Migrations, Mixed Populations, and Modern Imperialism

In 1914, the predominant political mentality in Germany was authoritarian: most Germans believed that sheer physical might was the necessary and sufficient condition for successful politics. Because nothing was impossible to a powerful government, the essence of politics was to make the state irresistible. Mises believed this view to be shortsighted. But why did the Germans, of all nations, succumb to imperialism?

The Utilitarian Method of Social Analysis

In a highly developed civilization operating under an international division of labor, it was in no one’s interest to wage war or pursue empire. Neither was it in Germany’s interest to cultivate resentments against its present oppressors, nor later to seek revenge. And it was against the considered self-interests of the victorious western allies that they themselves pursued imperialism.

The Fallacies of German Socialism in War and Peace

Nation, State, and Economy is a rationalist-utilitarian analysis of the three manifestations of German imperialism: (1) past German imperialism for the sake of national greatness, (2) economic central planning in World War I (war socialism), which accelerated the introduction of full-blown socialism, and (3) the blossoming imperialism of the social democrats under the banner of syndicalism and the dictatorship of the proletariat.

Political Economy of Language Communities

In his criticism of imperialist policies in the service of socialism, labor-unionism, and the socialist war economy Mises could restate many conventional arguments. He faced an unprecedented task in confronting the claim that imperialism can enhance the welfare of a nation. His pioneering analysis brilliantly confirmed Carl Menger’s insight that methodological individualism is able to analyze even large collective phenomena.

THE WAR HAD SEEMED like it would never end. Then suddenly, it was over. The Balkan front crumbled in the wake of the armistice in Bulgaria at the end of September 1918. This time it was clear that it would not be possible to liberate enough additional forces from elsewhere to stem the tides in the South East. The Central Powers had lost.

New Battlefields

In the years preceding the war, the social democratic party had sunk into political insignificance. By 1911, it had splintered into various national organizations and suffered a terrible setback at the Reichstag elections.5 But the war and eventual defeat had discredited the political establishment to such an extent that the social democrats by virtue of their “outsider” status now seemed to be the most important political force in the country, though elections could not yet be held to confirm the fact.

Postwar Socialism and the Specter of Anarchy

Official positions in the new government did not always reflect actual power. For instance, because of the support of the most militant groups within Austrian social democracy, Otto Bauer (who headed the Ministry of Foreign Affairs) was even more influential than Karl Renner, the chancellor. The situation changed only in 1927, when a social-democratic insurrection was defeated with unexpected ease.

Pro-Government Emergencies

Mises was one of the few men who understood that the inflation itself and the inflationary mentality it had produced were the greatest political burdens the war economy had bequeathed to the new republic. But in the socialists’ eyes, he was merely a competent technician who knew the money machine well. And during the first months of his involvement with the new administration, Mises did in fact play this role faithfully, preventing on several occasions Austria’s fall into lawlessness.

Toward Sound Money

The stamping of the krone banknotes had prevented a catastrophe, but the great remaining question was of course how Austrian monetary policy and public finance could be restored to sanity. This had to happen quickly, but the average intellectual saw no way of of this mess. Stopping the printing press seemed to imply the destruction of firms and laborers: