Classical Liberalism and the Austrian School

 

8	Eugen Richter and the End of German Liberalism

Introduction

For several generations now there has existed an interpretation of modern history conditioning and shaping the views held by nearly all educated people on the great issue of socialism vs. the market economy.

This interpretation goes roughly as follows: once there was a “class”—“the” bourgeoisie—that rose to prominence with the colossal economic and social changes of early modern history, and strove for domination. Liberalism, which admittedly helped to achieve a limited degree of human liberation, was the ideological expression of the bourgeoisie’s self-interested struggle.1

Meanwhile, however, another, much larger class came into being, “the” working class, victims of the triumphant bourgeoisie. This class strove in its turn for recognition and domination, and, accordingly, developed its own ideology, socialism. Socialism aimed at the transition to a higher, broader level of human liberation. The natural and inevitable conflict of interests of these two classes—basically, of the exploiters and the exploited—fills modern history, and has led in the end, in the welfare state of our own time, to a kind of accommodation and compromise.

With this historical paradigm I think we are all quite familiar.

Recently, however, a different interpretation has begun to gain ground. The outstanding historian Ernst Nolte, of the Free University of Berlin, has expressed its central point:

The real and modernising revolution is that of liberal capitalism or of economic freedom, which began 200 years ago in England and which was first completed in the USA. This revolution of individualism was challenged at an early date by the so-called revolutionary socialism, whose guideline was the archaic community, with its transparency of social conditions, as the most comprehensive counterrevolution, namely as the tendency for totalitarian collectivism.2

Although capitalism “radically chang[ed] the living conditions of all those affected in a relatively short time and improv[ed] them to an extraordinary degree, at least materially,” “it did not understand how to awaken love.”3 The great capitalist revolution called forth a socialist movement, which “in a certain sense [was] thoroughly reactionary, indeed, radical-reactionary.”4

The Place of Liberalism

This more recent conception suggests a new interpretation of liberalism. Liberalism is, in fact, the ideology of the capitalist revolution that prodigiously raised the living standards of the mass of people; a doctrine gradually elaborated over several centuries, which offered a new concept of social order, encompassing freedom in the only form suited to the modern world. Step by step, in practice and theory, the various sectors of human activity were withdrawn from the jurisdiction of coercive authority and given over to the voluntary action of self-regulating society.

Practically all the peoples of western and central Europe (as well as the Americans) contributed to the working out of the liberal idea and the liberal movement. Not just the Dutch, French, Scots, English, and Swiss, but, for instance, in Spain, the Late Scholastics of the School of Salamanca and at other academic centers,5 and a number of Italians, especially at the beginnings of political economy. In this evolution, the Germans also played an often overlooked part.6

Particularly striking for foreigners who have concerned themselves with German liberalism has been the bitter hostility that it met with in its own time and at the hands of historians, and which is linked to the first, conventional interpretation of modern history described above. Paul Kennedy has quite accurately referred to “the sheer venom and blind hatred behind so many of the assaults in Germany upon Manchestertum [Manchesterism, i.e., laissez-faire].”7

This hostility was directed especially against the man who was for two generations in Germany the representative of the liberal movement that embraced all civilized nations: Eugen Richter. Malice has now been replaced by oblivion. Last year, in July, was the 150th anniversary of Richter’s birth, and if any notice was taken of the occasion in the Federal Republic, aside from my own very modest contribution,8 it has not come to my attention.

That should not be surprising, however. Since both the conservatives and the socialists—the two camps that have by and large written the history of Germany—found Richter insufferable, he has usually been treated with disparagement or else totally disregarded. Thus, he remains unknown to the vast majority of educated people, even in his homeland. Given the older historical interpretation, this circumstance might possibly make a certain sense; it by no means corresponds to the newer one. Thus, an attempt to evaluate Richter’s significance for German liberalism and German history is called for and, indeed, overdue.

Differences of Opinion on Richter

Eugen Richter9 was the brilliant, if occasionally too masterful, leader of the Progressive Party (Fortschrittspartei) and later of the Liberals (Freisinn), the political expressions of German “Left Liberalism,”10 or “determined” (entschieden) liberalism, through thirty years, in the Imperial German Reichstag and in the Prussian House of Delegates; he was, moreover, an untiring journalist and publisher.11 Outside of a narrow group of friends and political associates, the attitudes and opinions on Richter, in his own time and afterwards, have been mostly very negative.12

This is naturally the case on the authoritarian-conservative side. Crown Prince Wilhelm, later Kaiser Wilhelm II, even hatched a plan (never realized) to have Richter “beaten up” by six junior officers,13 and Richter’s old adversary, Prince Bismarck, confided to the old Kaiser, Wilhelm I, that it was among men like Richter that “the material for deputies to the [French Revolutionary] Convention” was to be found.14 Hans Delbrück, whose portrayal of Richter influenced later writers, compared him to the Athenian demagogue Cleon and branded him the leader of a party whose highest passion was reserved for pieces of silver,15 while for the Marxist Franz Mehring, Richter was merely “a servant and helper of Big Capital.”16 Richter’s “rigidity,” “dogmatism,” and “carping doctrinairism” have been repeatedly attacked,17 and a present-day German historian simply reflected the nearly unanimous view of his colleagues when he summarily characterized Richter as “the eternal nay-sayer.”18

Yet even Bismarck was compelled to concede, “Richter was certainly the best speaker we had. Very well informed and conscientious; with disobliging manners, but a man of character. Even now he does not turn with the wind . . .”19 Another opponent, this time from the liberal camp, the first President of the Federal Republic, Theodor Heuss, admitted that Richter was “the most influential leader of ‘determined’ liberalism,” and “certainly in detail work [sic] the most knowledgeable deputy in the German parliaments . . .”20 An observer closer in spirit to his subject expressed it more simply: Richter “was the liberal doctrine incarnate.”21

Richter’s Career

Eugen Richter was born on July 30,1838, in Düsseldorf, the son of a regimental doctor. The atmosphere in the parental home was “oppositional,” e.g., the family read the Kölnische Zeitung “eagerly”—evidently rather bold behavior for the time. Richter’s “predominantly criticalrational disposition” developed from his early youth.22 He studied political science with Friedrich Christoph Dahlmann at Bonn and with Robert von Mohl at Heidelberg, where he also studied public finance with Karl Heinrich Rau, then the most celebrated expert in the field. While still a student he went to Berlin, where the proceedings of the Prussian House of Delegates interested him much more than his university lectures. He began attending the meetings of the Kongress deutscher Volkswirte (Congress of German Economists, a liberal reformist organization) and, through newspapers and journal articles, avidly took part in the growing movement for economic liberalism; he was also active in the consumer cooperative movement.

By 1884 Richter headed a united Left Liberal party, the Deutschfreisinnige Partei that boasted of more than 100 seats in the Reichstag. Liberalism’s hour in Germany seemed to have come: the Kaiser, Wilhelm I, was very old, the Crown Prince, Friedrich, the most liberal of all the Hohenzollerns.

It turned out otherwise than might have been desirable for the Germans. Bismarck’s political skill saw to it that the Freisinnige Partei was smashed in the next two elections, and when Friedrich finally ascended the throne, in 1888, he was already mortally ill.

These vicissitudes could make no difference in Richter’s political convictions, however. For another two decades he held fast to the same principles, which appeared increasingly obsolete and irrelevant. He was the last authentic liberal leader in the parliament of any European power.

Social Philosophy and the Two-Front Strategy

Already in his earliest journalistic activity, Richter emphasized not only the economic disadvantages of the antiquated mercantilist system, but at the same time the infringement of civil and political freedom bound up with it. Thus, in his brochure, On the Freedom of the Tavern Trade, he attacked the concessions system, which invested the political authorities with wide-ranging licensing and regulatory authority for all trades and professions:

As long as the police administration in our state unites in itself such legislative, judicial, and executive powers, Prussia does not yet deserve the name of a Rechtsstaat [state founded on the rule of law].23

Thus from the start, the cornerstone of Richter’s social philosophy was the connection between political and economic freedom, a conception that distinguished him, and Left Liberalism in general, from the mass of “National Liberals.” Two decades later, Richter closed, his great speech against Bismarck’s protective tariff with the words:

Economic freedom has no security without political freedom, and political freedom can find its security only in economic freedom.24

This tenet determined Richter’s continuing political strategy. All his life, he conducted a “two-front war,” against Bismarckian “pseudo-constitutionalism” and a recrudescent mercantilism on the one hand, and the rising socialist movement on the other.25

Richter and the other entschieden liberals have often been reproached for this policy. Critics maintain that the Left Liberals should have allied with the Social Democrats, in a common resistance to the militarist-authoritarian Second Reich, and Richter’s famous “rigidity” and “dogmatism” are supposed to be largely responsible for the fact that such a united front never came into being. Some historians even give the impression that liberal opposition to Social Democracy in Imperial Germany is only comprehensible as the product of “fear” of the “lower orders.”26

But it can scarcely be surprising that Richter rejected such an alliance. He saw himself faced with a socialist party that did not trouble to conceal its ultimate aim, abolition of the system of private property and the market economy, and that viewed “the class struggle between bourgeoisie and proletariat as the ‘pivot of all revolutionary socialism.’”27 After 1875, the Social Democratic Party of Germany (SPD) was officially a Marxist party, and, despite later revisionist tendencies, its acknowledged leaders, like Bebel, Liebknecht, and Kautsky, were confirmed orthodox Marxists. Of course, the SPD presented various democratic demands “to start with”; its ultimate goal remained, however, the social elimination of all non-proletarians.

The Social Democratic standpoint confronting Richter may be illustrated by Franz Mehring, a major theoretician and the biographer of Marx. In 1903, Mehring wrote, in the socialist Neue Zeit, of the German “bourgeoisie” (and its defenders): “It had to be aware, and basically it was aware, that, without the help of the working class, it could not defeat absolutism and feudalism. It had further to be aware, and basically it was also aware, that, in the moment of victory, its previous alliance-partner would face it as an adversary,” at which point the bourgeoisie would fall victim to the proletariat in the final, decisive conflict.

Nonetheless, Mehring insisted that in this putative state of affairs the bourgeoisie must draw the conclusion “that a pact with the working class on tolerable [sic] conditions offers it the only possibility it has.”28 But for liberals like Richter, the Marxist scenario was by no means all that “tolerable.” It is understandable, therefore, that Richter held that the “Social Democratic state of the future,” because it was hypothetical, was for the time being less dangerous than the existing military-authoritarian state, yet essentially “much worse.”29

Even aside from the fact that “from 1869, meetings of the Progressive Party in Berlin were violently disrupted by the Social Democrats,”30 how would an alliance with them have been at all conceivable? As liberals, men like Richter viewed socialism as the great modern counter-revolution, and believed that the achievement of the socialist goal would lead both to appalling poverty and state absolutism. There was nothing in the socialist doctrine of the time that would suggest otherwise. Historians would do well to recognize that the blame for the non-occurrence of a common front against militarism in Germany must be borne by the Social Democrats themselves.

Pictures of a Social Democratic Future

The socialists engaged in a relentless, scathing critique of the liberal economic order. But, as Richter pointed out:

The Social Democrats are very garrulous in criticizing the present social order, but they are careful not to clarify in detail the goal that is supposed to be achieved through the latter’s destruction.31

This omission Richter attempted to make good in his Pictures of a Social Democratic Future.32 In its time, this little book, with its ironic subtitle, “Freely drawn from Bebel,” was a sensation. It was translated into a dozen languages, with more than a quarter-million copies printed in Germany alone.

It must be conceded that in some respects Richter’s narrative is dubious. It leans too heavily on the pathos of family problems under the new socialist regime, although that was to be expected, since it was directed at a popular audience. Sometimes the work even verges on what at first seems absurd, especially in connection with the relations of social equality that will supposedly obtain under socialism, e.g., the new socialist Reich Chancellor must shine his own boots and clean his own clothes, in Richter’s account.

The explanation for this, however, is that Richter took the egalitarian promises of the socialists too literally, too seriously. He lacked any inkling of Marxism’s drive to bring to power a new class of privileged higher-echelon state functionaries and their supporters.

Still, Richter was able to anticipate many of the characteristics later displayed by Marxist states. Emigration is prohibited in Marxist Germany, since “persons who owe their education and training to the State cannot be accorded the right to emigrate, so long as they are of an age when they are obliged to work.”33 Bribery and corruption are to be found everywhere,34 and the products of the nationalized economy are unable to meet the standards of competition of the world market.35

But above all, Richter again emphasized the connection between economic and political freedom:

What is the use of freedom of the press if the government is in possession of all the printing presses, what does freedom of assembly avail if all the meeting places belong to the government? . . . in a society in which there is no more personal and economic freedom, even the freest form of the state cannot make political independence possible.36

When the worst imaginable happens and the socialist state proves incapable of provisioning the German Army as the Fatherland is invaded by France and Russia, a counter-revolution breaks out, restoring a free society.

Marxists and Conservatives: Mutual Aid

Richter presents his two-sided campaign as part of one and the same war, by arguing that it was a question merely of two forms of state paternalism. Interestingly, this interpretation was supported from an unexpected quarter, although without Richter’s normative charge. Accused of political offenses, the founder of German socialism, Ferdinand Lassalle, addressed his judges as follows:

As wide as are the differences that divide you and me from one another, Sirs, against this dissolution of all morality [threatening from the liberal camp] we stand shoulder to shoulder! I defend with you, the primeval Vestal flame of all civilization, the State, against those modem barbarians [the laissez-faire liberals].37

Richter reiterated that the right-wing parties—the Conservatives and the Anti-Semites—aided socialism “especially [by] the agitation against mobile capital, against ‘the exploitation’ it allegedly perpetrates, and, moreover, by the limitless promises handed out to all occupational classes of special state help and provision.”38 In turn, socialism helped the Conservatives and Anti-Semites through its revolutionary threats, intimidating the middle classes and driving them into the arms of a strong State power.39

State Socialism and Sozialpolitik

Richter fought Bismarck’s state-socialist program, including the nationalization of the Prussian railroads and the establishment of state monopolies for tobacco and brandy, and, naturally, Bismarck’s turn towards protectionism, towards rendering dearer the cost of life’s necessities, by which the great Chancellor, landowner, and hater of the “Manchester money-bags” manifested his compassion for the poor. Richter considered the planned tariff wall “the ideal nurturing ground for the formation of new cartels,” which in fact occurred.40 While Richter, together with other liberal leaders, like Ludwig Bamberger, supported the introduction of the gold standard in the newly formed empire, unlike them he opposed the centralization of the banking system through the creation of a Reichsbank; such a central bank, he felt, would tend to privilege “big capital and big industry.”41

Probably Richter’s most famous attack in this field was directed against Bismarck’s Sozialpolitik [social reform], with which the modern welfare state was born. Richter, together with Bamberger, was the chief speaker in opposition to the program, which began with the accident insurance bill of 1881, and over the years he persevered in his point of view when other liberal critics were converted to the new approach. One remark of his was, and is, deemed particularly notorious: “A special social question does not exist for us [the Progressives]. The social question is the sum of all cultural questions”42—by which he meant that, in the last analysis, the standard of living of working people can only be raised through higher productivity, a viewpoint perhaps not totally devoid of sense.

It is above all this opposition to Sozialpolitik with which Richter is reproached.43 If one judges from the standpoint of world history as the tribunal of the world, Richter was certainly in the wrong. The welfare state is today conquering the whole globe; even the grandiose socialist idea is on the point of being reduced to a mere set of comprehensive welfare programs. Still, at least one of the reasons Richter advanced against the beginnings of the welfare state has a certain cogency.

By hindering or restricting the development of independent funds, one pressed along the road of state-help and here awoke growing claims on the State that, in the long run, no political system can satisfy.44

Richter’s words give pause, when one considers the complex of problems gathered under the heading, “The Over-Straining of the Weimar Social State” (the “most progressive social state in the world” in its day), the collapse of the Weimar Republic, and the accompanying seizure of power of the National Socialists.45 One might also reflect on a circumstance that today appears entirely possible: that, after so many fatal “contradictions” of capitalism have failed to materialize, in the end a genuine contradiction has emerged, one that may well destroy the system, namely the incompatibility of capitalism and the limitless state welfarism yielded by the functioning of a democratic order.

Civil Liberties and the Rechtsstaat

While the majority of the Progressives supported the Kulturkampf—it was the celebrated liberal and friend of Richter’s, Rudolf Virchow, who gave the crusade against the German Catholic Church the label, “struggle of cultures”—Richter generally opposed this fateful conflict, which contributed so much to hardening the Catholic Church’s hostility to liberalism.46 Although he did not challenge his own close political collaborators as much as he might have—he claimed the Kulturkampf did “not particularly excite” him47—his own position was basically that of authentic liberalism, of the French Catholic liberals and the Jeffersonians: a clear separation of State and Church, including complete freedom for private education, and in the case of the Americans a principled rejection of state subsidizing of any religion.48

Particularly interesting in this connection is that, for Richter, “the private school was the last possible refuge.”49 In contrast to the majority of German (and of French and other) liberals of his time, Richter was not inclined to place obstacles in the way of the private school system in order to promote his own secular Weltanschauung. As he expressed it:

Even if it were true that by using the free private system of instruction schools would come into being less agreeable to my point of view than the public schools, I would still not let myself be led astray, or desist, out of a fear of Catholics or a fear of socialists.50

Similarly, Richter took to the field against the emerging anti-Semitic movement,51 with which Bismarck coquetted in another of his efforts to subvert the liberals. Richter branded the anti-Semites “unnational,” referring to them as “this movement damaging to our national honor.” In turn, the anti-Semites labeled the Left Liberals around Richter “Jew guard-troops,”52 and attempted, as had the Social Democrats, to disrupt liberal meetings in Berlin through violence.53 Until the end of Richter’s career, the German-Jewish middle classes formed an important part of the liberal following, in part on account of the liberal principle of separation of Church and State.54

In general, Richter had learned very well from the great theoreticians of the Rechtsstaat, Dahlmann and Mohl. He fought a bill to criminalize the slander and mockery of state institutions, marriage, and private property.55 In the case of the Social Democrats themselves, he opposed the notorious and futile Socialist Laws, with which Bismarck attempted to suppress the SPD.56 (In this matter, however, Richter appears on one occasion to have played, in the midst of Reichstag machinations, the politician rather than the principled liberal.57) Similarly with measures for the suppression of the Poles in Germany’s eastern territories. Ideas and competing cultural values, in Richter’s view, were not to be combated by force.58

Richter’s familiarity with the financial affairs of Prussia and of Germany was unequaled.59 From the beginning of his parliamentary service, his attention was focused most particularly on the military budget, and this old question, which had produced the great constitutional conflict of the 1860s and split German liberalism on several occasions, accompanied him throughout his whole political life. A proponent of low taxes, especially for the poorer classes,60 Richter was concerned with moderating the enormous financial demands of the military; in this effort he did not shy away even from wrangling with the venerable Count von Moltke. Above all, he was concerned that the authority of the people’s representatives, the Reichstag, should prevail over the Army, that the citizen should not be submerged in the soldier. Thus, his insistence on the two-year, rather than three-year, military service, which led to a further split in the liberal party, in 1893.61 His tireless probing into every single expenditure once caused Bismarck to cry out that in this fashion one would never come to the end of a budget.62 Regarding his interrogation of a minister on a financial matter, Richter wrote, with proud underscoring: “But I didn’t let go.”63 In the field of the spending of public money, that could well have been his lifelong motto.

The great social scientist Max Weber, who was a National rather than a Left Liberal, nevertheless declared:

Despite Eugen Richter’s pronounced unpopularity within his own party, he enjoyed an unshakable power position, which rested on his unequalled knowledge of the budget. He was surely the last representative who could check over every penny spent, to the very last canteen, with the War Minister; at least, this is what, despite any annoyance they felt, has often been admitted to me by gentlemen of this department.64

In this continuing feature of Richter’s, activity it is possible to see the most significant example in the whole history of parliamentary liberalism of the standpoint expressed by Frédéric Bastiat, when he wrote of peace and freedom and their connection with the “icy numbers” of a “vulgar state budget”:

The connection is as close as possible. A war, a threat of war, a negotiation that could lead to war—none of these is capable of coming to pass except by virtue of a small clause inscribed in this great volume [the budget], the terror of taxpayers. . . . Let us seek first of all frugality in government—peace and freedom we will have as a bonus.65

War, Peace, and Imperialism

On questions of war and peace, Richter shared the views of the radical-liberals, or “Manchester men,” of the nineteenth century, who were hostile to war and highly skeptical of the arguments for large military establishments and colonial adventures.66 In Britain this was the position of Richard Cobden and John Bright, and later of Herbert Spencer; in France, of Benjamin Constant, J.-B. Say, Bastiat, and many others. The German liberals, too, placed a high value on peace (although their attitude was somewhat skewed by the problem of national unification). John Prince Smith and his followers were spokesmen for the ideal of “peace through free trade.”67

Richter criticized increases in the strength of German military forces, pointedly remarking that they have “substantially contributed to a subsequent reciprocal increase in relation to France and Russia.”68 Admiral von Tirpitz’s Naval Bills, from 1898 on, which, by setting Germany on a collision course with England, proved to be so fateful, were rejected and denounced by Richter.69 For Wilhelm II’s “Weltpolitik” [world politics], he simply had no understanding. To the question, “What is ‘Weltpolitik’?” Richter replied: “Wanting to be there wherever something is going wrong.”70 Under his leadership, the Freisinnige Volkspartei continued to spurn it. The growing hostility between England and Germany and the war it presaged nearly drove him to despair.71

Richter experienced the Age of Imperialism, which began for Germany with Bismarck’s initiatives in 1884–85 in Africa and the South Seas. Although he repudiated these early initiatives, his attitude eventually was somewhat ambivalent, and requires examination.

Richter’s initial position, which he expressed in June, 1884, was that “colonial policy is extraordinarily expensive,” and

the responsibility for the material development of the colony, as well as for its formation, [is] to be left to the activity and entrepreneurial spirit of our seafaring and trading fellow citizens; the procedure followed should be less of the form of annexation of overseas provinces to the German Reich, than of the form of the granting of charters, on the model of the English royal charters. . . at the same time, to the parties interested in the colony should essentially be left its governing, and they should be accorded only the possibility of European jurisdiction and its protection that we could furnish without having standing garrisons there. For the rest, we hope that the tree will generally thrive through the activity of the gardeners who planted it, and if it does not, then the plant is an abortive one, and the damages affect less the Reich, since the costs we require are not significant, than the entrepreneurs, who were mistaken in their undertakings.72

Not Total “Dogmatism,” but Occasional Pragmatism was Richter’s Failing

A critic of Richter’s, the influential Weimar radical-democratic historian Eckart Kehr, maintained that Richter rejected the Naval Bills and Weltpolitik merely from “capitalist motives,” simply because they were not profitable.73 The truth is that, as always, Richter supported his position with statistics and “pragmatic” reasons of all kinds. But even Kehr had to concede that, for Richter, there were also certain principles involved. As he put it, Richter’s standpoint was

that the State should leave exports to the exporters, to industry, and to the merchants, and should not identify itself with the interests of the exporting class. . . . If industry . . . values the protection afforded by warships, let them go and shell out a part of the surplus profit they have captured in this way and build the cruisers for themselves.74

In other words, in this question Richter defended the same principle as on the questions of Sozialpolitik and the protective tariff: the State exists for the common good and it ought not to be debased to an instrument of special interests. As naive as this attitude may be, it demonstrates that Richter manifested traits of what can be called the civic humanism or classical republicanism of the Stein-Hardenberg variety.75

The genuine failing in Richter’s approach to imperialism is that he never systematically posed the question, “Profitable for whom?” It is true that Richter opposed Bismarck’s colonial plans in the conviction that their core was “the burdening of the relatively unpropertied to the advantage of the relatively propertied.”76 Yet, in the next decade, when Germany occupied Kiaochow, in China, and undertook the construction of a railroad in Shantung, Richter showed himself more amenable than before.77 He declared:

we [the Freisinn] view the acquisition of the [Kiaochow] Bay otherwise and more favorably than all the previous flag-raisings in Africa and Australia [i.e., New Guinea and the South Seas]. The difference for us is that . . . China is an old civilized country . . . and that transformations that have been introduced into China, especially by the last Sino-Japanese War, could cause it to appear desirable to possess a base there for safeguarding our interests.78

Yet, Richter’s last parliamentary speeches, in 1904, both in the Reichstag and in the Prussian House of Delegates, dealt with colonial questions in a sharply negative manner. Again, he put himself forward as, above all, “the representative of the whole community, the representative of the taxpayers,” and complained of “the neglect of urgent needs in domestic policy on account of the demands of a misconceived colonial policy.”79

In explaining Richter’s inconsistency in this area, the comment of Lothar Albertin is pertinent: Richter “remained, in regard to imperialism, without a theory [theorielos].”80 He was never able to advance to the interpretation of imperialism of a Richard Cobden, for example, according to which economic expansion supported by means of the state always redounds to the advantage of certain interests and to the disadvantage of the taxpayers and the majority. Thus, on this issue Richter belonged, in Wolfgang Mommsen’s suggestive typology, to the “pragmatic” entschieden liberals, rather than to the “principled” radical-liberals.81

The Liberal Surrender

The final capitulation of German liberalism was inaugurated by Friedrich Naumann,82 today viewed in what pass for liberal circles in the Federal Republic as a kind of secular saint. Ambitious and endowed with enormous drive, Naumann was politically insightful, as well. He recognized how the rules of the political game had changed:

What fundamentally destroyed liberalism was the entry of the class-movement into modern politics, the entry of the agrarian and industrial-proletarian movements. . . . The old liberalism was no representative of a class-movement, but a world-view that balanced all differences among classes and social orders . . .83

In some respects, Naumann anticipated the central insight of the school of Public Choice when he described the development of modern democracy:

The economic classes contemplated to what end they might make use of the new means of parliamentarianism . . . gradually, they learned that politics is fundamentally a great business, a struggling and a haggling [Markten] for advantages, over whose lap collects the most rewards cast by the legislation-machine.84

Richter, too, understood this.85 The small difference, however, was that the opportunist Naumann endorsed the new rules of the game and wished to see a revived liberal movement adopt them wholeheartedly.86 Together with his close friend, Max Weber, Naumann tried to fashion a liberalism more “adapted” to the circumstances of the twentieth century, and to win liberal leaders like Theodor Barth to his strategy. In contrast to the hopelessly prosaic Richter, Naumann knew how to shape a political vision and offer it to a new generation alienated from classical liberal ideas.87

In Naumann’s conception, liberalism had to make its peace with Social Democracy, by taking up the cause of Sozialpolitik and other “claims” of labor. At the same time, it had to snatch the national cause from the conservatives, by becoming the most zealous advocate of Weltpolitik and imperialism and learning to appreciate the German drive to authority and prestige in the world (Weltgeltung). It must both “absorb state-socialist elements”88 and develop “an understanding for the power-struggle among the nations.”89 In short, liberalism must become “nationalsocial.” Naturally, Naumann was wild about the naval build up. Already in 1900, he was blissfully convinced that war with England was a “certainty.”90

For the sake of liberalism’s future in Germany, Eugen Richter had to be “definitely fought.”91 Towards Richter, now the grand old man of Left Liberalism, Naumann had a kind of good-natured contempt. To one of his National Social audiences, he declared:

Eugen Richter is unchangeable, and that is his greatness [Laughter]. But under this man, with his unique tenacity in work and will—which must be admired even by those who consider him a peculiar fossil—there are a whole series of people who say, in assemblies and in private: Of course we are for the fleet, but as long as Richter is alive—the man surely has his greatness [Laughter] . . .92

Evolution or Dissolution of Liberalism?

Even from the ranks of the younger leaders of Richter’s own party there was growing criticism of his position on the colonies and the naval buildup. In 1902, on the floor of the Reichstag one of Richter’s own protégés, Richard Eickhoff, thanked the War Minister on behalf of his constituents for a new armaments contract, taking the opportunity to request still more contracts, and joking that “l’appétit vient en mangeant [“appetite comes in the eating].”93 With Richter’s death in 1906, the old liberal negativity and carping criticism in military matters—and the history of German Manchesterism—came to an end. German Left Liberalism had no further objections to the Imperial military budget. Eight years later would come that summer of 1914 and the confrontation with the powerful and hostile coalition including England that Richter had feared and warned against, and which proved a monumental disaster for Germany.

A few years after Richter’s death, the then well-known nationalist historian, Erich Marcks, spoke of the “supersession of the older liberalism.” This liberalism had, to be sure, saturated and impregnated the whole life of the modern nations; its effects continued to be felt everywhere. It was indestructible. But, added the biographer and adulator of Bismarck:

Together with its own most distinctive political principle it has now been eclipsed. The idea of increased state force, the idea of power, has displaced it. And it is this idea that everywhere fills the leading men mightily and decisively dominates them: we have met with this same drive, quite apart from Russia, where it never disappeared, in [Theodore] Roosevelt and [Joseph] Chamberlain, and recognize it in Bismarck and Kaiser Wilhelm II.94

German Liberalism as “English Trader-Spirit”

Ultimately, the enmity between England and Germany, which Richter had so bitterly fought, contributed greatly to the outbreak of the Great War—the enmity, it should be noted, not the economic competition, since England and America were also in that sense competitors (and, of course, also customers), a circumstance that did not result in contention. German hatred of England95 found its culmination, and its reductio ad absurdum, in a work by the scholar who was then probably the most famous economic historian in the world, Werner Sombart, a leader of the interventionist Verein für Sozialpolitik. To understand what the German anti-liberalism of the early twentieth century meant, the best work to consult is Sombart’s Traders and Heroes,96 which appeared in the war year 1915.

The underlying thesis is that there exist two “spirits” whose eternal strife comprises world history, the trader-spirit and the hero-spirit, and two peoples who today incarnate each of these. Naturally, the English are the traders, the Germans the heroes. Sombart’s work, to the extent that it is not a hymn of praise to war and death, is often even comical, e.g., when the author asserts: “The foundation of everything English is certainly the unfathomable spiritual limitedness of this people”97; or when he devotes a chapter to English science without mentioning even Isaac Newton98; or when he maintains that the English since the time of Shakespeare have produced no cultural value.99

Much more serious than this claptrap and characteristic for the time is Sombart’s seconding of Ferdinand Lassalle in dismissing the liberal ideal as merely that of “the nightwatchman state.”100 Many in the next two generations would echo Sombart’s judgment on German liberalism, when he described its golden age and decline:

But then there came another bleak time for Germany, when in the 1860s and 1870s the representatives of the so-called Manchester School quite shamelessly hawked imported English goods on the streets of Germany as German products. . . . And it is well-known how today this “Manchester theory” has been contemptuously shoved aside by theoreticians and practitioners in Germany as totally mistaken and useless.

The two sentences that conclude this passage end, however, in question marks:

So that perhaps we may say that in the conception of the state, it is the German spirit that in Germany itself has achieved sole sway? Or does the English trader-spirit still haunt some heads?101

As regards Richter, it would be pointless to deny that a certain air of “trader-spirit,’’ or, rather, of a middle-class mentality, always surrounded him. There is certainly some truth in Theodor Heuss’s accusation of a “monumental petty-bourgeois quality” about Richter.102 He knew no foreign languages, and the few times he traveled abroad it was to vacation in Switzerland. Richter seems to have had little interest in the affairs of other countries, even in the fortunes of the liberal movement there. Theodor Barth, spokesman for a Left Liberalism associated with the big banks and exporting merchant houses, jokingly replied to the question, what distinguished his own party from Richter’s: if a man can tell Mosel from Rhine wine, he was a member of Barth’s party, if not, then of Richter’s.103

But Richter’s “petty-bourgeois quality” was something that his followers in the German middle-classes, in the liberal professions and small business, particularly in the great cities and above all in Berlin, felt, understood, and responded to.104 A dwindling remnant as the years went by, they represented a German version of William Graham Sumner’s “Forgotten Man.”105 Six years after Sumner’s classic description was published in the United States, the journalist Alexander Meyer wrote in Richter’s Freisinnige Zeitung that the liberals were

the party of the small man, who depends on himself and his own powers, who demands no gifts from the state, but only wants not to be hindered in improving his position to the best of his abilities and to strive to leave his children a better lot in life than came to him.106

A rare glimpse of such a German “forgotten man” is given in the moving portrayal by the eminent conductor Bruno Walter of his father, a Berlin Jew,

accountant in a larger silk firm, for which he worked, in gradually rising positions and with a growing income, for over fifty years. He was a quiet man, with a strict sense of duty and total dependability, and outside of his profession he knew only his family . . . he voted liberal and venerated Rudolf von Virchow and Eugen Richter.107

Undeniably “petty-bourgeois” through and through, such men had little love for Weltpolitik and invigorating wars or for the overthrow of all existing social conditions in the name of a Marxist dream, and they stood by Richter to the end.108

“What Richter Can Still Mean for Us”

In 1931, the 25th anniversary of Richter’s death, the social-liberal historian Erich Eyck posed the question whether Eugen Richter could “still mean something for us.”109

After all that the Germans have gone through since Richter’s time, it is easier to ascertain where his significance lies. He was, as regards Germany, the principal advocate of the liberal world-revolution that constitutes the meaning of modern history. Through four decades he fought, as politician and publicist, for what Werner Sombart scorned as the “English trader-spirit”: for peace; a decent life for all classes through the market economy and free trade; pluralism and the peaceable rather than violent clash of world-views and cultural values; and citizenly self-respect instead of servility. As against all conservative reproaches, he was always a proud patriot. But he could never understand why it was the Germans—of all people—who should not enjoy their individual rights.

Florin Afthalion has remarked, in the case of Frédéric Bastiat:

How are we to explain that a man who fought for free trade a century before the majority of the industrialized nations made it their official doctrine, who condemned colonialism also a century before decolonization . . . who, above all, proclaimed an era of economic progress and the enrichment of all classes of society, should be forgotten, while the majority of his intellectual adversaries, prophets of stagnation and pauperization, who were wrong, still have freedom of the city?110

The case of Eugen Richter is similar and perhaps even more egregious. Certainly, in his own time Richter “failed.” But if this is proposed as the grounds for neglecting the most important of the political leaders of authentic liberalism in Germany, then the ready reply would be: which politician in modern German history before Adenauer and Erhard did not sooner or later fail?

For what he was and what he represented—if one may say so: from the mere fact that this great man “never trusted any government”111—the gruff old Rhineland liberal deserves to be better treated by the historians and, by the Germans, not to be completely forgotten.

 

________________

112See, for instance, Theo Schiller, Liberalismus in Europa (Baden-Baden: Nomos, 1979), 19: “Our starting-point is the universally accepted [sic] conclusion that the social interest-situation of the bourgeoisie was the foundation of classical liberalism.”

113Ernst Nolte, “Between Myth and Revisionism, The Third Reich in the Perspective of the 1980s,” in H.W. Koch (ed.) Aspects of the Third Reich (London: Macmillan, 1985) 24. Nolte notes that the view he presents is that of Domenico Settembrini, of the University of Pisa.

114Ernst Nolte, Marxism, Fascism, Cold War, Lawrence Krader (tr.) (Atlantic Highlands, N.J.: Humanities Press, 1982) 79.

115Ibid. viii. In fact, the similarities and historical connections between the conservative and socialist indictments of liberal capitalism are remarkable; see, for instance, ibid. 23–30.

116Alejandro A. Chaufen, Christians for Freedom: Late Scholastic Economics (San Francisco: Ignatius Press, 1986).

117See Ralph Raico, “Der deutsche Liberalismus und die deutsche Freihandelsbewegung: Eine Rückschau,” Zeitschrift fur Wirtschaftspolitik 36, no. 3 (1987) 263–81.

118Paul M. Kennedy, The Rise of the Anglo-German Antagonism, 1860–1914 (London: Allen and Unwin, 1980) 152.

