Against the Tide

II

The Intellectuals and “Capitalism”*

No one capable of judgment can deny that “capitalism”—that economic system of the Western world that rests upon private ownership of the means of production, upon an extraordinary differentiation of production and a long list of “freedoms”— has, in the course of the century and more of its history, proved to possess a greater power of creating prosperity than any other economic system that preceded it. And no one was more eloquent in praising this power than Karl Marx in the Communist Manifesto he wrote together with Friedrich Engels—Karl Marx, that great “intellectual” who combined his panegyrics on the historical achievements of capitalism with an anti-capitalist philosophy of so far unexcelled vigor and thereby set an example to thousands of lesser men after him. We all know that with this he laid the foundations of the socialist mass movement of our day, but it is equally well known that criticism of capitalism has not remained the exclusive preserve of the socialist camp. It has also spread to circles opposed to the socialist economic ideal, and thus led to a now almost-unending series of reformatory government interventions of all kinds.

This criticism invariably became loudest in times of crisis and depression, when the most distinguishing quality of capitalism, its outstanding achievements in production, seemed called in question and the host of immediate victims of the crisis became a challenge subject of anti-capitalist criticism and at the same time its natural sounding board. There is, therefore, nothing special in capitalism once more being pushed into the defensive all along the line. What is special and really rather alarming in the present situation is that the barrage of criticism has never before been so violent, nor the aggressive spirit of the opponents so fiery. And—to come to the most dangerous aspect of the situation—the exponents and advocates of the present economic system have never before been so lacking in self-assertion and have never been more unskillful in defending themselves.

Increasingly we find, not only in Germany, but also in the United States and England, a nagging doubt as to whether capitalism can be maintained much longer in this greatest of all depressions, whether indeed it is right and expedient to maintain it. A growing number of deserters leave the capitalist for the socialist camp, which soon will be as motley as ever Wallenstein’s was. There is mounting evidence of a distinct feeling of inferiority on the part of the capitalist world, of despondency and flirtation with socialist ideas of economic planning; openly or implicitly, the outward progress of the Russian five-year plan is taken as the yardstick for measuring the imagined and the real shortcomings of capitalism. And so that we should not be without that vicious circle that seems to be our fate in all spheres today, the crisis of confidence itself saps the efficiency of capitalism and thus creates the very substance on which it feeds.

There are some, and indeed more than a few, who see their dawn breaking and with barely concealed pleasure pour oil onto the fires of criticism and despair: some from selfless fanaticism and some because they covet the heritage they expect to come to them, but all without giving a thought to what we should put in the place of this economic system, on which the existence and civilization of the densely populated Western countries have rested so far and on which they alone can rest in the future. Nothing is easier than to find fault with this system, and no less a man than Owen Young, one of the leading personalities of the American economy, is said to have declared not long ago that he was second to no Bolshevik in his criticism of capitalism. After all, is our sense of justice satisfied with the distribution of income and wealth that we have today? Is it not disgraceful and provocative nonsense for millions to be idle and unable to find work to protect them from hunger and destitution, while at the same time countless machines are standing still? Who can really be at ease in the presence of the growing concentration in economic life, which goes hand in hand with the increasing dependence of the masses? Who can fail to see that our civilization is being destroyed by the progressive commercialization of things that are beyond economics, by the obsessive business spirit that confuses ends and means and forgets that man does not live in order to work, but works in order to live, and thus perverts all human values, by the empty bustle and sterile excitement of our time? Who, indeed, does not feel that all this is destructive of civilization, does not want to fight against it all? Who can fail to be shocked by the largely meaningless and uncultured extravagance of the rich, here in Europe as in America? In truth, we would not want for grandiloquence, lung-power, and acute observation in matching the critics of capitalism in this tune, and in our hymn of hate we would enjoy introducing appropriate allusions to bags of coffee dumped into the sea and corn used to fire locomotives. Any fool can do that, and there’s no need for anyone to feel clever and superior just because he reads out for the nth time the long list of sins imputable to the modern economy, with the implication that we are too stupid or obdurate to see it for ourselves. This is only where the true task begins. It is a double task.

First, it would be an act of unexampled irresponsibility to go from criticizing the present economic system to pronouncing the death sentence upon it so long as there is not at least a probability that the economic system that is to follow will give more satisfactory results. The fact that the present economic system has defects that no clear-thinking person denies is not sufficient proof of the existence of a better one. But the economic system that is to replace the present one so far exists only in the more or less extravagant imagination of the gullible and the enthusiastic. We fully understand the despair that grips the victims of the present economic crisis, and we insist that this despair should be an incentive to clear-sighted leadership to take such measures as can be taken with any prospect of success. But despair itself can generate only forces of destruction, not of reconstruction. We understand that a man in despair wants to smash everything to bits, but we doubt whether that will improve matters. In heaping accusation upon accusation, the opponents of capitalism forget to furnish any proof that we shall do better with their brand of economy. There is so far no experience to prove it; even the Russian example does not prove it, for reasons to be discussed presently. On the contrary, all experience so far with any kind of economic planning measures overwhelmingly speaks against the latter’s repetition and cumulation. On the other hand, our often so reckless anti-capitalists would do well to get thoroughly acquainted with the voluminous literature on economics, which demonstrates that in practice socialism must founder on the impossibility of economic calculation in a socialist community. Let them try their hand at a refutation which no one has yet managed. This is, of course, more troublesome and less rewarding than brandishing the hatchet, but it should not be too much to ask of men conscious of their responsibilities.

So much for the first task. Secondly, it is the duty of any serious critic of our economic and social environment to examine very carefully what defects and imperfections are to be imputed to the economic system as such, rather than to other historically more or less incidental circumstances. One point to note in this context is that the capitalist economic system has been saddled with burdens such as no other economic system probably has ever borne. Among them is a population increase unparalleled in history. It is the fault of that increase that the incredible growth of productivity has not done as much to raise individual welfare as might have been expected but has had, in part, to provide a means of existence for a larger number of people. But to hold capitalism responsible for that increase in population ill becomes those who fall over themselves today in blaming capitalism, and the alleged decay which it causes, for the steadily decreasing rate of demographic growth, or the “waning of the people’s vital force,” as certain circles are fond of expressing themselves. And then, let us ponder how very different the world would look today if capitalism had not been made to bear political burdens under which it nearly broke down. But capitalism cannot very well be blamed for the armaments race, the world war, the peace treaties, inflation, revolution, and political mass epidemics of all kinds, without exposing to utter ridicule the sociological approach underlying such an attempt. Were there no wars before capitalism ever existed, and did they not wreak destruction? And are Sweden, Denmark, the Netherlands, and Switzerland by any chance less capitalistic than Germany and England? And, surely, the first group of countries is the best demonstration of what peace signifies for the thriving of capitalism’s welfare-creating forces. As we take a closer look at one feature after another that we don’t like in capitalism, it turns out in very many cases that the complaint is misaddressed.

How much thought, for instance, is given to the extent to which the picture presented by quite a few capitalist countries is distorted by feudal and pre-capitalist vestiges carried over into the present time? Why does France enjoy such a happy balance, with a strong middle class and a vigorous peasantry? Surely it is because in 1789 that liberal revolution so busily ridiculed by the contemporary condemners of liberalism made a cleaner sweep of feudalism than elsewhere. And it wasn’t the fault of capitalism, after all, that England is a country without peasants but rather, as in Germany, the fault of an agrarian policy devoid of sense and of any understanding for the importance of the peasant class. Another example of a misaddressed complaint is the whole set of unedifying aspects of big industry that are the favorite butts of anti-capitalist criticism, to wit, the individual’s dependent condition, the threat to his satisfaction in work, and much else. Only careful sifting will show how much of all this is to be imputed to the big industrial enterprise as such and how much to the capitalist one, and it turns out that in a majority of cases there would be no less cause for complaint if the big enterprise were under socialist management. It may indeed be assumed that in a socialist state, where the workers are faced with only one employer, they would be a good deal more dependent and less free.

The decisive point in judging capitalism, finally, is that precisely in our days, when the system is being attacked so sharply, it is disfigured and distorted almost beyond recognition by alien elements. The direct manipulation of prices by the government, price ceilings such as still exist for dwellings, minimum prices for coffee, rubber, wheat or rye, an increasingly more complicated system of protection for domestic producers against foreign competition, regulations on the compulsory utilization of materials, regulations on consumption, “political” wage formation, the growing infiltration of public intervention in the field of production and trade, an endless string of premiums and subventions, the steadily increasing expansion of public expenditure—in short, intervention, collectivism, and economic “planning” all along the line. Can this still be called capitalism? Had we not better give it a new name, such as subventionism, interventionism, or pseudo-capitalism? What is so grotesque in this situation is that all these interventions and manipulations have lowered the efficiency of capitalism in a way of which we are only too painfully aware now, in the crisis, but that, on the other hand, they fit perfectly into precisely that pattern of economic policy that is advocated by the most vociferous critics of capitalism. And in order to refloat the economy whose functioning has been so largely impaired by past interventions, those same critics of capitalism clamor for more interventions, more planning, and hence a further emasculation of our economy. It is as though one poured sand into an engine and then hoped to start it up again by pouring in more sand. This is the admirable logic that bedevils us today.

Notoriously, the class of people somewhat loosely designated as “intellectuals” has long played a significant, perhaps even a decisive, part in the anti-capitalist Fronde. All the same, it is an astonishing spectacle, which needs some explanation, that today a mass wave of anti-capitalist sentiment threatens to engulf almost the whole intellectual class—at least in Germany but, to a lesser extent, also in the United States and in England. The consequences are incalculable. Whether they join the social democrats, the communists, or the national socialists, whether they side with Marx or swear by Spann and utter dark prognostications, none of them will have any truck with capitalism, and the younger they are, the less will they do so. It is worth looking a little closer into the background of this intellectual mass flight from capitalism.

The first point that comes to mind is that the economic and social changes of the last fifteen years have gotten the intellectuals into a situation that increasingly resembles that of the proletariat. We not only need to think in this context of the decimation of the old middle classes but also of the mass entry into the professions needing academic training, the prospects of which thereby become steadily poorer. In this situation people cling to the dream opportunities of escape and preferment that the anti-capitalist economic constructions appear to offer. Perhaps they hope that the planned economy of the future will need more lawyers and engineers than the market economy of the present, and it is thought a grave defect of the latter that it cannot always absorb the steadily mounting supply of intellectual workers without growing proletarianization, that is, without cheapening each individual. It must be obvious to any thoughtful person how big a danger this proletarianization of the intellectual middle classes, this constant erosion of the “bourgeois” concept, spells for the present economic system, and it must be equally obvious that the decimation of middle-class wealth by inflation is having to be paid for very dearly now and that it would be an unforgivable mistake to let the civil servants, in their turn, be swallowed up by the whirlpool.

But the intellectuals’ anti-capitalism is by no means conditioned solely by their economic situation and, in many cases, perhaps not even decisively. Their attitude is buttressed by strong sentiments, noble and ignoble alike. Hats off to the philanthropists whom the sense of justice, compassion, and charity leads to champion the cause of the economically weak and ultimately to oppose an economic system that rightly or wrongly is regarded as the sole culprit. Hats off to the patriot who is prepared to sacrifice not the others but himself to the common weal. But it may well happen that our sentiments fool us when we give them too free a rein and let them become a soporific of the cooly calculating mind. The tremendous danger in any sentimental justification of meddling with the ruling economic system is precisely that we are over and again driven beyond the limits that we can recognize and would respect if our mind were not dulled by sentiments of the most honorable and noble kind. The free-trader is no less patriotic than the protectionist and no less concerned with the common interests, but his mind tells him that the common interests are damaged when the international division of labor is obstructed by obstacles that look patriotic only because of a failure to appreciate that an obstacle to imports is also an obstacle to exports. The social revisionist is no worse nor less social a man than his opponents; he, too, knows of no higher purpose than to replace mass poverty by mass prosperity, and he, too, has a profound hatred of exploitation, unfairness, injustice, and that “hardness of heart” with which men torment each other and make one another unhappy. But is it not a sign of his particularly acute sense of social responsibility that he does not let his sentiments obscure his recognition of the fact that some part, at least, of what for ten years or so has been extolled as social progress ultimately annuls itself and, beyond that, is destructive and in the end effect, therefore, unsocial? These are just examples to show that anyone who cannot refute our rational arguments has no right to cast doubt on our sentiments and motives.

