Liberalism: In the Classical Tradition

The importance of this little book is far greater, I believe, than one would expect from its modest size and unpretentious language. It is, very simply, a book about the free society; about what would now-a-days be termed the “policy implications” for such a society in the conduct of both its internal and external affairs; and very especially about some of the obstacles and problems, whether real or imagined, lying in the way of establishing and maintaining that form of social organization.

Now, while there is nothing extraordinary in all this, the surprising fact is that virtually none of those who have advocated some alternative form of social economic organization offered a similar discussion of their respective proposals. Even now, the growing band of writers who regale us with detailed criticisms of capitalism and with forecasts of its impending demise are strangely reticent in treating any “contradictions” or other difficulties that might occur in the operation of the system they prefer or predict.

The Significance of this omission, however, has too easily been brushed aside only because the responsibility for it is usually somewhat misplaced. To accuse Marx—to take the most frequent example—of failure to describe the operating details and the implications of a socialist society in Das Kapital is indefensible; for that work is exactly what it was intended to be: a highly critical examination of the workings of capitalism as Marx conceived the latter to be. It would be just as vacuous to accuse Mises of neglecting to include, in his Socialism, a discussion of the principles of an enterprise system. But the essential point is that Mises did address himself to just such a task in a separate book—this one​—whereas Marx never did. This, then, is the book which Marx failed to write and which his followers and other critics of liberalism also neglected to do.

The real importance of this book, however, is not to be found in this narrower and more polemical sense, but in a much more fundamental and constructive one. Despite its brevity, this essay manages to speak to a fairly large number of the questions, doubts, and confusions most people face in the course of making up their minds on controversial—often emotional—social and economic issues. Its particular merit is that on all of the questions taken up, Mises provides insights and alternative views that are sure to be useful.

Since the reader will surely want to proceed at once to examine and consider some of these, I shall not intrude with comments of my own, except for one or two irrepressible reflections with which this foreword will close. Instead, we shall next take up a sampling of those (questions and opinions commonly On the minds of people considering controversial issues on which Mises has things to say here that are worth taking into account. For convenience, these are listed more or less in the order in which reference to them occurs in the text.

1. The free market system has been in full operation, and over a long time, but has proved to be unworkable.

2. Liberalism suffers from a fixation on the desirability of increasing production and material well-being and persistently overlooks man’s spiritual needs.

3. Since people don’t always act perfectly rationally, might we not do better, on some issues, to put less reliance on strictly logical arguments and to trust more to our intuitions, impulses, and so-called “gut” feelings?

4. There can be no denying that capitalism is essentially a system that is structured to favor the rich and propertied people at the expense of other classes.

5. Why defend a social system that does not enable each and every individual to realize what he dreams of, or to achieve everything he works for?

6. Is the private ownership of the means of production an obsolete piece of “excess baggage” carried over from earlier periods by people who find it difficult to accept and accommodate to changed conditions?

7. By its very nature, doesn’t a competitive market economy at best tend to work against international peace, and at worst, actually to promote wars?

8. What possible defense can there be for a socio-economic system that produces such great inequalities in income and consumption?

9. Pragmatism aside, can there be a morally defensible justification for private property rights?

10. In opposing government interventions, is liberalism not implicitly bound to advocate some form of anarchy in the end?

11. It is not self-evident that a stable, democratic society is any more possible under a system of decentralized planning, and decision-making than under a centrally planned economy.

12. What reason is there to expect that a capitalist Society will necessarily be any more tolerant of dissension than a socialist one?

13. Capitalism creates and preserves a preferential position for a “leisure class” of resource owners who do not work or contribute in any significant way to the society.

14. The reason the institution of private property has survived for so long is that it has been protected by the state; indeed, as Marx argued, the preservation of private property is the one and only function of the state.

15. The argument that socialism cannot work by itself because it lacks the means of making the required economic calculations is interesting, but are there specific, concrete illustrations of this?

16. Also interesting is the suggestion that government interventions in the operation of private enterprise necessarily lead to distortions and are therefore self-defeating, but can it be shown by specific example that this is necessarily the case?

17. Apart from arguing that alternative proposed systems can be shown to be inferior, are there any direct and positive reasons for advocating a free-enterprise system?

18. Since in order to be workable, all enterprise system requires a large number of relatively small firms in very active competition with each other, has it not been rendered largely obsolete by the development of giant corporations, monopolies, and the like?

19. Inasmuch as the managements of large Corporations tend to develop into bureaucracies, too, isn’t the issue Of private versus public control largely a distinction without a difference?

20. Is the coordination between domestic and foreign policies any more feasible or consistent under Liberalism than under some other system?