119Ralph Raico, “Eugen Richter: Ein unerbittlicher Liberaler,” Orientierungen zur Wirtschaftsund Gesellschaftspolitik 37 (September 1988) 77–80.

120The literature on Richter is very meager. See principally Felix Rachfahl, Eugen Richter und der Linksliberalismus im Neuen Reich,” Zeitschrift für Politik 5, Nos. 2–3 (1912) 261–374. Also, Eugen Richter, Jugenderinnerungen (Berlin: Verlag “Fortschritt,” 1893); idem., Im alten Reichstag: Erinnerungen, 2 vols. (Berlin: Verlag Fortschritt,” (1894–1896); Oskar Klein-Hattingen, Geschichte des deutschen Liberalismus, 2: Von 1871 bis zur Gegenwart (Berlin-Schoneberg: Fortschritt-Buchverlag der “Hilfe,” 1912); Leopold Ullstein, Eugen Richter als Publizist und Herausgeber: Ein Beitrag zum Thema “Parteipresse” (Leipzig: Reinicke, 1930); and Jesse Rohfleisch, Eugen Richter: Opponent of Bismarck, unpubl. diss., history, University of California, Berkeley, 1946. The most recent work on Richter, Ina Suzanne Lorenz, Eugen Richter: Der entschiedene Liberalismus in wilhelminischer Zeit 1871 bis 1906 (Husum: Matthiesen, 1980), is noteworthy above all owing to the author’s inexhaustible aversion to her subject and her total lack of understanding for classical liberalism in Germany and altogether.

121“Left Liberalism” is a direct translation of Linksliberalismus and refers to the middle- to late-nineteenth century German political movement in opposition to the regime-oriented National Liberals. It has no connection with what is often called “left-liberalism” in the present day.

122Kurt Koszyk and Karl H. Pruys, Wörterbuch zur Publizistik (Munich-Pullach/Berlin: Verlag Dokumentation, 1970), 223–25.

123See also Ralph Raico, “Der deutsche Liberalismus,” 275.

124According to the report of the Austro-Hungarian Crown Prince Rudolf; Brigette Hamann, Rudolf: Kronprinz und Rebell (Munich/Zurich: Piper, 1978), 333.

125Otto von Bismarck, Werke in Auswahl, 8, A, Erinnerungen und Gedanken, Rudolf Buchner (ed.), with Georg Engel (Stuttgart: W. Kohlhammer, 1975) 732.

126Hans Delbrück, Vor und nach dem Weltkrieg. Politische und historische Aufsätze 1902–1925 (Berlin: Stollberg, 1926) 136–48; Annelise Thimme, Hans Delbrück als Kritiker der wilhelminischen Epoche (Düsseldorf: Droste, 1955) 31–32

127Franz Mehring, Gesammelte Schriften, Thomas Höhle, Hans Koch, and Josef Schleifstein, (eds.), 14, Politische Publizistik, 1891 bis 1914 ([East] Berlin: Dietz, 1964) 35. Why precisely of “Big Capital” is baffling, except that it fits Mehring’s radical Marxist viewpoint. Richter fiercely opposed, for instance, the big banks and exporters who promoted German colonialism.

128See, among innumerable others, Thomas Nipperdey, Über einige Grundzüge der deutschen Parteigeschichte,” in Moderne deutsche Verfassungsgeschichte (1815–1918), Emst-Wolfgang Böckenforde (ed.), with Rainer Wahl (Cologne: Kiepenheuer and Witsch, 1972), 238, where the author writes of Richter’s accentuation of the theoretical orientation of liberalism “to the very extreme of rigid dogmatism.” Typical of many non-German historians is Kenneth D. Barkin, The Controversy over German Industrialization, 1890–1902 (Chicago: University of Chicago Press, 1970), 239, who complains that Richter “had not shed the dogmatic liberal principle of non-intervention.”

129Winfried Baumgart, Deutschland im Zeitalter des Imperialismus, 1890–1914. Grundkräfte, Thesen, und Strukturen, 5th ed. (Stuttgart: W. Kohlhammer, 1986) 135. Curiously, Baumgart passes this verdict in connection with Left Liberalism’s turn towards support for the aggressive armaments policy of Wilhelm II, made possible by Richter’s death.

130Rachfahl, “Eugen Richter,” 371. Theodor Barth, one of Richter’s many liberal opponents, declared: “Bismarck was no match for Richter dialectically, and the frequent eruptions of the Bismarckian temper against the implacable man of the opposition often sprang from the feeling that the omnipotent Chancellor would come up short in dialectical argumentation with Richter.” In Politische Porträts, new ed. (Berlin: Schneider, 1923) 84.

131Theodor Heuss, Friedrich Naumann: Der Mann, das Werk, die Zeit, 2nd ed. (Stuttgart/Tübingen: Rainer Wunderlich, 1949) 180.

132Rachfahl, “Eugen Richter,” 372.

133Ibid. 262–63.

134Ibid. 266.

135Richter, Im alten Reichstag, 2, 114.

136August Bebel, leader of the German socialists, described an early encounter with Richter, “whose chilly, reserved nature struck me even then. Richter gave the impression that he viewed all of us with sovereign disdain.” August Bebel, Aus Meinem Leben (1910; reprint, Frankfurt a. M., Europäische Verlaganstalt, n.d.), 92. One wonders why, given Richter’s character and well-known principles, the socialist leader was in the least surprised.

137See, e.g., Konstanze Wegner, Theodor Barth und die Freisinnige Vereinigung. Studien zur Geschichte des Linksliberalismus im wilhelminischen Deutschland (1893–1910) (Tübingen: J.C.B. Mohr [Paul Siebeck] 1968) 138.

138Ernst Engelberg, “Das Verhältnis zwischen kleinbürglicher Dernokratie und Sozialdemokratie in den 80er Jahren des 19. Jahrhunderts,” in Otto Pflange (ed.), with Elisabeth Müller-Luckner, Innenpolitische Probleme des Bismarck-Reiches (Munich/Vienna: Oldenberg, 1983) 26. The East German historian adds: “This conception was accepted not only by the most influential leaders around August Bebel, but also by the mass of members and sympathizers.”

139Franz Mehring, Gesammelte Schriften, 14, 553.

140Quoted in Peter Gilg, Die Erneuerung des demokratischen Denkens im wilhelminischen Deutschland. Eine ideengeschichtliche Studie zur Wende vom 19. zum 20. Jahrhundert (Wiesbaden: Franz Steiner, 1965) 135–36. Gilg adds, reasonably enough: “To this opposition [of Richter’s] the theory of revolution of the Social Democratic program, which permitted collaboration solely as a means to winning autocratic rule, naturally contributed, as well as the successful competition of Social Democracy in the struggle for the urban voting masses.” Ibid. 135.

141Richter, Im alten Reichstag, 2, 63, 178. “This occurred,” according to Richter, “with the permission of the Minister of the Interior.” In Britain, the Chartists had earlier used similar strong-arm methods against meetings of the Anti-Corn Law movement; see Wendy Hinde, Richard Cobden. A Victorian Outsider (New Haven, Conn.: Yale University Press, 1987) 65.

142Richter, Politisches ABC-Buch: Ein Lexikon parlamentarischer Zeit- und Streitfragen, 9th ed. (Berlin: Fortschritt Verlag, 1898), 307.

143Richter, Sozialdemokratische Zukunftsbilder Frei nach Bebel Berlin: Verlagsanstalt Deutsche Presse, 1907 [1891]). In 1922, in his Socialism, Ludwig von Mises undertook the same task, but on a strictly scientific level.

144Richter, Zukunftsbilder, 32.

145Ibid. 42–43.

146Ibid. 48.

147Ibid. 50, 52.

148Quoted in Werner Sombart, Händler und Helden: Patriotische Besinnungen (Munich/Leipzig: Duncker und Humblot, 1915) 77.

149Richter, Politisches ABC-Buch, 306. Bismarck’s hostility to Richter and the Left Liberals on account of their economic liberalism was intense, e.g., his demagogic reference to “the Progressive Party and clique of Manchester politicians, the representative of the pitiless moneybags, have always been unfair to the poor, they have always worked to the limit of their abilities, to prevent the state from helping them. Laissez-faire, the greatest possible self-government, no restraints, opportunity for the small business to be absorbed by Big Capital, for exploitation of the ignorant and inexperienced by the clever and crafty. The State is supposed to act only as police, especially for the exploiters.” Willy Andreas and K.F. Reinking, Bismarcks Gespräche: Von der Reichsgründung bis zur Entlassung (Bremen: Carl Schünemann, 1965), 339.

150Richter, Politisches ABC-Buch, 322.

151Fritz Blaich, Kartell- und Monopolpolitik im kaiserlichen Deutschland. Das Problem der Marktmacht im deutschen Reichstag zwischen 1870 und 1914 (Düsseldorf: Droste, 1973) 230,259.

152Richter, Im alten Reichstag, 1, 112.

153Ibid. 2, 86. (Emphasis in original)

154See, among many others, Dieter Langewiesche, Liberalismus in Deutschland (Frankfurt a.M Suhrkamp, 1981 195–96, where Left Liberal opposition on this question is ascribed in part to “Manchesterite blindness.” Oskar Stillich, Die politischen Parteien in Deutschland. 2, Der Liberalismus (Leipzig: Klinkhardt, 1911) 125, referred to ‘‘ice-cold laissez-faire in the area of the workers’ question,” and even maintained that “Liberalism was indifferent and without feeling towards the interest of the broad masses.” Erich Eyck, Bismarck, (Erlenbach-Zurich: Rentsch, 1941) 3, 372, demonstrated a rare if limited understanding for the Left Liberal position: “In spite of all that, that opposition was not without an internal justification. For it rests on the idea that the feeling of personal responsibility, of the individual citizen for his own destiny is indispensable for the sound development of a people, and that the omnipotence of the state is, in the long run, incompatible with the freedom of the individual.” Eyck, too, favored the Bismarckian policy, however, as do all present-day German historians I have consulted. But it should be obvious that even the question of the economic effects of the program is not as simple as is usually supposed, and cannot be resolved by pure assumption: Bismarck’s Sozialpolitik was based, in the last analysis, on deductions (either direct or indirect) from the wages of labor. Cf. W.H. Hutt, The Strike-Threat System: The Economic Effects of Collective Bargaining (New Rochelle, N.Y.: Arlington House, 1973), 206–15.

155Richter, Politisches ABC-Buch, 173 (empahsis in original).

156Cf. Jurgen von Kruedener, “Die Überforderung der Weimarer Republik als Sozialstaat,” Geschichte und Gesellschaft 11, No. 3 (1985) Kontroversen uber die Wirtschaflspolitik in der Weimarer Republik, Heinrich August Winkler (ed.) 358–76.

157Richter, Im alten Reichslag, 1, 54–55.

158Ibid.78.

159Rohfleisch, Eugen Richter: Opponent of Bismarck, 37–40, and Rachfahl, “Eugen Richter,”278.

160Urs Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz: Ein Versuch über die Schwierigkeiten des liberalen Bürgertums, im wilhelminischen Deutschland um zu Macht und politischem Einfluss zu gelangen (unpubl.diss.; Free University of Berlin, 1971) 201.

161Ibid.

162See Richter, Im alten Reichstag, 2, 176–83, 200–03, and the articles, “Anti-Semiten” and “Juden,” in ABC-Buch, 17–23 and 174–79; also Alfred D.Low, Jews in the Eyes of the Germans: From the Enlightenment to Imperial Germany (Philadelphia: Institute for the Study of Human Issues, 1979) 392–94.

163Fritz Stern, Gold and Iron: Bismarck, Bleichröder, and the Building of the German Empire (New York: Viking/Penguin, 1987), 524.

164To protect their meetings against anti-Semitic assaults, the liberals had recourse to a sort of private police agency; Richter, Im alten Reichstag 2, 203.

165Low, Jews in the Eyes of the Germans 389–90.

166Richter, Im alten Reichstag 2, 128–29.

167Ibid. 81–84; Wolfgang Pack, Das Parlamentarische Ringen um das Sozialistengesetz Bismarcks 1878–1890 (Düsseldorf: Droste, 1961) 81–82.

168Ibid. 153–60.

169Richter’s lifelong fight for the Rechtsstaat and the predominance of parliament is so well known in the literature that Leonard Krieger’s assertion, “Radical liberalism in him tended to be wholly absorbed in the dogma of economic freedom,” The German Idea of Freedom (Boston: Beacon Press, 1957) 397, can only be explained by simple-minded political bias.

170Rachfahl, “Eugen Richter,” 274–75.

171See, e.g., Richter, Im alten Reichstag, 1, 103, 127; 2, 58, 68–69.

172Müller-Plantenberg, Der Freisinn nach Blsmarcks Sturz.

173Rohfleisch, Eugen Richter: Opponent of Bismarck, 103.

174Richter, Im allen Reichstag, 1, 68.

175Max Weber, Gesammelte Politische Schriften, Johannes Wickelmann (ed.) (Tübingen J.C.B. Mohr [Paul Siebeck], 1958) 333. Weber’s allusion to Richter’s unpopularity refers to others in the liberal leadership, not to the ordinary liberal voters.

176Frédéric Bastiat, “Paix et liberte, ou le budget républicain,” Oeuvres complètes, 5 (Paris: Guillaumin, 1854) 410–11. Even Lorenz, in her disparaging work on Richter, Eugen Richter, 235, is forced to admit that, with all of Richter’s haggling over military expenditures, at many points one can sense “the spirit of unconditional opposition, that, beyond the saving of money, wanted to spare the people militarism,” as well.

177Cf. E.K. Bramsted and K.J. Melhuish, Western Liberalism. A History in Documents from Locke to Croce (London/New York: Longman, 1978) 278–84. Richter always kept his distance from the organized German peace movement, however, although his cousin, Adolf Richter, and a close political collaborator, Max Hirsch, were among its leaders. Roger Chickering, Imperial Germany and a World Without War. The Peace Movement and German Society, 1892–1914 (Princeton: Princeton University Press, 1975) 252, 254.

178Julius Paul Kohler, Staat und Gesellschaft in der deutschen Theorie der auswärtigen Wirtschaftspolitik und des internationalen Handels von Schlettwein bis auf Fr. List undPrince-Smith (Stuttgart: Kohlhammer, 1926) 22–42.

179Richter, Im alten Reichstag, 1, 93.

180Richter, ABC-Buch, “Die deutsche Flotte,” 416–90.

181Quoted by Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 284. In the author’s opinion, “no bourgeois politician fought against the military, naval, and colonial policy of Wilhelmine Germany as sharply, energetically, and consistently as Eugen Richter.”

182Paul Kennedy, The Rise of the Anglo-German Antagonism, 1860–1914,150–51.

183Quoted in Hans Spellmayer, Deutsche Kolonialpolitik im Reichstag (Stuttgart: Kohlhammer, 1931) 15–16.

184Eckart Kehr, Schlachtflottenbau und Parteipolitik, 1894–1901 (Berlin: Ebering, 1930) 293.

185Ibid. 297–98.

186A civic humanist, rather than liberal slant is evident also in Richter’s advocacy of a “citizen-army,” recruited by conscription. This was aimed at placing the army under the control of the people at large, rather than the rulers, the central issue in the constitutional struggles of the 1860s.

187Hans-Ulrich Wehler, Bismarck und der Imperialismus (Cologne/Berlin: Kiepenheuer und Witsch, 1969) 444.

188Spellmayer, Deutsche Kolonialpolitik im Reichstag, 81, 89.

189Quoted in Ludwig Elm, “Freisinnige Volkspartei,” in Die bürgerlichen Partien in Deutschland, Dieter Fricke, et al. (eds.), ([East]Berlin: Das europäische Buch, 1970) 2, 84.

190Rachfahl, “Eugen Richter,” 369–70.

191Lothar Albertin, “Das Friedensthema bei den Linksliberalen vor 1914: Die Schwäche Ihrer Argumente und Aktivitaten,” in Karl Holl und Günther List (eds.), Liberalismus und Imperialistischer Staat. Der Imperialismus als Problem liberaler Parteien in Deutschland, 1890–1914 (Gottingen: Vandenhoeck and Ruprecht, 1975) 92–93.

192Wolfgang Mommsen, ‘Wandlungen der liberalen Idee im Zeitalter des Imperialismus,” in ibid. 122.

193See Peter Theiner, Sozialer Liberalismus und deutsche Weltpolitik: Friedrich Naumann im Wilhelminischen Deutschland (1860–1919), (Baden-Baden: Nomos, 1983), and William 0. Shanahan, “Liberalism and Foreign Affairs: Naumann and the Prewar German View,” The Review of Politics, 21, No. 1 (January 1959).

194Friedrich Naumann, “Der Niedergang des Liberalismus,” Werke, 4 (Opladen: Westdeutscher Verlag, 1964), 218.

195Ibid. 220.

196See, for instance, his remarks regarding Bismarck’s legislation (‘’the foyer of the Reichstag resembled a marketplace.”), cited in Raico, “Der deutsche Liberalismus,” 279.

197Friedrich Naumann, “Klassenpolitik des Liberalismus,” Werke, 4, 257–58.

198Of Richter, Urs Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 89, very correctly writes: “In his ABC-Books for liberal voters, Richter processed a plethora of statistics, dates, facts, and legislative paragraphs into rational arguments, which, absent a whole that might have come to light behind it all, could never have their full effect.”

199Friedrich Naumann, “Liberalismus als Prinzip,” Werke, 4, 252.

200Friedrich Naumann, “Niedergang des Liberalismus,” ibid. 224.

201Paul M. Kennedy, The Rise of the Anglo-German Antagonism, 1860–1914, 340. Typical of the historical treatment of the Richter-Naumann dichotomy, Winfried Baumgart, Deutschland im Zeitalter des Imperialismus, 1890–1914, 160, writes of “the mitigation of the earlier [liberal] dogmatism” in foreign as in domestic policy that is “to be ascribed to the work of Friedrich Naumann.” When all is said and done, however, one may well be of the opinion that even more important than whether a given foreign policy position was or was not “dogmatic” is whether it promoted peace or war. One may also question whether the concept of “dogmatism” itself has much heuristic, in contrast to polemical, value.