But there are also sentiments of a morally less clear-cut kind, and they are today associated especially with the anti-capitalism of those intellectuals who stand aside from the real mass movement of socialism. It is a brand of anti-capitalism that at present finds particularly striking and, it would seem, effectual expression in the circle connected with the periodical Die Tat. The first impression the reader of this periodical gets is the frequency of doom and destruction articles, which, one would think, are bound to become wearisome to the public in time. But the contrary seems to be true; the economic and political ideas developed in the review every month by a number of contributors, especially by Ferdinand Fried (clearly a pseudonym), seem gradually to be accepted as gospel truth by an uncritical section of the younger generation. “The Road to Chaos,” “The Crisis of Capitalism, “ “Breakdown of the World Economy,” “Getting Better?—Storm Signal!” “Blind Alley,” “Exit the Old Economy,” “The Road to Catastrophe”—these are just a few sample titles. Wallowing in pessimism, these apocalyptic visions seem to betray more than just the satisfaction Cassandra might have felt had she been able to gather a circle of readers around herself. There seems to be something else behind these effusions, and that is the all too human inclination to exaggerate the historical significance of present happenings, to feel as though one were standing on the Gaurisankar of epoch-making events, whereas it is maybe just a little molehill of history, in short, to believe “that as of here and now a new epoch of world history is beginning” and to add proudly: “I was there.” To begin with, pessimism appeals to intellectuals because it is the mark of a certain lack of vitality, a certain escapism, and it suits people who, in their own way of putting it, have more “mind” than “blood.” But perhaps it is also a mark of the German character, as Die Tat itself somewhere states, “to welcome even the most destructive phenomenon if only it fits into some theory.” This is the only possible explanation for the unconcealed pleasure and satisfaction with which the Tat circle hailed the latest credit crisis in Germany as “a decisive and saving step forward.”

What gives the anti-capitalism of our intellectuals, and especially of the Tat circle, its distinctive flavor and, I frankly confess, makes it so peculiarly unpalatable is the wholesale rejection of all those values and ideals that we subsume under the, admittedly somewhat discredited, expression of liberalism. These circles, it seems, have lost all feeling for the infinite and absolute value of individual freedom, all understanding of the truth that what the Age of Enlightenment and liberalism fought for, what men like Hume, Voltaire, Wilhelm von Humboldt, John Stuart Mill, Jefferson, or Mazzini as well as our classical poets extolled, what our grandfathers and greatgrandfathers battled and suffered for, is ultimately mankind’s oldest and finest intellectual heritage. All feeling for humanitas in the widest sense of the word seems to be dead to them and seems to have given way to a new enthusiasm for the omnipotence of the state, the subjection of the individual, for the militarization and tutelage that threatens to lead us back into another barbarism—until, fifty or a hundred years later, people will rediscover the truth that there can be no civilization without freedom, and this truth will prevail in another fearful struggle, as can be predicted right now in Italy. They are racing full steam ahead toward the termite state, and however much our friends on the other side prefer to call it the “total state,” this does not make their ideal any prettier. Certainly, it is to be hoped that all those who still have a remnant of resistance against this barbaric social philosophy should oppose it with an unbending NO. Since one cannot very well argue about opinions, it can at least be pointed out forcefully how unrealistic is this étatism, which is here being resurrected in its most radical form. Has anyone stopped to think that the state, in practice, means bureaucracy, about which, after all, even Die Tat has its biting tale to tell? Have the red tape of our war economy and the corruption of our foreign trade controls after the war been forgotten? Has it been forgotten, for example, that for months during the war we had to eat turnip jam because some junior official in a position of responsibility confused turnips with beetroot? Or, to mention another example, has it been forgotten in the heat of the battle against the gold standard where we end up if we let the state handle and mishandle the currency at its discretion? All these experiences, which we would have expected to provide salutary immunization for at least one generation, must, indeed, have been forgotten, for otherwise this new enthusiasm for a war-time and planned economy would be incomprehensible.

The more tasks are assigned to the state, the more “total” it is made, the more emphasis is laid on its external position, and the more significance is attached to the national frontiers. It is only consistent—though we shudder at this kind of consistency—that our anti-capitalist intellectuals are ready to jettison economic freedom not only within but without, and that they want to achieve national autarky by means even more drastic than protective tariffs. Along with the social philosophy of mercantilism, its whole economic armory has thus been taken over. That no one makes even the slightest attempt to refute the simply overwhelming arguments that speak against such a policy is hardly worth mentioning, for economics is, after all, a liberal invention that need not be bothered with. Instead of anything like a real proof, we are fobbed off with a device that is extremely popular in this whole spiritual province of our country, namely, the use of emotional appeals of all kinds to create a certain atmosphere, to which the reader is then exposed. One of these emotional appeals is a sort of glorified nationalism, which so dominates the Tat circle in particular, that one almost gets the impression that the whole economic policy program is merely a means to some foreign policy purpose. Again and again we read how closely things national and social belong together. And this connection is made even closer by defining, if need be, the infinitely iridescent concept of “capitalism” in such a way that it coincides with the whole group of countries that are the bugbear of foreign policy, that is, Western Europe.

