It is not fine to be a young man under bureaucratic management. The only right that young people enjoy under this system is to be docile, submissive, and obedient.” We can provide a productive alternative with vitality. If we can girdle the state of valuable resources, and if we can show a path forward for our youth, then our liberties may yet be rejuvenated, and our homelands may yet flourish once again.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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