202Friedrich Naumann, “Niedergang des Liberalismus,” Werke, 4, 234.

203Ibid. 232. Theodor Heuss faithfully follows his mentor Naumann, when he writes of Richter: he saw “the objective of the power-state only in the distortion of militarism,” Friedrich Naumann: Der Mann, das Werk, die Zeit, 242.

204Roger Chickering, Imperial Germany and a World Without War. The Peace Movement and German Society, 1892–1914, 255.

205Erich Marcks, Männer und Zeiten: Aufsätze und Reden zur neueren Geschichte 4th rev. ed. (Leipzig: Quelle und Meyer, 1916) 260.

206Concerning the equally fateful English hatred of Germany, see my contribution, “The Politics of Hunger: A Review,” The Review of Austrian Economics (1988), 253–59, reprinted in my collection, Great Wars and Great Leaders: A Libertarian Rebuttal.

207Werner Sombart, Händler und Helden: Patriotische Besinnnngen (Munich/Leipzig: Duncker und Humblot, 1915).

208Ibid. 9.

209Ibid. 17–34.

210Ibid. 48.

211Ibid. 25.

212Ibid. 75.

213Heuss, Friedrich Naumann: Der Mann, das Werk, die Zeit, 180.

214Konstanze Wegner, Theodor Barth und die Freisinnige Vereinigung. Studien zur Geschichte des Linksliberalismus im wilhelminischen Deutschland (1893–1910) 100.

215Ibid. 99–101.

216William Graham Sumner, “On the case of a Certain Man Who is Never Thought Of” and “The Case of the Forgotten Man Further Considered” (1884), in idem, War and Other Essays, Albert Galloway Keller (ed.), (New Haven, Conn.: Yale University Press, 1911) 247–68.

217Quoted in Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 146.

218Bruno Walter, Thema und Variationen; Erinnerungen und Gedanken (Stockholm Bermann-Fischer, 1947) 16 and 21.

219Cf. Franz Mehring’s view, admittedly sardonic, “that [Richter] did not create the Freisinnige Partei in his own image, but that they chose him as their leader, because they saw in him their most fitting image.” Gesammelte Schriflen, Thomas Höhle, Hans Kock, and Josef Schleifstein (eds.), 15, Politische Publizistik 1905 bis 1918 ([East]Berlin: Dietz, 1966) 165.

220Erich Eyck, “Eugen Richter,” in Auf Deutschlands Politischem Forum (Erlenbach-Zurich: Rentsch, 1963) 47.

221Florin Afthalion, “Introduction,” in Frédéric Bastiat, Oeuvres économiques (Paris: Presses Universitaires de France, 1983) 8.

222Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 200.