Another emotional appeal that is very effective in Germany is what I would call geographical romanticism, a brand of romanticism publicized linguistically by the frequent use of the word “space.” Geopolitics, as such a very useful approach that we owe to the Swedish geographer Kjéllèn, though he was not to know what we would make of it, is thereby turned almost into a caricature of itself. With the finger on the map an attempt is made to prove to us that our salvation lies in a certain “space” (Southeast and Eastern Europe), without worrying about the consequences such self-encirclement is bound to have on our trade and foreign relations, however plainly visible these consequences have already become, and without considering that what counts is not square miles but purchasing power and capital wealth. The fact that small countries such as Denmark, the Netherlands, and Switzerland are doing very well without “space” is ignored. If they establish contacts with a view to defending themselves against regionalism in foreign trade, they are at once suspected of wanting to form a new “space,” and this is used as an argument to justify more “space-building” of our own. If only all these things were for once discussed more soberly and without throwing around so many pompous words! But that is just what is so characteristic of the intellectuals’ socialism in Germany, however much its representatives, such as the members of the Tat circle, may otherwise be perfectly articulate in the German language.

Verbal pomposity is something that applies in the first place to the very expression “capitalism,” which, just like the expression “space,” is used in countless nuances and compounds and is an indispensible prop in the written output of our intellectuals, where it has helped them to many a logical fraud. On closer inspection it is frightening to see how this seductively iridescent concept is manipulated at will to provide ever new justification for the eternal ceterum censeo. Western “capitalism,” rentier “capitalism,” creditor “capitalism,” private “capitalism,” state “capitalism”—all are concepts that elude precise definition and, hence, lend themselves eminently to whipping up a certain stylistic lather. By hook or by crook everything is pressed into the mold of the “crisis of capitalism” with a violence one is tempted to describe as “association mania,” and this applies regardless of whether the thing in question has as little to do with the economic system as such, as, say, deficit financing in Germany.

The self-assurance with which our anti-capitalist intellectuals justify the per eat they hurl at the capitalist economy and with which they predict its demise by a sort of self-intoxication, by the course of some much-quoted “fate,” is by no means matched (taking, once more, Die Tat as an example) by the sort of knowledge of economics one would have a right to expect. The statistics of which Die Tat makes copious and tendentious use cannot make good this shortcoming, for all depends on the interpretation of the figures, and that cannot possibly be done without economic theory. Ferdinand Fried, for instance, took a lot of trouble proving the inequality of the distribution of income and wealth in Germany, only to reach the conclusion, among others, that one third of the country’s total wealth is in the hands of no more than seventy-nine thousand people. But then he adds: “The whole hullabaloo that goes on at present in Germany about the economy, private property, politics and parties in the end turns on just these seventy-nine thousand people—and that is nothing less than grotesque!”1 That is the sort of primitive black and white approach we thought serious Socialists had outgrown by now. Not an inkling of the fact that in the debate about the economic system the fate of these people is totally irrelevant, but that any improvement in the situation of the have-nots to be expected from a more equal distribution of income and wealth would be so minute that this point is completely overshadowed by the question of the system itself, which is rooted in private ownership of the means of production. Not an inkling of the fact that arbitrary interference with the existing distribution of income and wealth, however much such interference may be desirable from a host of other points of view, has to be paid for with intolerable disturbances that would cause more hardship to the have-nots themselves. Not an inkling of the fact that “capitalists” really fulfill the function of social officials, who are selected on the strict principle of performance, who are responsible for the good management of the means of production and for this get paid a sum that, all in all, is probably less than the pay of officials in a socialist state in relation to their performance, and who must pay the penalty for their mistakes by the loss of their livelihood.

