Vienna Circles

Mises’s main occupation was still that of a Kammer secretary, in which capacity he profited from the government’s attempt to democratize Austria.

The Argument

During the first weeks of the winter semester, Mises fine-tuned his article on economic calculation, addressing various criticisms and remarks from his seminars. He eventually gave the first formal presentation in early January 1920 in a meeting of the Nationalökonomische Gesellschaft. In the assembly were some of the world’s best economists and Marxist scholars.

The Intellectual Context

The political implications of Mises’s argument were obvious. If Mises was right, full socialism was not a viable option. Only capitalism or some mixed economy that accommodated the market remained on the menu of feasible political constitutions.

Triumph

By the beginning of 1922, Mises had finished the manuscript of his treatise on socialism and was looking for a good academic publisher.36 Duncker & Humblot in Munich declined because of the difficult inflationary situation that had begun to wreck the German economy, making the publication of a 500-page scientific treatise a major risk. Mohr in Tübingen was interested but asked Mises to cut 20 percent of the manuscript. Mises kept looking. In February, he signed a contract with Gustav Fischer in Jena.

The Incomplete Revolution

The kernel of Mises’s theory of calculation is this: while calculation in terms of money prices is the essential intellectual tool of entrepreneurs acting in a market economy, calculation in terms of “value” is impossible. A calculus can only be performed with multiples of an extended unit; for example, one can add one apple to another apple or one grain of silver to another grain of silver. In contrast, one cannot add a telephone to a piano concerto and still less can one add wittiness to silence.

THE PUBLICATION OF THE essay on economic calculation in socialist commonwealths was the first installment of an entire treatise on socialism that Mises had begun in 1919. This new work would contain a detailed discussion of the profound implications of the calculation problem, but it was far more than that. With penetrating observations on virtually all aspects of socialist practice and doctrine, Mises painted an encompassing and breathtakingly original picture of socialism.

Benefits Derived from the Means of Production under Capitalism

One of the most common charges against the classical-liberal program of elevating the respect of private property into the first principle of human cooperation is that private property benefits the haves at the expense of the great mass of have-nots. As the word “private” insinuates, the have-nots are deprived of the benefits of the goods that are under exclusive control of the haves, who are happy and few.

The Utilitarian Case for Democracy

Closer analysis revealed that private property in the factors of production was not just a privilege of the happy few capitalists, but had a genuine social function. Mises brought the same perspective to bear on government and thus discovered an original rationale for democracy. This institution was not an end in itself. It fulfilled a social function that no other system of government could fulfill.

Political Economy of the Family

One of the most successful rhetorical ploys in defense of socialism is to present socialism as “going beyond” liberalism in liberating the human being. Socialists such as Karl Marx and Friedrich Engels had praised capitalism for unfettering production. But capitalism had not gone far enough in abolishing the institutions that hampered the flowering of the human race. There was still private ownership in the means of production. Socialism would do away with this last bulwark of the exploitation of man by man.