The great catastrophes that befell Germany in the first part of our century were the inevitable effect of its political and economic policies. They would not have happened at all or they would have been much less pernicious if there had been in the country any noticeable resistance to the fatal drift in official policies. But the characteristic mark of Germany in the age of Bismarck as well as later in that of World War I General Erich Ludendorff and of Hitler was strict conformity. There was practically no criticism of the interventionist economic policies and still less of inflationism.

One of the characteristic marks of the age that witnessed more bloodshed, war, and destruction than any preceding era of history was the credulous appreciation of quasi-prophetic prognostications about the course of future history and about the final goals of mankind’s evolution. In the wake of Hegel’s philosophy, Marx had proclaimed that a mysterious, never-defined or clearly described agency called the “material productive forces” was inevitably leading the peoples toward the bliss of everlasting earthly paradise, socialism.

The publication of a new English-language translation of Böhm-Bawerk’s monumental work on Capital and Interest1  raises an important question.

As is customary with biographies, Professor R. F. Harrod’s The Life of John Maynard Keynes (Harcourt, Brace, 195 1) provides an abundance of information about insignificant happenings and uninteresting people who crossed the path of his subject. The whole of page 171, for instance, is devoted to the description of a lady who happened to be the niece of an authentic duke. We are told how she dressed, how and where she lived, what her eccentricities were and many other things.

The Keynesian doctrine as developed by 1936 in The General Theory of Unemployment, Interest, and Money, tries to prove the soundness of the two most popular but least tenable components of contemporary economic policies: inflationism and labor unionism. At the time of its publication the spectacular failure of these two methods of interfering with the market phenomena could no longer be concealed. Yet the governments and the political parties were firmly resolved not to abandon “deficit spending” and the support of labor union violence and intimidation.

The interpretation of the trade cycle—the recurrence of periods of feverishly booming business invariably followed by periods of depressions—first developed by the British Currency School and later perfected by modem economics runs this way:

In his book, How Can Europe Survive? (Van Nostrand, 1955), Dr. Hans F. Sennholz explodes one of the main fallacies underlying present-day economic policies.

The most powerful force in the policies of our age is Karl Marx. The rulers of the many hundreds of millions of comrades in the Communist countries behind the Iron Curtain pretend to put into effect the teachings of Marx; they consider themselves as the executors of the testament of Marx.

It seems that in the heated polemics of the cold war people have lost sight of the issue in dispute between socialism and capitalism. The objective of socialism and communism is neither to “bury” us, nor to occupy the whole of the city of Berlin, nor the conquest of any of the remaining free countries.

Socialism, as all its harbingers announced in the past and as its professorial, journalistic, and political advocates repeat again and again in their books, speeches, and platforms, aims at a spectacular improvement in the average man’s standard of living.

The social and economic meaning of institutions may change in the course of history while their legal definition and character remain unaltered. Whenever this is the case, serious misunderstandings originate that lead astray the reasoning not only of the masses but also that of economists and politicians.

Let us deal with two outstanding examples.