It is true that in the modern economy there is often a wide divergence between income and performance, but that does not affect the principle. On the contrary, we place the strongest possible emphasis on degenerative symptoms of this kind and differ from the anti-capitalist radicals only insofar as we do not allow our indignation to carry us away into an ultimately sterile negation of the whole system but draw from it the passionate demand for an economic policy that, to the extent possible, stops up the sources of fraudulent incomes (without corresponding performance) and unpunished mistakes. What is at stake here are questions of trade policy, monopoly control, reform of corporation law, monetary and credit policy, and this is the appropriate sphere for positive criticism of the existing system. That the capitalist economy is just as much a want-satisfaction economy as the socialist one should be self-evident to anyone who has ever stopped to think that the success of any business, that is, its profit, is determined by the sensitive scales of the market, and that means consumer demand. It is quite illogical to contrast the capitalist profit economy (“want-creation” economy) with the socialist “want-satisfaction” economy. Both economic systems aim at satisfying wants, and it is only the motives and organization of “want-satisfaction” that differ. The only logical contrast to the profit economy would be, say, “bureaucratic” economy. So far as I am concerned, I am inclined to think that this capitalist “want-creation” economy (profit economy), however much its equilibrium is upset by the present crisis, does not come off so badly by comparison with the Russian “want-satisfaction” (bureaucratic) economy.

Here is another example to illustrate where too bold an emancipation from economics may lead. Anyone familiar with the most elementary notions of economics knows that price determination on the basis of production cost has a profound economic significance, insofar as this is the means of achieving the best and most efficient possible distribution of factors of production in the economy. Ferdinand Fried is innocent of this. He obviously suspects2 that he is here on the scent of some eccentricity of the capitalists, a psychosis contrasting to its disadvantage, as he implies, with the Russians’ happy-go-lucky policy of dumping. This goes to show, once more, the pitfalls that await the amateur who wants to attack an economic system he has not thoroughly studied beforehand, were it only with the sort of love-hate that must have driven Karl Marx to such study. On the other hand, Ferdinand Fried seems to take a very poor view of businessmen’s being interested in economics, and thinking, talking, or writing about the meaning of what they do. They can’t do that, opines Fried3 without giving away that their vital sap has become thinner. What would be his judgment if they responded with silence to all the attacks showered upon them is anybody’s guess, but that his conclusion is quite absurd would be obvious even if so many of the businessmen who talk and write did not burst with vitality and energy. The sole example of Ford should clinch the argument.

The more deeply the capitalist world sinks down in the sulphurous vapors of catastrophe, the brighter rises the Russian star for our anti-capitalist intellectuals. To be sure, they make reservations of all kinds, but on the whole they look to Russia in a way that some years ago would have been called national bolshevikism, and that seems to arouse a good deal more sympathy today than it did then. After thirteen years the Russian system is at long last beginning to develop ideas that look constructive at least formally and from the technical point of view, and at the precise moment when the capitalist world is convulsively contracting after a gigantic wave of investment and is groping for a new equilibrium in the severest of all depressions, the Russians have embarked with tremendous energy upon an investment program of huge dimensions, with the result that all-out effort combines with relatively little unemployment in Russia at this time of depression in the capitalist world. For many people this is enough proof that the Russian method is superior to the capitalist one. More than just a few of those who only a few years ago admired the American “economic miracle” seem to have turned right about and now see a new “economic miracle” emerging in the East. All these widespread attitudes seem to be largely devoid of objective thought. The Russians may well succeed in building power plants and other things on a gigantic scale, but that really need not astonish us any more than the successful erection of the pyramid of Cheops. What is astonishing in both cases is merely the tremendous social pressure and the remarkable compressibility of consumption, which alone make such investment projects possible, as well as the political and social system that can withstand this pressure. But a people’s ability to stand impoverishment is no proof of the superiority of a system that uses this ability for the creation of durable investments. This applies all the more forcefully as the machines that are being installed in Russian factories have to be bought in capitalist countries, the best that only capitalist industry can produce, and are paid for with money procured by dumping, to the detriment of Russians as consumers and non-Russians as producers. And then there still remains the question not only of how much the Russians manage to do with these machines, but, far more important, of whether there is any chance at all of economic calculation such as would prevent at least the worst cases of misallocation of resources and faulty investment, and whether the incentives are sufficiently strong to guarantee some minimum of speed and quality of work. For an answer to this question, all the enthusiastic admirers of Russia would be well advised to read Boris Brutzku’s extremely well-informed and instructive article “Planwirtschaft und Marktwirtschaft in der Sowjetunion.”4 What they can learn there about the increasing disruption of the Russian economy owing to the sheer impossibility of running an economy without a market should give them as much food for thought as the circumstance that, unlike the typical investment booms of capitalist economies, the Russian investment boom has not so far caused the slightest improvement in the general supply situation for the population—if anything, the contrary. (Ferdinand Fried, to be sure, seems to suggest that this is another special merit of the Russian investment boom, to judge from his article “Der Umbau der Welt,” as indeed he is visibly at pains to belittle the terrible shortages from which the Russian population suffers according to all reports.) But then, I hear someone object, surely Russia is free from the appalling unemployment of the capitalist countries. Well, during the inflation we, too, had no appreciable unemployment, but the price we would have to pay for a repetition of that experiment seems to us too high, and rightly so, because an economy cannot with impunity be subjected to such heroic treatment. That will become apparent in Russia as well when the investment phase comes to an end and a new equilibrium has to be found for the economy, which will be all the more difficult, just as in the case of a capitalist boom, the steeper was the climb of the investment curve. But these are considerations of economics that are far from the minds of our anti-capitalist intellectuals of the Tat species. They wax enthusiastic about the “anti-pole of Western private capitalism” (Fried), about the “total state” (for which in the interests of clarity, I continue to prefer the name “termite state”), they have no detailed program of their own but are thrilled by their belief that instead that can not only invoke “fate” but point to the Russian example. It is all a piece of dilettantism of the kind that cannot be censured too sharply, dilettantism interwoven with romantic enthusiasm for political dictatorship.