• 1Ludwig von Mises
• 2Raico’s profound and extensive knowledge of intellectual, political, and economic history are evident in each of the following essays and, in fact, virtually on each page of this book. His readers will also appreciate the warm passion he brings to the study of his subject, as well as his dry wit. Drawing from original sources in German, French, and Italian, as well as English, Professor Raico provides us with original scholarship on the history of liberalism from a decidedly liberal, though not exclusively Anglo-Saxon perspective. What is more, he definitely has the talent to rouse his readers to emulate the deeds of earlier generations. It was through Raico’s book Die Partei der Freiheit (The Party of Freedom) that I and many other Germans first heard of Eugen Richter, the champion of true liberalism in fin de siècle Germany. Forgotten by virtually everyone except for his social-democratic detractors, Richter has made a comeback in the past ten years and some of his major writings are again in print. Today his words and deeds inspire a new generation of intellectuals and politicians. Thank you for that lesson, Professor Raico! If Germany returns to the tradition of true liberalism, we shall have in Berlin a Raico Straße leading to the Richter Platz.
• 3Erich Streissler 1990a.: 60 has even maintained that it is in this area that Menger’s achievement is to be found, and not in co-initiating the marginalist revolution.
• 4Eugen von Böhm-Bawerk, for instance, stated (1891: 380–81): “We must not weary of studying the microcosm if we wish rightly to understand the macrocosm of a developed economic order . . . we must seek an understanding of the phenomena of great things in the study of the world of small things.” F.A. Hayek, who probably did more than anyone else to identify Austrianism with methodological individualism, wrote (1973: 8): “The consistent use of the intelligible conduct of individuals as the building stones from which to construct models of complex market structures is of course the essence of the method that Menger himself described as ‘atomistic’ (or occasionally, in manuscript notes, as ‘compositive’) and that later came to be known as methodological individualism.”
• 5Elster makes the important point (1985: 5; emphasis in original): “It is not only our confidence in the explanation, but our understanding of it that is enhanced when we go from macro to micro, from longer to shorter time-lags. To explain is to provide a mechanism, to open up the black box and show the nuts and bolts, the cogs and wheels, the desires and beliefs that generate the aggregate outcomes.”
• 6The Austrian method also involves a universalism that has strong affinities with liberalism, in contrast to certain forms of conservatism. As Mises stated (1969: 38): “As against the declarations of Schmoller and his followers, [the Austrians] maintained that there is a body of economic theorems that are valid for all human action irrespective of time and place, the national and racial characteristics of the actors, and their religious, philosophical, and ethical ideologies.”
• 7On the general philosophical background of the Austrian School, see especially Gordon 1993, also Smith 1994c. Pearson 1997: 31 attempts to minimize the differences between the German Historical School and the early marginalists (including the Austrians), maintaining that both were allegedly reacting against the Classical School (of mainly British political economy), rather than one another. His analysis fails to inspire confidence, however, since it is based on his assumption that the marginalists “displace[d] interest away from ‘value,’ that transcendent quality that had never quite lost the imprint of natural law, and toward ‘price,’ a frankly social phenomenon . . .”
• 8See Gellner 1968: 256 n. 4, where M. Ginsberg is cited: “those who refuse to accept methodological individualism . . . are well aware . . . of the dangers of concentrated power. But they deny that the only choice open to us is between a spontaneous competitive order on the one hand, and a system of all-pervading control on the other.” See also Gellner’s own comment on the same page: “[Methodological] individualists who attempt to save us, in the name of logic and liberty, from misconstruing our situation, are not wholly free at all times from suspicion that a little propaganda for laissez-faire is being hitched on to those very general issues.”
• 9In his account of the Great Depression (1963), as well as other works, Rothbard applies theory to help explain quite concrete historical events, often interpreting those events in the light of the “class” (or, “caste,” in the stricter, Misesian-Rothbardian terminology) interests involved. See also the comment by Garrison and Kirzner (1989: 121) that, among other scientific merits, “Hayek’s business cycle theory provided a basis for interpreting much of 19th-and 20th-century economic history.”
• 10Cf. White 1984: 4: “The subjective approach to economic phenomena builds economic analysis upon the insight that every individual chooses and acts purposively. . . . This approach has been the hallmark of the Austrian School from its inception in the 1870s to the present day, although different members have defended their method in different ways.” Cf. also Vaughn 1990: 382: “The human being that is the subject of Menger’s study . . . cannot be summarized by a static and fully defined preference function. . . . He is an active creator both of himself and of his world. And creation is a process rather than a state of affairs.”
• 11In contrast to Pareto, in the Austrian view, consumers are viewed, not as fixed loci of consumption functions, but as sources of incessant change, who also play an entrepreneurial role (Mises 1949: 253–54). As for Pareto, despite the positivism and apparent “anti-individualism” of his methodology, he was all his life a fervent economic liberal; see Finer 1968 and the essay on “Ludwig von Mises’s Liberalism on Fascism, Democracy, and Imperialism,” in the present volume.
• 12Cf. Kirzner’s remarks 1976b: 59: “It is easy to see how foreign the notion of the ‘automatic maintenance of capital’ [the Clark-Knight concept] must have appeared to Mises. An approach that concentrates analytical attention—as Austrian economics does—on the purposive and deliberate decisions of individual human beings when accounting for all social economic phenomena must treat the notion of capital as a spontaneously growing plant as not merely factually incorrect but simply absurd.”
• 13Cf. the statement of the self-described Austrian “fellow traveler,” Leland Yeager 1995: 219: “economics deals with human choices and actions, not with mechanistically dependable relations. The economy is no machine whose ‘structure’ can be ascertained and manipulated with warranted confidence.” There are no constants in economics comparable to those in the natural sciences, and “no amount of cleverness with econometrics can make the nonexistent exist after all.” See also Yeager 1997, where, after a judicious evaluation of Austrian economics, the author suggests some reasons for the relative neglect of the Austrian school by the mainstream of the profession.
• 14See especially the works attempting to develop Misesian ideas on this topic by Israel M. Kirzner, beginning with Kirzner 1973; and the exposition by Rothbard 1997, 2: 245–53. Jaffé 1976 argues that decisive differences between the Austrian and neoclassical approaches that existed from the start have been overlooked because of the tendency to “homogenize” Menger, Jevons, and Walras as co-founders of “the marginalist revolution.”
• 15For an informative discussion of other contrasts between Austrianism and neoclassicism, see Huerta de Soto 1998.
• 16Herbert Matis remarks (1974: 257) of the early Austrian school that “this new intellectual approach in economics was subjective, relative, and psychological, since it started from the human being and not from abstract concepts; it signified, therefore, to that degree a departure from classical liberalism.” The confusions evident here are not untypical of the superficial treatment of liberalism by many writers on its history.
• 17Cf., for instance, Edward G. Dolan’s critique 1976b: 6, 11 of “mainstream economics”: “it necessarily omits an important component of reality—the concept of purposive action,” while Austrianism “insists on laying bare the true causal relationships at work in the social world and is not content to simply establish empirical regularities among dubious statistical aggregates.” Austrianism offers “a microeconomic approach to macroeconomic problems.”
• 18See also the trenchant analysis in two essays on the subject by Rothbard 1997, 2: 180–84 and 217–25.
• 19Cf. the perceptive and important comment by Lawrence Birken (1988: 256): “Only with the emergence of marginalism was individual taste decidedly emancipated from the idea of universal need. With occasional exceptions, pre-marginalist thought had ignored or downplayed the significance of the idiosyncratic consumer, thus precluding the recognition of consumer preference as a mark of individuality. Early economic thought, functioning as a kind of secular morality which sought to uphold the idea of the ‘normal,’ conceived of need or utility in universal terms. . . . Only with the advent of marginalism do we see the emergence of a genuinely individualistic desire.” Birken’s analysis, however, would appear to apply much more to the Austrian than the neoclassical variant of marginalism.
• 20Hayek himself lent some support to Hutchison’s distinction between Mises and “Hayek II” in his foreword to a reprint of Mises’s Socialism (Mises 1981: xxiii-xxiv), when he criticized Mises’s claim that “all social cooperation [is] an emanation of rationally recognized utility,” as both “factually mistaken” and an expression of Mises’s “extreme rationalism.” But the general thrust of this passage is to downplay his disagreement with Mises. Hayek states, for instance, that Mises “largely emancipated himself from that rationalist-constructivist starting point,” and that “Mises as much as anybody has helped us to understand something which we have not designed.”
• 21Mises never claimed that the specific motivations of human action, in the psychological sense, were relevant to economics; rather it was a question of preferences as demonstrated in action.
• 22It should be noted that Friedman expressed these views in a popular address. Still, it is difficult to see how his argument could be made substantially more rigorous or coherent. Friedman declares, for example, that we must “beware of intolerance [such as Mises supposedly displayed] if we’re going to be really effective in persuading people,” yet concedes, very graciously, that “there is no doubt in my mind that Ludwig von Mises has done more to spread the fundamental ideas of free markets than any other individual” (1991: 18). Friedman’s brief account of Ayn Rand’s allegedly a priori philosophy is simply uninformed and incorrect.
• 23To those familiar with Mises’s achievements (see Rothbard 1988; Hoppe 1993; Reisman 1998; Zlabinger 1994; Ebeling 1981), the attempt of Hutchison and others to minimize them is more ludicrous than troubling, e.g., Erich Streissler’s assertion, regarding Mises (1990b: 109; see also 1988: 200) that, “not without truth, though certainly with little charity, [he] might be called the arch-lobbyist for entrepreneurial concerns in interwar Austria.”
• 24On the question of apriorism, it is worth noting that Hayek (1955: 221 n.1) wrote of John Locke that he regarded “the moral sciences” (ethics, political theory, etc.) “as a priori sciences comparable with mathematics and of equal certainty with it.” The context makes it clear that Hayek is here passing a favorable judgment on Locke. It is doubtful whether either Hayek or Hutchison would have wished to classify Locke as “a false individualist.”
• 25For an incisive critique of Popperian falsificationism, see Gordon 1993: 34–41.
• 26See also de Jasay 1991b. Gerard Radnitzky 1995: 49–84, especially 50, 64, 83, has criticized Popper’s oft-repeated praise of Marx as a “humanist,” as well as his political philosophy in general. He holds Popper’s concessions to “a not thought-through social democracy” to have been a “survival strategy,” which permitted him to find a wide readership for his views. This Radnitzky contrasts to Mises, who simply refused to compromise with the statist spirit of the times. Radnitzky’s view paints Popper as a hypocrite and an opportunist, which does not seem right.
• 27Popper’s knowledge of the history of liberal thought was astonishingly deficient. He held, for instance, 1992: 10 that Hayek originated the notion that complete socialism entailed political enslavement (and that Mises derived it from Hayek). But this idea was a commonplace among late-nineteenth century liberals, as evidenced by Herbert Spencer’s essay, “The Coming Slavery,” Yves Guyot’s La tyrannie socialiste, Eugen Richter’s Pictures of a Social-Democratic Future, and other works.
• 28On the influence of Capitalism and the Historians, see Taylor 1997: 162–64. In a learned study, Jeremy Shearmur (1996) has argued that, despite Popper’s evident social-democratic attitudes, the implications of his ideas are more closely related to classical liberalism than Popper himself understood. Whatever the validity or scope of that claim, there is the anterior and more fundamental question—whether Popper’s ideas on politics, based as they are on grossly incorrect historical and economic notions, are even important enough to warrant extended examination in the first place. Popper’s superficiality in dealing with political issues is nowhere more obvious than in his 1956 tour d’ horizon of the world scene, “The History of Our Time: An Optimist’s View” (1962: 364–76). Here he declares that “our own social world is the best that has ever been”—neglecting, among other things, the Chinese, around one-fifth of the human race and then living under the Maoist terror regime. He not only implies, for no good reason, that the disappearance of “class differences” is desirable, but announces, absurdly, that in the United States (and elsewhere) “we have, in fact, something approaching classless societies.” Similarly, in a tribute to Hayek (Popper 1997: 321, from a talk given in 1992), Popper recalls that often in conversations with Hayek, he criticized Mises’s conduct of the fight against “what was then called . . . protectionism, or state-protectionism” (sic—presumably, Popper is referring to what everyone else calls interventionism), because “in a complex society, anything approaching a free market could only exist if it enjoyed the protection of laws, and therefore of the state. Thus the term ‘free market’ should always be placed in inverted commas, since it was always bound, or limited, by a legal framework and made possible only by this framework.” On Popper’s “logic,” then, terms like “freedom of the press” and “religious freedom” should also always be placed in inverted commas, for the same reason.
• 29On some differences between Mises and Hayek in connection with the famous debate, see Keizer 1994.
• 30For a statement of this position, see März 1991: 101–05, where the author, in what purports to be a scholarly work, adopts the Marxist polemical tactic of characterizing Mises as having launched “the theoretical and ideological counter-offensive of the Austrian bourgeoisie” in his critique of socialist planning.
• 31Karen Vaughn 1994 maintains that the use by socialist writers of neoclassical theory to derive market socialist responses to the Austrian assault sensitized both Mises and Hayek to the distinctively Austrian components of their argument.
• 32Cf. Dasgupta 1985: 80: in contrast to classical economics, “consumption, not accumulation, appears in marginalist economics as the mainspring of economic activity. The new system, so to say, substitutes ‘consumers’ sovereignty’ for ‘capitalists’ sovereignty.’”
• 33It should be noted that by including the state in the same category as such social formations as language and markets, Menger is obscuring the crucial liberal distinction between state and civil society, coercion and voluntarism.
• 34Emil Kauder 1965: 61 points out that Menger opposed religious bigotry, anti-Semitism, militarism, dueling, and the glorification of war, and “was very critical of the feudal pillars of the Habsburg monarchy—clergy, army, and nobility.” A number of these are traditions or institutions which, it could well be argued, had developed “spontaneously.”
• 35In his last work on politics, Considerations on the Government of Poland, Rousseau, who is still viewed by many as a serious political thinker, continued his idolization of Lycurgus, while spelling out the totalitarian implications of his childish infatuation: “He showed them [the Spartans] their country unceasingly, in their laws, their games, their homes, their loves, their feasts. He did not allow them a moment to be by themselves alone. And from this continual constraint, ennobled by its object, was born that ardent love of country . . .” See Crocker 1973: 335.
• 36Wieser maintained 1923: 91–92 that, before Menger, all the schools of economic thought “pursued the interests of one of the great economic parties . . . [and] sought evidence for their partisan interest.” Very oddly, he even employs the Marxist terminology of “bourgeois” and “proletarian” economists, going so far as to assert that the “proletarian,” i.e. socialist, economists, will be able to learn from Menger’s economic theory, without “in any way giving up their fundamental standpoint”; rather, they will be able to “strengthen their standpoint.”
• 37It was left for Erich Streissler among non-socialists to impute a class interest to the Austrian economists (1988: 200–01): “after the end of the monarchy the members of the School belonged to the old ruling class dispossessed of power and mostly expropriated through the hyperinflation which had abolished their rentier capital. No wonder they were particularly critical of the state.”
• 38Fetter 1923: 602 noted that the negative implications of the subjective theory for Marxian economics appears more clearly in Wieser’s and Böhm-Bawerk’s works, but maintained that “this application had, however, been recognized from the very beginnings of the subjective school.” While he cites no particular evidence, he may have had in mind, for instance, Menger’s critique of Rodbertus’s claim that capitalists and landowners expropriate the product of labor and thus “live without working.” To this Menger 1981: 168 n. 30 countered that they live “upon the services of their land and capital which have value, just as do labor services, both to individuals and to society.”
• 39Streissler 1990a: 64 makes the peculiar statement that: “Perhaps Bukharin is not that far off the mark after all when he thinks it [Austrian economics] is the economics of the rentier.” However, Günther Chaloupek, an author sympathetic to Marxism, is considerably closer to the mark when he states 1986: 221, in discussing Bukharin’s critique of Austrianism: “But: if the marginal utility school drew attention to demand, this was certainly not in the first instance a symptom of the beginning of age of the rentier, but rather a reflex of the increased standard of living of the masses as well in the train of capitalist expansion.”
• 40Joan Robinson, on the other hand, argued 1962: 52, emphasis in original, that while “the whole point of utility was to justify laisserzfaire,” the theory had inherently egalitarian and redistributionist implications.
• 41That the approach to the history of economic thought centering on the British tradition from Smith to Mill must be abandoned is argued by Murray N. Rothbard (1976a). Rothbard persuasively claims 1976a: 53 that a more informed interpretation would see “Smith and Ricardo, not as founding the science of economics, but as shunting economics onto a tragically wrong track, which it took the Austrians and other marginalists to make right.” Citing works by Marjorie Grice-Hutchinson and Raymond de Roover, Rothbard emphasizes the importance of medieval and early modern thinkers, particularly the Spanish Late Scholastics. These themes also pervade Rothbard’s history of economic thought 1995c, where the Late Scholastics are treated in 1: 97–133. See also Jesús Huerta de Soto 1999.
• 42Oscar Morgenstern 1927: 673–74, however, had a sharply different interpretation of Wieser’s last work, Gesetz der Macht, and incongruously characterized Wieser as a “convinced pacifist.”
• 43Streissler 1986: 100 points out that Wieser’s constant references to “the socialist state of the future” influenced his student Joseph Schumpeter in the latter’s assessment of the probable course of historical development.
• 44Even as regards Wieser’s economic theory, Mises 1978b: 36 concluded that he “could not be called a member of the Austrian School, but was rather a member of the Lausanne School . . .” This viewpoint is cogently set forth in Hoppe and Salerno 1999.
• 45Cf. Streissler’s insightful remark 1987: 24: “Through Menger his school became a vessel of economic liberalism, at a time when in other countries it stood under an unlucky star. This school took over a then ‘lost cause,’ and nursed liberalism at the time of its deepest ebb—especially in the period between the wars.”
• 46Kauder 1965: 64 asserts of Menger: “He was not a consistent defender of free competition, and he was not a socialist, although his brother, the famous socialist Anton Menger, had some influence on him.”
• 47Paul Silverman, however, 1990: 85, 90–91 criticizes Kauder on the nature of the Austrian background of Menger’s work (as well as on Menger’s alleged methodological dependence on Aristotle). Silverman points up the importance in Austrian history of a school of liberal cameralists, including the key figure of Joseph von Sonnenfels, who posited “a system of preestablished social harmony which the state was to watch over and protect.” Josef von Kudler, whose work on economics was the standard textbook in Austrian universities in the decades before the appearance of Menger’s Principles, likewise displayed “a staunchly liberal outlook.” In Silverman’s view, the impact of the “Austrian tradition” on Menger was not in the direction of conservatism, spurring the search for a Metternichian stability; instead, it may mainly have worked to convey the notion of objective, rational ends for man in society. This set a limit to Menger’s subjectivism, leading him, for instance, to differentiate real from imagined needs.
• 48Böhm 1990: 232 n. 2 suggests that Mises’s extreme liberal viewpoint was out of step with the general position of the founders of Austrianism, who tended towards “a kind of ‘enlightened conservatism’ (in the European sense), or ‘paternalistic conservatism’—allegations of laissez faire repeated ad nauseam notwithstanding.”
• 49At the University of Vienna, Hans Mayer, who was all that was left of the Austrian school after the Anschluss with Nazi Germany, also held that Mises’s radical liberal conclusions were not inherent in the school’s teachings (Craver 1986: 10–11). This is easily understandable, given Mayer’s position as a functionary of the new National Socialist regime. The tradition of attempting to disassociate Mises’s “personal,” “Manchester-liberal” world-view from “the objective findings of the Austrian school” was carried on by Weber 1949: 644.
• 50Hans-Hermann Hoppe puts the matter very well. When Mises arrived in the United States in 1940, he was already “an international scientific celebrity,” and his influential works, The Theory of Money and Credit and Socialism had been available in English for years. “But while every third-class European Marxist or ‘Marxian’ of the time found a respectable academic position without any difficulty, in the land of capitalism the American universities and intellectuals plainly and shamelessly turned a cold shoulder to Mises, the great theoretician of liberalism and capitalism.” Mises finally obtained a position at New York University, but only as permanent guest professor, and the university did not pay his salary, which was covered from private sources. Hoppe 1993: 27–28, 30, 34 n. 24. Hayek’s situation was analogous. While he did become a professor on the Committee on Social Thought, he was deemed unsuitable, not “scientific” enough (i.e., not sufficiently positivist) by the economics department of George Stigler and Milton Friedman, and his salary was likewise paid from outside sources.
• 51Cf. Steele 1992: “The fact that there were capable liberal thinkers in Europe after World War II is mainly due to the influence of Die Gemeinwirtschaft [Mises’s Socialism] during the inter-war years. There might not have been any West German ‘economic miracle’ without the existence of a handful of active people converted from socialism by Mises.” See also Roll 1945: 176: “Hayek and his Viennese colleagues have been the leaders of an astonishing movement of revival [of individualism and liberalism] which in the early thirties began to appear also in England. . .There in nothing quite comparable to this movement in the United States.”
• 52See in particular Joseph T. Salerno’s perceptive introduction to Hayek’s Prices and Production and Other Works, “Hayek on the Business Cycle,” Mises Daily, October 8, 2008.
• 53On Hayek’s position, see Shearmur 1997. The German “neo-liberal” Alexander Rüstow was one of many who could not differentiate the position of Hayek from that of “his master Mises,” viewing both as “the last surviving examples” of the “old liberalism,” fit to be placed in a museum; see Kathrin Meier-Rust 1993: 69–70. Meier-Rust herself (91) discusses the sharp differences between the German “neo-” and “Ordo-liberal,” and the “classical laissez-faire champions” like Hayek.
• 54See also Streissler 1987: 10: “pronounced liberals, at least in the eighteenth and nineteenth centuries, were rather averse to a redistributive function [of the state]. On the other hand, Friedrich von Hayek, for instance, is no longer of this opinion. He believes only that the pursuit of Sozialpolitik should not be attempted with the help of the market but through transfers independent of the market.”