In effect the anti-capitalism of the Tat circle has one thing in common with old-style Marxism: it leaves us in the dark regarding its positive program. They throw out expressions like “state economy,” “want-satisfaction economy,” “organic economic community,” “spiritualization, moralization and nationalization of the economy,” “tied planning,” “the mass of the unpropertied people growing into the state,” “realization of the idea of true democracy,” but these are all more or less lyrical catch-phrases that cannot give us any clear idea of the nature of the new economic system. The only clear intention is to close off the economy against the rest of the world even more than is already the case, if possible by a state monopoly of foreign trade. No attempt is made to discuss the real problems of socialization, not even in the August issue of Die Tat, which was supposed to have published the positive program. Before we see that positive program, there is no possibility of a critical assessment that will carry further the general considerations already propounded in these articles.

The strong appeal of the Russian economic experiment as well as the whole intellectual socialism of our days, especially as represented by Die Tat, is, of course, like many another contemporary phenomenon that would find no echo in dispassionate minds, explicable only as an emotional reaction to the great economic depression of the capitalist world. It is this that helps to create a sort of chiliastic mood and creates the impression that we are faced with a crisis not merely of the economy but of the whole system, with the last great “crash,” with the “crisis to end crises,” when reason is out of place and fate takes its course, a fate to which we must blindly bow. It would be interesting to know today how this doomsday mood is going to be judged in fifty years’ time, but my guess is that the chronicler of 1980 will find that mood very strange if he compares it with the technical feats achieved by capitalism during the ten years preceding the crisis, feats that had become one of the main causes of imbalance. He will note that history takes a longer view than our pessimists had assumed, and that it was premature to introduce such expressions as “late capitalism” so long as there was still a possibility that our economic system was not breathing its last. No doubt, he will see much in a different light than we do, and he won’t be able to make head nor tail of much apprehension and hysteria on one side and of self-confidence on the other. He will be moved on seeing what efforts we made to get out of the pandemonium of the crisis, and, we hope, will go on to record that in spite of gigantic difficulties and unpardonable mistakes we did eventually find our way back to safe ground. But things may also turn out otherwise. The chronicler of 1980 may have to record, sadly, how badly we failed when there was still time to prevent a catastrophic regression into poverty and barbarism. Maybe he will have to record that the civilization and the economy of the Western world perished because people allowed an economic system of unparalleled strength and resilience to rot or threw it overboard. And not without bitterness will he recall not only those who sinned against the economic system but also the pessimists and amateurish activists whose prophesies based on secret desires came true, just because their propaganda was more than anything else responsible for undermining the intellectual foundations of the system. And his curse will also fall upon those who were indolent enough to succumb to that propaganda.

* Frankfurter Zeitung, Nos. 662-663, 675-676, and 681-682, September 6, 11, and 13, 1931, signed by the pseudonym: Ulrich Unfried.

1 Die Tat, September, 1930, p. 442.

2 In his article “Der Umbau der Welt,” Die Tat, May, 1931.

3 Die Tat, July, 1931.

4 Der Deutsche Volkswirt, May 8, 1931.