• 55Hayek also later remarked that another error in The Road to Serfdom was his neglect of the significance of the experience of Soviet Communism, adding, rather oddly, that this was a fault “which is perhaps pardonable when it is remembered that when I wrote Russia was our wartime ally.” This is a curious inversion of the strange criticism leveled at The Road to Serfdom by Erich Roll, in the American Economic Review (1945: 180): “Hayek might have stopped to reflect upon the very different development during the last few pre-war years in Germany and in the Soviet Union, and he might have had the grace, at the least, to acknowledge the very different manner in which the war itself has been conducted by the enemy and by our ally: we have yet to be shown that Maidanek is an inevitable corollary of a collective economy” (1945: 180). Evidently, Professor Roll and his equally ignorant editors at the American Economic Review had somehow never heard of the Ukrainian terror famine, the mass executions, or the system of forced labor camps known today as the Gulag, all conducted by our noble wartime ally, the model terror state of the twentieth century.
• 56Cf., e.g., Mises, 1949:149: “State or government is the social apparatus of compulsion and coercion. It has the monopoly of violent action. . . . The state is essentially an institution for the preservation of peaceful interhuman relations. However, for the preservation of peace it must be prepared to crush the onslaughts of peace-breakers.”
• 57Hans-Hermann Hoppe 1994: 67 has ventured to assert that “Hayek’s view regarding the role of market and state cannot systematically be distinguished from that of a modern social democrat.” But see the attack on Hayek for his rejection of the concept of social justice by a social democratic writer, in Plant 1994.
• 58Late in his life, Hayek 1994: 68, 72–73 referred to his “curious relationship” to Mises, from whom “I probably learnt more than from any other man.” Here Hayek made the confusing claim that “Mises remained in the end himself a rationalist-utilitarian, and with a rationalist-utilitarianism, the rejection of socialism is irreconcilable. . . . If we remain strict rationalists, utilitarians, that implies that we can arrange everything according to our pleasure.” At an earlier stage, Hayek’s judgment of Mises had been much more positive. In 1952, Hayek wrote 1952: 729–30 of Mises that “since the early twenties [he] has been building a new edifice of liberal thought more consistently, more systematically, and more successfully than anyone else . . . his work resemble[s] that of the great social philosophers of the eighteenth century much more than the labors of a contemporary expert . . . he alone has given us a conclusive treatment of all economic and social thought,” Hayek asserted, adding, “whether or not one concurs with him in every detail.”
• 59A comprehensive examination of what Hayek criticized as Mises’s “extreme rationalism” (foreword to Mises, 1981: xxiii) is presented, with a critique of Hayek’s position, in Salerno 1990.
• 60Menger adds in a footnote 1935c: 93 n.: “I certainly attack the so-called ‘ethical’ tendency in political economy in a number of places in my Investigations, while strictly distinguishing it from the ‘social-political’ [social reform] tendency in economic research.” Streissler, incidentally, cites Menger’s clash with Schmoller, but omits his praise of Schmoller’s crusade for Sozialpolitik (Menger 1994: 24 n. 8).
• 61By 1891 Menger (1935b: 244–45) also had some harsh criticisms of the policies of the social reformers: “The self-interest that the advocates of Sozialpolitik so utterly despise has not disappeared from the world. Rather, it has degenerated into a collectivist, national and class egoism, which strives not for the increase of the total product (of the object to be divided up!) but for as great a portion of the total product as possible for each individual social class.”
• 62On Thierry, see Augustin-Thierry 1922; Carroll 1951; Smithson 1973; and Gossman 1976.
• 63Augustin Thierry, “Commentaire sure L’Esprit des Lois de Montesquieu,” Censeur européen, 7 (1818), 228, 230.
• 64Ibid. 205–06.
• 65Ibid. 217.
• 66Ibid. 244.
• 67Ibid. 218.
• 68Ibid. 256–57.
• 69Ibid. 257–58.
• 70Ibid. 251–52.
• 71Ibid. 255.
• 72Charles Comte, “De la multiplication des pauvres, des gens à places, et des gens à pensions,” Censeur Européen, 7, 1n.
• 73Shirley M. Gruner, Economic Materialism and Social Moralism, The Hague/Paris: Mouton, 1973, 108–10, aptly summarizes Guizot’s standpoint: He “liked to be popular and therefore liked to be considered up-to-date in his ideas. Nor does he wish to appear ‘unscientific.’ Therefore he never denies anything outright but seeks to modify a little here and there so that finally nothing is left of it. There is no head-on opposition. . .This is in fact the whole problem of Guizot—his indecisive decisiveness so that not only in history but in politics the basically constitutional conservative appears at times to long for the trappings of a radical liberal.” Gruner shrewdly adds that “it has also been in the interest of certain groups, for instance the Communists of 1848 [including presumably Marx and Engels], to suggest that there was not much difference between Guizot and the other ‘bourgeois’ liberals.”
• 74Gerhard (1960), 305.
• 75François Mignet, “Le comte Sieyès: Notice,” Notices et portraits historiques et littéraires, I (Paris: Charpentier, 1854), 88.
• 76François Mignet, “Charles Comte: Notice,” ibid. II, 102.
• 77“After much time and labor lost in thus obtaining artificial results, I perceived that I was falsifying history by imposing identical formulas on totally different periods.” Augustin Thierry, Dix Ans d’Études Historiques (Paris: Furne, 1851 [1834]), 3. He adds that, after his first essays on English history, in the Censeur Européen, he began to feel the need to leave to each epoch its originality: “I changed style and manner; my former rigidity became more supple . . .” ibid. 6–7. Of his earlier radical-liberal views, he says: “I aspired enthusiastically towards a future of which I had no very clear idea . . .” [vers un avenir, je ne savais trop lequel . . .] ibid. 7.
• 78Ibid. 8.
• 79Ibid. 12.
• 80Thierry, Essai sur l’Histoire de la Formation et des Progrès du Tiers État (1894 [1853]) Paris: Calmann Lévy), 172.
• 81Ibid. 195.
• 82Ibid. 1–2.
• 83Marx discusses Thierry’s Essai in the letter to Engels cited in note 211. Interestingly, he commends Thierry for describing “well, if not as a connected whole: (1) How from the first, or at least after the rise of the towns, the French bourgeoisie gains too much influence by constituting itself the Parliament, the bureaucracy, etc., and not as in England through commerce and industry. This is certainly still characteristic even of present-day France.” Selected Corr. 88.
• 84Augustin Thierry, “Preface,” Essai sur l’Histoire de la Formation det des Progrès du Tiers État.
• 85Alexis de Toqueville, Recollections, Alexander Teixeira de Matos (tr.) J.P. Mayer (ed.), New York: Meridian, 1959. 2–3.
• 86Allix, 318–19.
• 87A. Augustin-Thierry, Augustin Thierry, 1795–1856 (Paris: Librairie Plon, 1922) 114.
• 88Ibid. 112f.
• 89Eugene Tenbroeck Mudge, The Social Philosophy of John Taylor of Caroline: A Study in Jeffersonian Democracy (New York: AMS Press, 1968 [1939]), 151–204, passim.
• 90William Leggett, Democratick Editorials: Essays in Jacksonian Political Economy, Lawrence H. White (ed.) (Indianapolis: Liberty Press, 1984), 250–51. See also Lawrence H. White, “William Leggett: Jacksonian Editorialist as Classical Liberal Political Economist,” History of Political Economy, 18, No. 2 (Summer 1986), 307–24.
• 91William Leggett, Democratick Editorials, 142.
• 92John C. Calhoun, A Disquisition on Government and Selections from the Discourse, C. Gordon Post (ed.) Indianapolis: Bobbs-Merrill, 1953, 17–19.
• 93Theda Skocpol, Bringing the State Back In (1985), Cambridge, Eng.: Cambridge University Press. The title derives from an earlier essay by Skocpol.
• 94A scholar who stressed the role of the state in creating corporatist forms and hence “class interest” (although he preferred the term “caste” to “class”) was Ludwig von Mises; see his Theory and History: An Interpretation of Social and Economic Evolution (New Haven: Yale University Press, 1957), 113–15. Mises, who examined this topic thirty years ago, is not mentioned by Skocpol. See also Murray N. Rothbard, Power and Market: Government and the Economy (Menlo Park: Institute for Humane Studies, 1970), 12–13, where Rothbard writes: “It has become fashionable to assert that ‘Conservatives’ like John C. Calhoun ‘anticipated’ the Marxian doctrine of class exploitation. But the Marxian doctrine holds, erroneously, that there are ‘classes’ on the free market whose interests clash and conflict. Calhoun’s insight was almost the reverse. Calhoun saw that it was the intervention of the State that in itself created the ‘classes’ and the conflict.” Rothbard also prefers the term “caste”: “castes are State-made groups, each with its own set of established privileges and tasks.” ibid. 198, note 5.
• 95“Manifesto of the Communist Party,” in Karl Marx and Friedrich Engels, Selected Works, 47.
• 96George Konrad and Ivan Szelényi, The Intellectuals on the Road to Class Power, Andrew Arato and Richard E. Allen (trs.) (New York/London: Harcourt Brace Jovanovich, 1979) xiv-xvi, 39–44, and passim.
• 97Ibid. 9.
• 98Ibid. 17–34.
• 99Ibid. 48.
• 100Ibid. 25.
• 101Ibid. 75.
• 102Heuss, Friedrich Naumann: Der Mann, das Werk, die Zeit, 180.
• 103Konstanze Wegner, Theodor Barth und die Freisinnige Vereinigung. Studien zur Geschichte des Linksliberalismus im wilhelminischen Deutschland (1893–1910) 100.
• 104Ibid. 99–101.
• 105William Graham Sumner, “On the case of a Certain Man Who is Never Thought Of” and “The Case of the Forgotten Man Further Considered” (1884), in idem, War and Other Essays, Albert Galloway Keller (ed.), (New Haven, Conn.: Yale University Press, 1911) 247–68.
• 106Quoted in Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 146.
• 107Bruno Walter, Thema und Variationen; Erinnerungen und Gedanken (Stockholm Bermann-Fischer, 1947) 16 and 21.
• 108Cf. Franz Mehring’s view, admittedly sardonic, “that [Richter] did not create the Freisinnige Partei in his own image, but that they chose him as their leader, because they saw in him their most fitting image.” Gesammelte Schriflen, Thomas Höhle, Hans Kock, and Josef Schleifstein (eds.), 15, Politische Publizistik 1905 bis 1918 ([East]Berlin: Dietz, 1966) 165.
• 109Erich Eyck, “Eugen Richter,” in Auf Deutschlands Politischem Forum (Erlenbach-Zurich: Rentsch, 1963) 47.
• 110Florin Afthalion, “Introduction,” in Frédéric Bastiat, Oeuvres économiques (Paris: Presses Universitaires de France, 1983) 8.
• 111Müller-Plantenberg, Der Freisinn nach Bismarcks Sturz, 200.
• 112Ludwig von Mises, Theory and History (New Haven: Yale University Press, 1957), p. 294.
• 113R. Raico, Die Partei der Freiheit (Stuttgart: Lucius & Lucius, 1999). The book is available online at http://docs.mises.de/Raico/die_partei_der_freiheit_raico.pdf
• 114Methodological individualism has been a keystone of Austrian economics from the start (Christainsen 1994). In his Investigations, Menger wrote:
• 115Methodological individualism was endorsed by the other leaders of Austrianism to the point where Fritz Machlup (1981: 9) could list it as the first of “the most typical requirements for a true adherent of the Austrian school.”
• 116It is certainly possible for someone to adopt methodological individualism and not endorse liberalism (Böhm 1985: 252–53). Jon Elster, for instance, is able to insist on the necessity of methodological individualism in the social sciences, while continuing to view himself as a kind of Marxist (1985: 4–8). Yet it is significant that Elster dismisses certain claims of Marx on the grounds of their incompatibility with methodological individualism. In general, it seems clear that the Austrian approach in methodology tends to preclude certain holistic ideologies that are also inconsistent with liberalism, such as classical Marxism and some varieties of racism and hyper-nationalism. To this extent, then, it is not simply methodological individualism.
• 117It is certainly possible for someone to adopt methodological individualism and not endorse liberalism (Böhm 1985: 252–53). Jon Elster, for instance, is able to insist on the necessity of methodological individualism in the social sciences, while continuing to view himself as a kind of Marxist (1985: 4–8). Yet it is significant that Elster dismisses certain claims of Marx on the grounds of their incompatibility with methodological individualism. In general, it seems clear that the Austrian approach in methodology tends to preclude certain holistic ideologies that are also inconsistent with liberalism, such as classical Marxism and some varieties of racism and hyper-nationalism. To this extent, then, it is not simply methodological individualism.
• 118Political factors played a role in the debate over Austrian methodology from the start. The very fact that “nation” and “state” understood as holistic entities were not primaries in his system set Menger apart from important currents of economic thought in the German-speaking world of his time. Indeed, it was on the basis of Menger’s methodology that Gustav Schmoller, leader of the German Historical School, instantly politicized the whole debate at the very start of the famous Methodenstreit (dispute over methods) (Bostaph 1978 and 1994). Reviewing the Investigations, Schmoller (1883:241) charged Menger with the cardinal sin of adhering to Manchestertum (laissez-faire), since his abstract and “atomistic” method might better be called “the Manchesteristindividualist” method.
• 119Furthermore, according to Hayek, the supposed discovery of such laws has resulted in the construction of philosophies of history on which major socialist projects have been erected—Marxism, of course, but particularly Saint-Simonianism, the system he dissects in his book. The followers of the early “utopian” socialist, Henri de Saint-Simon, were practitioners par excellence of scientism, the illegitimate application to the study of society of the methods of the natural sciences. And it is scientism—the negation of methodological individualism—that “through its popularizers has done more to create the present trend towards socialism than all the conflicts between economic interests . . .” (1955: 100–01). Opponents of liberalism, in criticizing Hayek for his methodological individualism, have also assumed that it was closely connected to his political philosophy.
• 120This Marxist complaint is misguided, however. The abstracting approach of Austrianism pertains—necessarily—to its theory. Some Austrians, it may be conceded, have neglected to apply their theory to the understanding of concrete, “real-life” issues. That this failing is not intrinsic to Austrian economics, however, was demonstrated—to cite only one example—by the outstanding Austrian economist, Murray N. Rothbard, who devoted much of his extremely productive career not only to “pure economics,” but also to highly important questions of political economy, both on a theoretical level and in specific historical contexts (see, e.g., Rothbard 1963, 1970, 1995a, 1995b, 2002).
• 121the thought design, the economic calculation or economic plan of the individual, always stands in the foreground of theoretical interest. . . . The significance of the Austrian school in the history of ideas perhaps finds its most pregnant expression in the statement that here man as an actor stands at the center of economic events. (1978: 47, 51; emphasis in original)
• 122This standpoint may be contrasted to that of neoclassical theory, of which Lachmann went so far as to declare: “Fundamentally, we cannot really speak of economic activity here. As in nature, people react to the current external conditions of their economic existence: they do not act.” In support of this rather severe judgment, Lachmann cited the statement of Vilfredo Pareto: “The individual can disappear, provided that he leaves us this photograph of his tastes.” Incensed by such a depreciation of individual acting man, Lachmann assailed the “arid formalism” of neoclassical economics, which treats “the manifestations of the human mind in household and market as purely formal entities, on par with material resources” (1978: 51, 56, 181; emphasis in Lachmann).
• 123This standpoint may be contrasted to that of neoclassical theory, of which Lachmann went so far as to declare: “Fundamentally, we cannot really speak of economic activity here. As in nature, people react to the current external conditions of their economic existence: they do not act.” In support of this rather severe judgment, Lachmann cited the statement of Vilfredo Pareto: “The individual can disappear, provided that he leaves us this photograph of his tastes.” Incensed by such a depreciation of individual acting man, Lachmann assailed the “arid formalism” of neoclassical economics, which treats “the manifestations of the human mind in household and market as purely formal entities, on par with material resources” (1978: 51, 56, 181; emphasis in Lachmann).
• 124Israel Kirzner, too, has noted the uniqueness of the Austrian outlook. Both the earlier Ricardian and the current neoclassical economics exhibit a “mechanical quality,” whereby “human aspirations, human errors, and human discoveries are downplayed, ignored, or simply assumed away.” Austrian economics, on the other hand, highlights the alertness, inventiveness, fallibility, and resourceful creativity of all the participants in the market process, especially in the case of the entrepreneur and the entrepreneurial function. This is a distinctive Austrian outlook which Kirzner traces back to Menger, whose originality consisted in his “vision of an economy created and shaped by human action” (Kirzner 1994, 1: xiv, xxiv). For neoclassical economic theory, on the other hand, as one practitioner has ruefully admitted, entrepreneurs and entrepreneurship simply do not exist (Rosen 1997: 148–49).
• 125Israel Kirzner, too, has noted the uniqueness of the Austrian outlook. Both the earlier Ricardian and the current neoclassical economics exhibit a “mechanical quality,” whereby “human aspirations, human errors, and human discoveries are downplayed, ignored, or simply assumed away.” Austrian economics, on the other hand, highlights the alertness, inventiveness, fallibility, and resourceful creativity of all the participants in the market process, especially in the case of the entrepreneur and the entrepreneurial function. This is a distinctive Austrian outlook which Kirzner traces back to Menger, whose originality consisted in his “vision of an economy created and shaped by human action” (Kirzner 1994, 1: xiv, xxiv). For neoclassical economic theory, on the other hand, as one practitioner has ruefully admitted, entrepreneurs and entrepreneurship simply do not exist (Rosen 1997: 148–49).
• 126Israel Kirzner, too, has noted the uniqueness of the Austrian outlook. Both the earlier Ricardian and the current neoclassical economics exhibit a “mechanical quality,” whereby “human aspirations, human errors, and human discoveries are downplayed, ignored, or simply assumed away.” Austrian economics, on the other hand, highlights the alertness, inventiveness, fallibility, and resourceful creativity of all the participants in the market process, especially in the case of the entrepreneur and the entrepreneurial function. This is a distinctive Austrian outlook which Kirzner traces back to Menger, whose originality consisted in his “vision of an economy created and shaped by human action” (Kirzner 1994, 1: xiv, xxiv). For neoclassical economic theory, on the other hand, as one practitioner has ruefully admitted, entrepreneurs and entrepreneurship simply do not exist (Rosen 1997: 148–49).
• 127In this whole area there is a strong link to an important element of classical liberalism, as exemplified, for instance, in the early Wilhelm von Humboldt, Benjamin Constant, and Herbert Spencer. In combating authoritarian ideologies, liberal thinkers focused on the individual human being per se (i.e., irrespective of class, race, etc.) as the fountainhead of creative response to an ever-changing world. From this they derived the basic liberal demand for as wide a latitude as possible for individual freedom of choice and action.
• 128On the level of policy, Austrianism’s individualist and subjectivist methodology tends, indirectly at least, to sway decisions in a liberal direction. Austrian economists are skeptical of the macroeconomic models devised by “mainstream economists,” with their assumption that various global magnitudes act upon one another. There appear to be affinities between a macroeconomic approach and anti-liberal policies. Hayek, for example, wrote, of the heightened interest in macroeconomic statistics associated with the Keynesian revolution:
• 129It was largely a growing demand for greater deliberate control of the economic process (which required more knowledge of the specific effects to be expected from particular measures) that led to the endeavor to use the obtainable statistical information as the foundation of such predictions. (1973: 12)
• 130Besides having implications for policy, the Austrian concern with the diversity of human beings and their situations is strongly congruent with liberalism’s view of the nature of man. The epigraph which John Stuart Mill placed at the beginning of his On Liberty, from Humboldt’s Limits of State Action, epitomizes this liberal outlook: “The grand, leading principle towards which every argument unfolded in these pages directly converges is the absolute and essential importance of human development in its richest diversity” (quoted in Mill 1977: 213).
• 131“False” as well as “True” Individualism has been very much present among modern Austrian views on the philosophy and method of economics . . . it is important that [the Austrians’] methodology, or epistemology, should be clearly, logically, and explicitly compatible with their political principles. As well as its ethics, politics, and economics, freedom has its epistemology, which must surely be one of its most fundamental aspects and requirements. (1981: 224).
• 132. . . his fundamental idea was that we knew things about “human action” (the title of his famous book) because we are human beings. As a result, he argued, we have absolutely certain knowledge of the motivations of human actions [sic] and he maintained that we can derive substantive conclusions from that basic knowledge. Facts, statistical or other evidence cannot, he argued, be used to test those conclusions. . . . That philosophy converts an asserted body of substantive conclusions into a religion. . . . Suppose two people who share von Mises’s praxeological view come to contradictory conclusions about anything. How can they reconcile their difference? The only way they can do so is by a purely logical argument. One has to say to the other, “You made a mistake in reasoning.” And the other has to say, “No, you made a mistake in reasoning.” Suppose neither believes he has made a mistake in reasoning. There’s only one thing left to do: fight. (1991: 18)
• 133How such an argument could emanate from such a distinguished source is simply baffling. Among other problems with it: Friedman’s theory would predict the occurrence of incessant bloody brawling among mathematicians and logicians, the non-occurrence of which falsifies that theory in Friedman’s own positivist terms. Friedman’s position also entails that no religious person who felt certain about his religious beliefs could have any principled reason to respect the conflicting religious beliefs of others, which is absurd. Finally, Friedman’s “explanation” of Mises’s alleged personal “intolerance” fails to account for the personal “tolerance” of other practitioners of apriorism in economics.
• 134As for Hutchison, he really offers no argument at all for his strange attack on Mises. Instead, there is the endorsement, without argument, of Hayek’s very dubious distinction between “false,” French individualism, and “true,” British individualism, and of the confusing account of intellectual history Hayek builds on this imagined dichotomy. (See the essay on “Liberalism: True and False,” in the present volume.) Hutchison also makes the unsupported and no means obviously true assumption that “freedom” (presumably meaning liberal theory) must have a single epistemological (as well as ethical) foundation. Clearly, Hutchison’s candidate for the “epistemology of freedom” is the theory of knowledge of Karl Popper.
• 135As for Hutchison, he really offers no argument at all for his strange attack on Mises. Instead, there is the endorsement, without argument, of Hayek’s very dubious distinction between “false,” French individualism, and “true,” British individualism, and of the confusing account of intellectual history Hayek builds on this imagined dichotomy. (See the essay on “Liberalism: True and False,” in the present volume.) Hutchison also makes the unsupported and no means obviously true assumption that “freedom” (presumably meaning liberal theory) must have a single epistemological (as well as ethical) foundation. Clearly, Hutchison’s candidate for the “epistemology of freedom” is the theory of knowledge of Karl Popper.
• 136To what extent Hayek accepted Popper’s methodological views remains unclear. In his Nobel lecture, in 1974, Hayek continued to argue that a fundamental difference exists between the subject matter of the natural and social sciences. Since the complexity of the phenomena studied in the latter usually renders empirical testing impossible, most attempts to apply the characteristic methods of the natural sciences in the social sciences are ruled out (Christainsen 1994: 14). Hutchison himself (1994: 233, n. 7) labels the claim that Hayek became a “falsificationist” as “exaggerated and misleading.” One wonders, though, what a Popperian is supposed to be if not a falsificationist.
• 137In his most famous work on social philosophy, The Open Society and Its Enemies, he asserts—argues for would be putting it much too strongly—that the state has an obligation not only to provide the usual welfare services, but beyond that to guarantee a livelihood to everyone willing to work, and, topping it all, to protect everyone from “inequitable arrangements” arising out of differential “economic power.” Even in 1974, Popper was advocating that the state should take over a controlling share of all “public companies” (Shearmur 1996: 51–52, 36).
• 138Most damaging to any claim that Popper represents authentic liberalism is the fact that he accepted the traditional mythology of industrial capitalism as a system of oppression of the working class, only gradually made tolerable by social reforms effected in part through socialist agitation. In The Open Society and Its Enemies, Popper wrote that Marx’s protests against capitalist oppression “will secure him forever a place among the liberators of mankind.” He contrasted Marx’s “invincible humanitarianism and sense of justice” with the “cynical” defense of “shameless exploitation” of workers by “hypocritical apologists,” i.e., the laissez-faire liberals of the time (1950: 310–12; see also 675 n. 13). As late as 1973, he declared that, although he had decisive disagreements with Marx, he respected him highly “as a fighter for a better world” (1984: 167).
• 139That Popper uncritically embraced the most negative interpretation of the industrial revolution is not surprising, considering that his source for the condition of workers in that period was Marx’s Capital (Shearmur 1996: 52). But it is remarkable that Popper never reconsidered that interpretation, given that it was his friend Hayek himself among liberal theorists who led the fight to bring more historically correct views on this subject to the general public (Hayek 1954). One wonders why Popper, the fearless critical thinker, didn’t just read Capitalism and the Historians and a few of the works cited in that collection.
• 140The sustained theoretical attack on the possibility of rational economic planning under socialism initiated by Mises in the early 1920s and then led by him and Hayek doubtless played a major role, and rightly so, in associating the school with the liberal doctrine. In the decades that followed, the common opinion among economists, that Mises and Hayek had been bested by their socialist adversaries, tended to confirm the sense that the Austrian position in general was antiquated and obsolete. However, recent scholarship (Lavoie 1985; Boettke 1990; Steele 1992)—as well as certain well-known world events—has served to overturn the older verdict. Indeed, the revolution in thinking has prompted one scholar to remark that “it is really scandalous to observe how decades of ridicule poured upon Mises’s ‘impossibility thesis’ [on rational planning under socialism] suddenly give way to an appreciation of his views as if they had been part of conventional wisdom all along” (Böhm, 1990: 231).
• 141The sustained theoretical attack on the possibility of rational economic planning under socialism initiated by Mises in the early 1920s and then led by him and Hayek doubtless played a major role, and rightly so, in associating the school with the liberal doctrine. In the decades that followed, the common opinion among economists, that Mises and Hayek had been bested by their socialist adversaries, tended to confirm the sense that the Austrian position in general was antiquated and obsolete. However, recent scholarship (Lavoie 1985; Boettke 1990; Steele 1992)—as well as certain well-known world events—has served to overturn the older verdict. Indeed, the revolution in thinking has prompted one scholar to remark that “it is really scandalous to observe how decades of ridicule poured upon Mises’s ‘impossibility thesis’ [on rational planning under socialism] suddenly give way to an appreciation of his views as if they had been part of conventional wisdom all along” (Böhm, 1990: 231).
• 142The sustained theoretical attack on the possibility of rational economic planning under socialism initiated by Mises in the early 1920s and then led by him and Hayek doubtless played a major role, and rightly so, in associating the school with the liberal doctrine. In the decades that followed, the common opinion among economists, that Mises and Hayek had been bested by their socialist adversaries, tended to confirm the sense that the Austrian position in general was antiquated and obsolete. However, recent scholarship (Lavoie 1985; Boettke 1990; Steele 1992)—as well as certain well-known world events—has served to overturn the older verdict. Indeed, the revolution in thinking has prompted one scholar to remark that “it is really scandalous to observe how decades of ridicule poured upon Mises’s ‘impossibility thesis’ [on rational planning under socialism] suddenly give way to an appreciation of his views as if they had been part of conventional wisdom all along” (Böhm, 1990: 231).
• 143a system driven entirely and independently by the choices and valuations of consumers—with these valuations transmitted “upwards” through the system to “goods of higher order,” determining how these scarce higher-order goods are allocated among industries and how they are valued and remunerated as part of a single consumer-driven process. (Kirzner 1990: 99)
• 144In his Investigations, Menger broaches the issue in Chapter 2, Book 3, devoted to “The Theoretical Understanding of Those Social Phenomena Which Are Not a Product of Agreement or of Positive Legislation, but Are Unintended Results of Historical Development.” He poses the question: “How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a common will directed toward establishing them?” Menger points out that “Law, language, the state, money, markets, all these social structures are to no small extent the unintended result of social development,” and goes on to provide a brilliant and famous explanation, based on methodological individualism, of the origin of money (1985: 146, 152–55; see also Menger 1981: 256–85).
• 145But never, and this is the essential point in the matter under review, may science dispense with testing for their suitability those institutions which have come about “organically.” It must, when careful investigation so requires, change and better them according to the measure of scientific insight and practical experience at hand. No era may renounce this “calling.” (1985: 234).
• 146The lawgiver is the engineer who invents the machine; the prince is merely the mechanic who sets it up and operates it. . . . Whoever ventures on the enterprise of instituting a people must be ready, as it were, to change human nature. . . . A sublime reason, which soars above the heads of the common people, produces those rules which the lawgiver puts into the mouth of the immortals. . . .The lawgiver’s great soul is the true miracle which must vindicate his mission. (1968: 84–87)
• 147Their “intellectual distress” was instantly alleviated, however, when they happened to discover Menger’s Principles. It should be stressed that Wieser gives no hint of bad faith. He states that both he and Böhm-Bawerk became convinced that socialism, in consistently applying the classical concept of value as stemming from labor, was fallacious (Wieser 1923: 88).
• 148Like Wieser, Fetter is quick to point out that no bad faith was involved in propagating the subjective theory. Yet he asserts, as against Hayek, that even a “casual examination of the works of Jevons, Menger, Clark, and of their most influential colleagues reveals from first to last evidences of this undercurrent of interest in the political bearings of the value theory.” The story, however, ends happily from Fetter’s point of view. The subjective-value theory left Marxism in the dust: “it would be difficult to find in the whole history of economic thought a more complete victory of one idea over another” (1923: 600–02, 605; on Fetter, see Herbener 1999).
• 149Like Wieser, Fetter is quick to point out that no bad faith was involved in propagating the subjective theory. Yet he asserts, as against Hayek, that even a “casual examination of the works of Jevons, Menger, Clark, and of their most influential colleagues reveals from first to last evidences of this undercurrent of interest in the political bearings of the value theory.” The story, however, ends happily from Fetter’s point of view. The subjective-value theory left Marxism in the dust: “it would be difficult to find in the whole history of economic thought a more complete victory of one idea over another” (1923: 600–02, 605; on Fetter, see Herbener 1999).
• 150From the opposing camp, a long line of socialist critics, from the 1890s on, pilloried marginalism as a mere rationalization for the exploitative capitalist system. The Italian socialist Achille Loria assailed the marginal approach for precluding “the possibility of a deep analysis of social relations” and eliminating “any theoretical threat against the established economic system” (Barucci 1972: 529). Karl Kautsky, the Pope of German Marxism before the First World War, took note of the Austrian challenge in the form of Böhm-Bawerk’s work, declaring: “Böhm-Bawerk’s and Marx’s theories of value are mutually exclusive. . . . That means, therefore: either-or” (cited in Chaloupek 1986: 198–99). Nikolai Bukharin (1927), who attended Böhm-Bawerk’s lectures, labeled Austrianism “the economic theory of the rentier class.” Decades later, Ronald L. Meek claimed, citing Menger and Jevons, that “the founders [of marginalism] were very well aware of the dangerous uses which were currently being made of these doctrines [of classical economics] in certain quarters” (1972: 503).
• 151From the opposing camp, a long line of socialist critics, from the 1890s on, pilloried marginalism as a mere rationalization for the exploitative capitalist system. The Italian socialist Achille Loria assailed the marginal approach for precluding “the possibility of a deep analysis of social relations” and eliminating “any theoretical threat against the established economic system” (Barucci 1972: 529). Karl Kautsky, the Pope of German Marxism before the First World War, took note of the Austrian challenge in the form of Böhm-Bawerk’s work, declaring: “Böhm-Bawerk’s and Marx’s theories of value are mutually exclusive. . . . That means, therefore: either-or” (cited in Chaloupek 1986: 198–99). Nikolai Bukharin (1927), who attended Böhm-Bawerk’s lectures, labeled Austrianism “the economic theory of the rentier class.” Decades later, Ronald L. Meek claimed, citing Menger and Jevons, that “the founders [of marginalism] were very well aware of the dangerous uses which were currently being made of these doctrines [of classical economics] in certain quarters” (1972: 503).
• 152The history of economic thought in the first half or three-quarters of the nineteenth century was and still is often portrayed in very Anglo-centric terms, as though the theories which achieved for so long in Britain such an extraordinary dominance and authority. . .enjoyed a similar hold and authority elsewhere in Europe. This was not the case.
• 153Of the founders—Menger, Böhm-Bawerk, and Wieser—it is Wieser’s views that seem to be the least problematical (Mayer 1929; Streissler 1986: 86–91). Though not a socialist, Wieser firmly believed that the private property, market economy was rife with flaws that cried out for interventionist remedies. Robert B. Ekelund, Jr., has noted that, for Wieser, both consumers and workers were typically tyrannized by the possessors of great concentrations of wealth, and that in Wieser’s view it was the duty of government to reduce the power of these property owners and provide for the “victims of acquisitive capitalism.” Detecting power operating everywhere in market exchanges, Wieser even favored protective tariffs for less developed nations in order to counteract the economic and political domination of the wealthier countries. He tried to deploy marginal utility theory to justify not only progressive taxation, as Hayek noted, but also state subsidies for “projects productive of high total utility” (Ekelund 1992). There seems little reason to dissent from Streissler’s characterization of Wieser as “a statist, who believed in the wisdom of the state machinery guided by a wise bureaucracy (coming from his own caste)” (1987: 14–15).
• 154Of the founders—Menger, Böhm-Bawerk, and Wieser—it is Wieser’s views that seem to be the least problematical (Mayer 1929; Streissler 1986: 86–91). Though not a socialist, Wieser firmly believed that the private property, market economy was rife with flaws that cried out for interventionist remedies. Robert B. Ekelund, Jr., has noted that, for Wieser, both consumers and workers were typically tyrannized by the possessors of great concentrations of wealth, and that in Wieser’s view it was the duty of government to reduce the power of these property owners and provide for the “victims of acquisitive capitalism.” Detecting power operating everywhere in market exchanges, Wieser even favored protective tariffs for less developed nations in order to counteract the economic and political domination of the wealthier countries. He tried to deploy marginal utility theory to justify not only progressive taxation, as Hayek noted, but also state subsidies for “projects productive of high total utility” (Ekelund 1992). There seems little reason to dissent from Streissler’s characterization of Wieser as “a statist, who believed in the wisdom of the state machinery guided by a wise bureaucracy (coming from his own caste)” (1987: 14–15).
• 155Wieser’s last book, The Law of Force, intended as his magnum opus, has been open to widely varying interpretations (Streissler 1986: 86–91; Morgenstern 1927: 673–74; and especially Samuels in Wieser 1983: xiii–xxxvi). In any case, as a confusing hodgepodge in which all of history is explained and the whole future of mankind sketched through an obsessive application of the concepts of “power” and “leadership,” this work is fundamentally outside the tradition of the Austrian school. Menger’s political orientation, on the other hand, has been the most studied and remains the most disputed.
• 156Mises (1969: 18) conveyed the impression that Menger was more or less a classical liberal, asserting that he “heartily disapproved of the interventionist policies that the Austrian Government—like almost all governments of the epoch—had adopted.” Streissler has also argued for a virtually laissez-faire Menger, seeing him as the source of the school’s commitment to the free market. Emil Kauder, on the other hand, saw Menger as a sympathizer with Sozialpolitik (social reform) and a critic of laissez-faire (1965: 62–64).
• 157Mises (1969: 18) conveyed the impression that Menger was more or less a classical liberal, asserting that he “heartily disapproved of the interventionist policies that the Austrian Government—like almost all governments of the epoch—had adopted.” Streissler has also argued for a virtually laissez-faire Menger, seeing him as the source of the school’s commitment to the free market. Emil Kauder, on the other hand, saw Menger as a sympathizer with Sozialpolitik (social reform) and a critic of laissez-faire (1965: 62–64).
• 158But, according to Kauder, the underlying intellectual tradition in Austria was one of state paternalism, to the point where even the expression of the concept of a spontaneous economic order had been actively suppressed. The founders thus “tried to compromise between British [i.e., Smithian] and Austrian tradition.” In the end, Böhm-Bawerk held that social stability was more important than progress, preaching a “social quietism akin to the ideals of the Austrian past” (Kauder 1958: 421–22). To make matters worse, Stephan Böhm points out that “Böhm-Bawerk’s outstanding achievement as Minister of Finance was the introduction of the progressive income tax on the total income of individuals.” (1985: 256; see also Weber 1949: 667)
• 159But, according to Kauder, the underlying intellectual tradition in Austria was one of state paternalism, to the point where even the expression of the concept of a spontaneous economic order had been actively suppressed. The founders thus “tried to compromise between British [i.e., Smithian] and Austrian tradition.” In the end, Böhm-Bawerk held that social stability was more important than progress, preaching a “social quietism akin to the ideals of the Austrian past” (Kauder 1958: 421–22). To make matters worse, Stephan Böhm points out that “Böhm-Bawerk’s outstanding achievement as Minister of Finance was the introduction of the progressive income tax on the total income of individuals.” (1985: 256; see also Weber 1949: 667)
• 160His purpose, Weiss declared, was “to establish that a number of notable representatives [of the Austrian doctrine], among them its founders, did not draw from it the conclusions for economic policy that [Mises] believes he must draw.” Mises’s brief response to Weiss’s critique: “I am not so pious towards authority [autoritätsgläubig] and quotation-minded [zitatenfreudig], and I base my argumentation on logic and not on exegesis.” The interesting implication is that the political consequences of Austrian economics are to be gathered not from the particular views of its major early proponents, subject to the climate of opinion of their times, but from the inner logic of the system itself (Mises and Spiethoff 1933: 51–53, 131, 118).
• 161Beginning with Ludwig von Mises and F.A. Hayek, the links between liberalism and the Austrian School become intense and pervasive, since these two scholars were themselves at once the outstanding Austrian economists and the most distinguished liberal thinkers of the twentieth century. The American academic world, however, deemed none of this sufficient for them to be accorded the kind of positions to which they were clearly entitled. They, and in particular Mises, were also responsible to a greater degree than is generally appreciated for the upsurge of the free-market philosophy in the second half of the century.
• 162Beginning with Ludwig von Mises and F.A. Hayek, the links between liberalism and the Austrian School become intense and pervasive, since these two scholars were themselves at once the outstanding Austrian economists and the most distinguished liberal thinkers of the twentieth century. The American academic world, however, deemed none of this sufficient for them to be accorded the kind of positions to which they were clearly entitled. They, and in particular Mises, were also responsible to a greater degree than is generally appreciated for the upsurge of the free-market philosophy in the second half of the century.
• 163What follows refers to Hayek’s political attitudes, not to his contributions to economic science. These were highly significant and valuable in the earlier part of his career, as he together with Mises built the theoretical foundations of the modern Austrian school.
• 164This remained Hayek’s standpoint throughout his long and richly productive scholarly life. It is regrettable, but typical, that a great many confused commentators continue to characterize him as a advocate of laissez-faire. In fact, he always avoided using the term to describe his own views, quite unlike Mises, who gloried in it. Provocatively—and quite misleadingly—Hayek states that the supposed laissez-faire conclusions of classical economics “of course, would have been invalidated by the demonstration that, in any single case, State action was useful” (1933: 134). Here Hayek seems to have lost sight of a principle that otherwise loomed large in his thinking: that with such issues of social policy it could never be a question of “any single case,” but rather of general rules and their overall effect.
• 165Hayek habitually displayed a penchant for a considerable degree of Sozialpolitik. In a radio debate in Chicago, following the publication of The Road to Serfdom, he not only stated that, “I have always said that I am in favor of a minimum income for every person in the country,” but, pressed by two aggressive if uninformed leftist opponents, even made the astonishing assertion: “That the monetary system must be under central control has never, to my mind, been denied by any sensible person” (1994b: 114, 116). Some twenty years later, in the preface to a reprint of his book, Hayek admitted that at the time he wrote The Road to Serfdom, “I had not wholly freed myself from all the current interventionist superstitions and in consequence made various concessions which I now think unwarranted” (1994a: xxiv). It may be that, besides his youthful inclination towards a mild Fabianism and his deep admiration for Friederich von Wieser, Hayek was influenced in this direction by the arrant statism that dominated intellectual life in Britain when he lived there in the 1930s and 40s, often involving starry-eyed admiration for the noble experiment underway in Soviet Russia. In any case, his divergence from the more consistent—or more “dogmatic”—variety of liberalism espoused by Mises endured to the end of his career.
• 166Hayek habitually displayed a penchant for a considerable degree of Sozialpolitik. In a radio debate in Chicago, following the publication of The Road to Serfdom, he not only stated that, “I have always said that I am in favor of a minimum income for every person in the country,” but, pressed by two aggressive if uninformed leftist opponents, even made the astonishing assertion: “That the monetary system must be under central control has never, to my mind, been denied by any sensible person” (1994b: 114, 116). Some twenty years later, in the preface to a reprint of his book, Hayek admitted that at the time he wrote The Road to Serfdom, “I had not wholly freed myself from all the current interventionist superstitions and in consequence made various concessions which I now think unwarranted” (1994a: xxiv). It may be that, besides his youthful inclination towards a mild Fabianism and his deep admiration for Friederich von Wieser, Hayek was influenced in this direction by the arrant statism that dominated intellectual life in Britain when he lived there in the 1930s and 40s, often involving starry-eyed admiration for the noble experiment underway in Soviet Russia. In any case, his divergence from the more consistent—or more “dogmatic”—variety of liberalism espoused by Mises endured to the end of his career.
• 167The state, Hayek insisted, is not solely “a coercive apparatus,” but also “a service agency,” and as such “it may assist without harm in the achievement of desirable aims which perhaps could not be achieved otherwise.” This opening to an extensive welfare state in cases where it “involves no coercion except for the raising of the means by taxation” (sic) (Hayek, 1978: 144), has been criticized by Anthony de Jasay. De Jasay cogently remarks that Hayek put his proposal “a touch naïvely,” and adds:
• 168Here is a clear call, or what anyone might be excused for taking as one, to re-create something like the “Swedish model” under the liberal banner. Horrified as Hayek would be by the imputation of such a proposal, his exposition is fully consistent with it, and must be classed as “loosely liberal” for that reason. (1991a: 15–16; see also 1996)
• 169Tributes to the faculty of human reason are strewn throughout his works, e.g., reason is “the mark that distinguishes man from animals and has brought about everything that is specifically human”; and, “Man has only one tool to fight error: reason” (Mises 1949: 91, 187; see also especially Salerno 1990). This stands in stark contrast to Hayek’s disparagement of reason in his later works (especially Hayek, 1988).
• 170History looks backward into the past, but . . . it does not teach indolent quietism; it rouses men to emulate the deeds of earlier generations. . . . Faithfulness to tradition means to the historian observance of the fundamental rule of human action, namely, ceaseless striving to improve conditions. It does not mean preservation of unsuitable old institutions and clinging to doctrines long since discredited by more tenable theories. (1957: 294, 296)
• 171If anything reconciles me to Schmoller’s activity in the field of our science, odious in so many respects, then it is the circumstance that he is fighting with an unmistakable devotion on the side of honorable men against social evils and for the fate of the weak and the poor. This is a struggle in which, as different as the direction of my researches may be, my sympathies lie entirely on the side of such efforts. I may devote my meager power to the investigation of the laws in accordance with which the economic life of men is shaped; but nothing is further from the trend of my thinking than service in the interest of capitalism. No accusation of Schmoller’s is more contrary to the truth, no reproach more frivolous, than that I am a supporter of the Manchester party . . . (Menger 1935c: 93)
• 172On the other hand, Menger was surely aware that terms like Sozialpolitik and Kathedersozialismus denoted support for a quite activist state in economic affairs. If Menger was “a classical liberal of the purest water,” as Streissler claims, why did he write so favorably of Sozialpolitik and Kathedersozialismus—to the point of conceding Schmoller’s great services in furthering the cause of “social reform” in the midst of a diatribe against him? Why did he attack Manchesterism so vehemently? Unless the explanation is to be found in political opportunism, these statements represent a great mystery, given Streissler’s interpretation.
• 173In the period of his association with the Censeur Européen, Augustin Thierry shared the Industrialist philosophy of Comte and Dunoyer, with perhaps even more radical emphases. His review-essay on Destutt de Tracy’s Commentaire sur l’Esprit des Lois de Montesquieu is particularly important in this connection. Thierry seconds Destutt de Tracy’s firm adherence to laissez-faire:
• 174Government should be good for the liberty of the governed, and that is when it governs to the least possible degree. It should be good for the wealth of the nation, and that is when it acts as little as possible upon the labor that produces it and when it consumes as little as possible. It should be good for the public security, and that is when it protects as much as possible, provided that the protection does not cost more than it brings in. . . . It is in losing their powers of action that governments improve. Each time that the governed gain space, there is progress.
• 175As against Montesquieu, Thierry sides with Destutt de Tracy: “commerce consists in exchange; it is society itself”; and “taxation is always an evil.”
• 176As for the alleged greediness that commerce, rightly understood, inspires in those who make it their social estate: it is a vague reproach, which should be classed with the most insipid and meaningless rantings. Greediness consists in ravishing the goods of another through violence or cunning, as in the two noble professions of conqueror and courtier. But the merchant, like all other industrious men, seeks his benefit only in his talent, in virtue of freely arrived at agreements, and appealing to faith and the laws.
• 177its actions can be classed with the action exerted upon the inhabitants of a land when it is invaded by soldiers; it degenerates into domination, and that occurs regardless of the number of men involved, of the arrangement in which they order themselves, or what titles they take . . .
• 178Sharing the horror of militarism of the other Industrialist authors, Thierry quotes Destutt de Tracy with approval on “the absurd and ruinous wars which have been too often waged to maintain the empire and exclusive monopoly over some faraway colonies.” This is not true commerce, he declares, but “the mania for domination.”
• 179An invisible and ever-active power, labor, spurred on by industry, will precipitate at the same time all of the populations of Europe into this general movement. The productive force of the nations will break all its fetters. . . . Industry will disarm power, by causing the desertion of its satellites, who will find more profit in free and honest labor than in the profession of slaves guarding slaves. Industry will deprive power of its pretexts and excuses by recalling those the police keep in check to the enjoyments and virtues of labor. Industry will deprive power of its income, by offering at less cost the services which power makes people pay for. To the degree that power will lose its actual force and apparent utility, liberty will gain and free men will draw closer together (emphasis supplied).
• 180the passage from one society to another will scarcely be felt. Federations will replace states; the loose but indissoluble chains of interest will replace the despotism of men and of laws; the tendency towards government, the first passion of the human race, will cede to the free community. The era of empire is over, the era of association begins.
• 181Thierry highlights the role of historical writing in aiding in the great struggle. “We are the sons of these serfs, of these tributaries, of these bourgeois that the conquerors devoured at will; we owe them all that we are.” History, which should have transmitted memories of this tradition to us, “has been in the pay of the enemies of our fathers. . . . Slaves emancipated only yesterday, our memory has for a long time recalled to us only the families and acts of our masters.” As if presaging his own work on the chartered towns of the Middle Ages, he adds:
• 182If a skillful and liberal pen were finally to undertake our history, that is, the history of towns and associations . . . all of us would see in it the meaning of a social order, what gives it birth and what destroys it.
• 183Second, by concentrating on production rather than on exchange of rightful property, they create false targets of attack. Thus, “monks”—they really mean the religious orders altogether—are deemed “idlers,” placed in the same category as feudal lords and brigands, and, quite deliberately, no distinction is made among paupers between those who live on voluntary charity and those who live from state aid. It would seem that the Industrialists did not understand the implications of their own insistence on the existence of “immaterial” as well as “material” values.
• 184Although François Guizot has often been placed in the same category as Thierry as a historian of class conflict, especially by Marxists, his views were crucially different. Guizot had no connection with the Censeur group, being a supporter instead of the juste milieu (roughly, golden mean) views of the Doctrinaire, Royer-Collard. As a leader of the Doctrinaires (of whom it has been said that no school of thought ever deserved the name less), Guizot lacked any guiding theory, such as Industrialism, to apply in his historical works. Always an eclectic, he wrote for a while in the 1820s in the then popular idiom of classes and class conflict. But he never held that one of the competing classes would or should triumph. On the contrary, the struggle, according to Guizot, was already in his own day eventuating in a grand synthesis, whereby aristocracy and Third Estate would combine in the “French Nation.”
• 185As a thinker—and, of course, in his political role—Guizot was essentially oriented towards the state. A major purpose of his account of French history was to show that “the bourgeoisie and the power of the Crown were not only allies but forces pressing towards each other.” He thoroughly endorsed the historical collaboration of Crown and the Third Estate, which reached a kind of apotheosis in the July Monarchy of Louis Philippe (1830–48), particularly under Guizot’s own ministry.
• 186All the old aristocratic armies of Europe had succumbed to these bourgeois, at first disdained and then feared, who, forced to take up the sword and having made use of it as before of the word, as previously of thought, had become heroic soldiers, great captains, and had added to the formidable power of their ideas the prestige of military glory and the authority of their conquests.
• 187forgot that the greatest advances of humanity have had as their representatives and defenders the greatest captains . . . that Napoleon’s sword had, for fifteen years, led to the principle of modern equality penetrating all of Europe. He likewise disputed the difficult art of governing the peoples . . .
• 188Eventually, Thierry exchanged his sophisticated Industrialist analysis of class conflict for a considerably coarser one. At some point, he came to believe that the Industrialist view “falsified” history by subjecting it to too rigid a theoretical scheme.
• 189The type of general and purely political considerations to which I had confined myself up until then seemed to me for the first time too arid and limited. I felt a strong inclination to descend from the abstract to the concrete, to envisage the national life in all its facets and to take my point of departure in solving the problem of the antagonism of the different classes of men in the bosom of the same society the study of the primitive races in their original diversity.
• 190The “tinge of politics was effaced,” Thierry explains, as he devoted himself more to “science.” In fact, he did not cease altogether to write as the historian of the oppressed and downtrodden, as the chronicler, first, of the sufferings of the defeated “races” like the Saxons at the time of the Norman Conquest, then of the rise to power and pride of the despised Third Estate in France.
• 191Over and over again, the French kings are praised for having worked to elevate the Third Estate, largely by providing bureaucratic jobs for its members, and, in the traditional manner, for have “created” France. Richelieu is eulogized both for his foreign and domestic policies, equally admirable, and for “multiplying for the commons, besides offices, places of honor in the State.” Colbert, the architect of French predatory mercantilism, is glorified as a commoner who planned “the industrial regeneration of France,” and is applauded for his distribution of its tax-funded largesse to writers, scholars, and “all classes of men.” One could go on.
• 192Over and over again, the French kings are praised for having worked to elevate the Third Estate, largely by providing bureaucratic jobs for its members, and, in the traditional manner, for have “created” France. Richelieu is eulogized both for his foreign and domestic policies, equally admirable, and for “multiplying for the commons, besides offices, places of honor in the State.” Colbert, the architect of French predatory mercantilism, is glorified as a commoner who planned “the industrial regeneration of France,” and is applauded for his distribution of its tax-funded largesse to writers, scholars, and “all classes of men.” One could go on.
• 193How to explain this radical shift of perspective? The chief reason is to be sought in Thierry’s experience of the socialist agitation of 1848 including the violence of the June Days, and the specter of social revolution haunted him to the end of his life. He was anxious that the socialist troublemakers should not be able to draw sustenance from his work on the role of classes in French history. In the Preface to the Essay, Thierry implies that now, in 1853, there is no further need for the concept of classes: “the national mass” is “today one and homogeneous.” Only “the prejudices spread by systems that tend to divide” the homogeneous nation into “mutually hostile classes” could suggest otherwise. The present-day antagonism between bourgeoisie and workers, which some wish to trace back for centuries, is “destructive of all public order.” Thus, ironically, one of the thinkers who was a major inspiration for the socialist concept of class conflict ended by categorically denying any class conflict in the modern world, and he did so in part out of fear of the dangers posed now that it had been reshaped by the socialists. He put this in the form of the statement that there could no longer be a history of the Third Estate—now the Third Estate was in reality, as the Abbé Siéyes had announced it programmatically in 1788, “everything.”
• 194How to explain this radical shift of perspective? The chief reason is to be sought in Thierry’s experience of the socialist agitation of 1848 including the violence of the June Days, and the specter of social revolution haunted him to the end of his life. He was anxious that the socialist troublemakers should not be able to draw sustenance from his work on the role of classes in French history. In the Preface to the Essay, Thierry implies that now, in 1853, there is no further need for the concept of classes: “the national mass” is “today one and homogeneous.” Only “the prejudices spread by systems that tend to divide” the homogeneous nation into “mutually hostile classes” could suggest otherwise. The present-day antagonism between bourgeoisie and workers, which some wish to trace back for centuries, is “destructive of all public order.” Thus, ironically, one of the thinkers who was a major inspiration for the socialist concept of class conflict ended by categorically denying any class conflict in the modern world, and he did so in part out of fear of the dangers posed now that it had been reshaped by the socialists. He put this in the form of the statement that there could no longer be a history of the Third Estate—now the Third Estate was in reality, as the Abbé Siéyes had announced it programmatically in 1788, “everything.”
• 195How to explain this radical shift of perspective? The chief reason is to be sought in Thierry’s experience of the socialist agitation of 1848 including the violence of the June Days, and the specter of social revolution haunted him to the end of his life. He was anxious that the socialist troublemakers should not be able to draw sustenance from his work on the role of classes in French history. In the Preface to the Essay, Thierry implies that now, in 1853, there is no further need for the concept of classes: “the national mass” is “today one and homogeneous.” Only “the prejudices spread by systems that tend to divide” the homogeneous nation into “mutually hostile classes” could suggest otherwise. The present-day antagonism between bourgeoisie and workers, which some wish to trace back for centuries, is “destructive of all public order.” Thus, ironically, one of the thinkers who was a major inspiration for the socialist concept of class conflict ended by categorically denying any class conflict in the modern world, and he did so in part out of fear of the dangers posed now that it had been reshaped by the socialists. He put this in the form of the statement that there could no longer be a history of the Third Estate—now the Third Estate was in reality, as the Abbé Siéyes had announced it programmatically in 1788, “everything.”
• 196[The middle class] entrenched itself in every vacant government job, prodigiously augmented the number of such jobs, and accustomed itself to live almost as much upon the Treasury as upon its own industry.
• 197Many of the liberals were major beneficiaries of the new regime, rewarded for the support they had given, and continued to give, to Louis Philippe. Dunoyer was made prefect in Moulins and Stendhal consul at Trieste, while Daunou was reappointed as director of the National Archives. Others of the liberal party under the Restoration did as well or better. Guizot, of course, was one of the chief figures of the new order. With Mignet, Thiers, Villemain, he “shared the highest offices of the state, the most brilliant favors of the regime.” Thierry himself, however, now blind and in poverty, was reduced to pleading for assistance, until Guizot awarded him a small pension.
• 198Many of the liberals were major beneficiaries of the new regime, rewarded for the support they had given, and continued to give, to Louis Philippe. Dunoyer was made prefect in Moulins and Stendhal consul at Trieste, while Daunou was reappointed as director of the National Archives. Others of the liberal party under the Restoration did as well or better. Guizot, of course, was one of the chief figures of the new order. With Mignet, Thiers, Villemain, he “shared the highest offices of the state, the most brilliant favors of the regime.” Thierry himself, however, now blind and in poverty, was reduced to pleading for assistance, until Guizot awarded him a small pension.
• 199Many of the liberals were major beneficiaries of the new regime, rewarded for the support they had given, and continued to give, to Louis Philippe. Dunoyer was made prefect in Moulins and Stendhal consul at Trieste, while Daunou was reappointed as director of the National Archives. Others of the liberal party under the Restoration did as well or better. Guizot, of course, was one of the chief figures of the new order. With Mignet, Thiers, Villemain, he “shared the highest offices of the state, the most brilliant favors of the regime.” Thierry himself, however, now blind and in poverty, was reduced to pleading for assistance, until Guizot awarded him a small pension.
• 200John Taylor was outraged by the betrayal of the principles of the Revolution by a new aristocracy based on “separate legal interests,” the bankers privileged to issue paper money as legal tender and the beneficiaries of “public improvements” and protective tariffs. American society has been divided into the privileged and the unprivileged by this “substantial revival of the feudal system.”
• 201Have we not, too, our privileged orders? our scrip nobility? aristocrats, clothed with special immunities, who control, indirectly, but certainly, the power of the state, monopolise the most copious source of pecuniary profit, and wring the very crust from the hard hand of toil? Have we not, in short, like the wretched serfs of Europe, our lordly master? . . . If any man doubts how these questions should be answered, let him walk through Wall-street.
• 202The American aristocracy naturally favored a strong government, including control of banking. Leggett, in contrast, demanded “the absolute separation of government from the banking and credit system.”
• 203is to divide the community into two great classes: one consisting of those who, in reality, pay the taxes and, of course, bear exclusively the burthen of supporting the government; and the other, of those who are the recipients of their proceeds through disbursements, and who are, in fact, supported by the government; or, in fewer words, to divide it into tax-payers and tax-consumers. But the effect of this is to place them in antagonistic relations in reference to the fiscal action of the government and the entire course of policy therewith connected.
• 204Today a revival appears to be underway of the concept of the state as the creator of classes and class conflict. A group of scholars including Theda Skocpol has produced an anthology with the significant title, Bringing the State Back In. In an introductory chapter, Skocpol speaks of “an intellectual sea change” taking place, by which the “societycentered ways of explaining politics and governmental activities” popular in the 1950s and 60s are being reversed, and government itself is looked upon as “an independent actor.”
• 205“the timing and characteristics of state intervention” affect “not only organizational tactics and strategies,” but “the content and definition of interest itself.” . . . Some scholars have directly stressed that state initiatives create corporatist forms . . . the formation, let alone the political capacities, of such purely socioeconomic phenomena as interest groups and classes depends in significant measure on the structures and activities of the very states the social actors, in turn, seek to influence.
• 206From a scientific point of view, the liberal theory—which locates the source of class conflict in the exercise of state power—has another pronounced advantage over the conventional Marxist analysis: liberal theory is able to shed light on the structure and functioning of Marxist societies themselves. “The theory of the Communists,” as Marx wrote, may be summed up in the single sentence: Abolition of private property.” Yet, Communist societies, which have essentially abolished private property, are hardly on the road to the abolition of classes. This has led to some deep soul-searching among Marxist theoreticians and justified complaints regarding the inadequacy of a purely “economic” analysis of class conflict to account for the empirical reality of the socialist countries. Yet the liberal theory of class conflict is ideally suited to deal with such problems in a context where access to wealth, prestige, and influence is determined by control of the state apparatus.
• 207From a scientific point of view, the liberal theory—which locates the source of class conflict in the exercise of state power—has another pronounced advantage over the conventional Marxist analysis: liberal theory is able to shed light on the structure and functioning of Marxist societies themselves. “The theory of the Communists,” as Marx wrote, may be summed up in the single sentence: Abolition of private property.” Yet, Communist societies, which have essentially abolished private property, are hardly on the road to the abolition of classes. This has led to some deep soul-searching among Marxist theoreticians and justified complaints regarding the inadequacy of a purely “economic” analysis of class conflict to account for the empirical reality of the socialist countries. Yet the liberal theory of class conflict is ideally suited to deal with such problems in a context where access to wealth, prestige, and influence is determined by control of the state apparatus.
• 208The underlying thesis is that there exist two “spirits” whose eternal strife comprises world history, the trader-spirit and the hero-spirit, and two peoples who today incarnate each of these. Naturally, the English are the traders, the Germans the heroes. Sombart’s work, to the extent that it is not a hymn of praise to war and death, is often even comical, e.g., when the author asserts: “The foundation of everything English is certainly the unfathomable spiritual limitedness of this people”; or when he devotes a chapter to English science without mentioning even Isaac Newton; or when he maintains that the English since the time of Shakespeare have produced no cultural value.
• 209The underlying thesis is that there exist two “spirits” whose eternal strife comprises world history, the trader-spirit and the hero-spirit, and two peoples who today incarnate each of these. Naturally, the English are the traders, the Germans the heroes. Sombart’s work, to the extent that it is not a hymn of praise to war and death, is often even comical, e.g., when the author asserts: “The foundation of everything English is certainly the unfathomable spiritual limitedness of this people”; or when he devotes a chapter to English science without mentioning even Isaac Newton; or when he maintains that the English since the time of Shakespeare have produced no cultural value.
• 210The underlying thesis is that there exist two “spirits” whose eternal strife comprises world history, the trader-spirit and the hero-spirit, and two peoples who today incarnate each of these. Naturally, the English are the traders, the Germans the heroes. Sombart’s work, to the extent that it is not a hymn of praise to war and death, is often even comical, e.g., when the author asserts: “The foundation of everything English is certainly the unfathomable spiritual limitedness of this people”; or when he devotes a chapter to English science without mentioning even Isaac Newton; or when he maintains that the English since the time of Shakespeare have produced no cultural value.
• 211Much more serious than this claptrap and characteristic for the time is Sombart’s seconding of Ferdinand Lassalle in dismissing the liberal ideal as merely that of “the nightwatchman state.” Many in the next two generations would echo Sombart’s judgment on German liberalism, when he described its golden age and decline:
• 212So that perhaps we may say that in the conception of the state, it is the German spirit that in Germany itself has achieved sole sway? Or does the English trader-spirit still haunt some heads?
• 213As regards Richter, it would be pointless to deny that a certain air of “trader-spirit,’’ or, rather, of a middle-class mentality, always surrounded him. There is certainly some truth in Theodor Heuss’s accusation of a “monumental petty-bourgeois quality” about Richter. He knew no foreign languages, and the few times he traveled abroad it was to vacation in Switzerland. Richter seems to have had little interest in the affairs of other countries, even in the fortunes of the liberal movement there. Theodor Barth, spokesman for a Left Liberalism associated with the big banks and exporting merchant houses, jokingly replied to the question, what distinguished his own party from Richter’s: if a man can tell Mosel from Rhine wine, he was a member of Barth’s party, if not, then of Richter’s.
• 214As regards Richter, it would be pointless to deny that a certain air of “trader-spirit,’’ or, rather, of a middle-class mentality, always surrounded him. There is certainly some truth in Theodor Heuss’s accusation of a “monumental petty-bourgeois quality” about Richter. He knew no foreign languages, and the few times he traveled abroad it was to vacation in Switzerland. Richter seems to have had little interest in the affairs of other countries, even in the fortunes of the liberal movement there. Theodor Barth, spokesman for a Left Liberalism associated with the big banks and exporting merchant houses, jokingly replied to the question, what distinguished his own party from Richter’s: if a man can tell Mosel from Rhine wine, he was a member of Barth’s party, if not, then of Richter’s.
• 215But Richter’s “petty-bourgeois quality” was something that his followers in the German middle-classes, in the liberal professions and small business, particularly in the great cities and above all in Berlin, felt, understood, and responded to. A dwindling remnant as the years went by, they represented a German version of William Graham Sumner’s “Forgotten Man.” Six years after Sumner’s classic description was published in the United States, the journalist Alexander Meyer wrote in Richter’s Freisinnige Zeitung that the liberals were
• 216But Richter’s “petty-bourgeois quality” was something that his followers in the German middle-classes, in the liberal professions and small business, particularly in the great cities and above all in Berlin, felt, understood, and responded to. A dwindling remnant as the years went by, they represented a German version of William Graham Sumner’s “Forgotten Man.” Six years after Sumner’s classic description was published in the United States, the journalist Alexander Meyer wrote in Richter’s Freisinnige Zeitung that the liberals were
• 217the party of the small man, who depends on himself and his own powers, who demands no gifts from the state, but only wants not to be hindered in improving his position to the best of his abilities and to strive to leave his children a better lot in life than came to him.
• 218accountant in a larger silk firm, for which he worked, in gradually rising positions and with a growing income, for over fifty years. He was a quiet man, with a strict sense of duty and total dependability, and outside of his profession he knew only his family . . . he voted liberal and venerated Rudolf von Virchow and Eugen Richter.
• 219Undeniably “petty-bourgeois” through and through, such men had little love for Weltpolitik and invigorating wars or for the overthrow of all existing social conditions in the name of a Marxist dream, and they stood by Richter to the end.
• 220In 1931, the 25th anniversary of Richter’s death, the social-liberal historian Erich Eyck posed the question whether Eugen Richter could “still mean something for us.”
• 221How are we to explain that a man who fought for free trade a century before the majority of the industrialized nations made it their official doctrine, who condemned colonialism also a century before decolonization . . . who, above all, proclaimed an era of economic progress and the enrichment of all classes of society, should be forgotten, while the majority of his intellectual adversaries, prophets of stagnation and pauperization, who were wrong, still have freedom of the city?
• 222For what he was and what he represented—if one may say so: from the mere fact that this great man “never trusted any government”—the gruff old Rhineland liberal deserves to be better treated by the historians and, by the Germans, not to be completely forgotten.