21. Isn’t the existence and protection of rights of private ownership a hindrance rather than a help in achieving and maintaining international peace and understanding?

22. It seems obvious that nationalism, colonialism, and imperialism could have evolved only under capitalism.

23. The self-interest of private enterprises is the main impediment in the way of developing a freer movement of goods and people among the world’s regions.

24. Since it represents and fosters the special interests of one class—the resource-owners or capitalists—Liberalism made a serious tactical blunder in not constituting itself a political party and in not pursuing its aims through compromise and accordance with political expediency.

Anyone who has been in a position to observe at close range how certain presuppositions, half-truths, and seemingly self-evident “values” often prevent people from giving full and fair considerations to unfamiliar or unfashionable views in economics will recognize many of the points mentioned in this list. What Mises has to say on each of these should help the general reader (and the beginning student) toward a more comprehensive perspective on social issues and also to deal with his own doubts and suspicions. The suppression of the book in East Germany, to which Mises refers in his preface becomes understandable In this light and is another—and unintended—indication of its importance.

Finally, there are two points on which I should like to make some brief comment. The first is one which occurs a number of times in the book but in such very different contexts and so far apart that its generality and importance may not be noticed.

This is the idea—so essential to the logic of true Liberalism that it is often wise and productive to make what Mises in one place calls “provisional sacrifices.” To claim an immediate benefit, however attractive it may seem, is an act of folly, if, by so doing one shuts off a disproportionately greater later benefit; that is, one so much greater that it more than makes up both for forgoing the present gain and for the trouble of waiting.

Of Course, few reasonable people making this sort of “calculation” would be likely to choose the present benefit under the conditions stipulated. But?and this is the heart of the difficulty?people sometimes do not calculate prudently, nor are they encouraged to do so. The same type of omission occurs under very different circumstances and is far from being true, only of the “ordinary” citizen or consumer. It may apply to businessmen in their pursuit of short-run profits or competitive advantage; to the legislator who favors an immediate increase in minimum-wage rates, in social security benefits, in tariffs, or other taxes; to economists who counsel increasing the money supply or a redistribution of incomes; and to an endless list of others. Indeed, it would be an excellent exercise for the reader to search for further examples both in the major sections of the present book and especially in thinking about contemporary issues and controversies.

Finally, a word of explanation is called for concerning the title of the book. The original work, published in 1927, was entitled Liberalismus and so complemented, as indicated earlier, Mises’ book on socialism. That it was deemed desirable or necessary, when the English translation was prepared in the early sixties, to re-title it The Free and Prosperous Commonwealth illustrates pointedly what I believe to be a real tragedy in intellectual history: the transfer of the term Liberalism.

The underlying issue is not merely terminological; nor can it be brushed aside as just another instance of the more general degeneration of language?an entropy of words, so to say?in which earlier distinctions of meaning and tonality have tended to be lost. There is more here than a devaluation of terms, important as that may be; involved are substantive matters of the greatest practical as well as intellectual significance.

To begin with, the word “liberal” has clear and pertinent etymological roots grounded in the ideal of individual liberty. It also has a valuable historical foundation in tradition and experience, as well as the patrimony of a rich and extensive literature in social philosophy, political thought, belles-lettres, and elsewhere. For these and many other reasons, it is inconceivable that the point of view which this book illustrates should not have exclusive and unassailable claim on the liberal label.

Yet, for all of this, the term Liberalism proved unable to go beyond the nineteenth century or the Atlantic without changing its meaning?and not just slightly but virtually to that of its contrary! The resulting confusions and imprecision are such that one finds it hard to conceive of a deliberate plan that could have succeeded more in obfuscating its content and meaning.

The sadness of all this is compounded by at least two more considerations. One is the astonishing agreeableness with which the titular heirs of liberalism not only let the title slip away, but actually repelled it by their willingness to use it as a term of opprobrium for crypto-Socialists, for whom a more relevant label already existed. In comparison to this spectacle, the ancient fable of the Camel and the Tent looks like a mild case of re-zoning. The other reason for regret is that the loss of term “liberal” made it necessary to have recourse to any number of contrived surrogate terms or tortured circumlocutions (e.g. “libertarian,” “nineteenth century liberalism,” or “classical” liberalism. Is there, incidentally, a “neo-classical” liberalism to which anyone claims memberships).

Is the liberal label by now irreversibly lost to us? In an appendix to the original German edition (and included in the translation), Mises discusses the changing meaning of the term and alludes to the possibility of recapturing it. But by 1962, in his preface to the English translation, he appears to have abandoned any hope of doing so.

I must respectfully disagree. Because, by any reasonable standard, Liberalism belongs to us, I believe we are bound to try to take it back—as a matter of principle, if for no other reason. And there are other reasons. For one thing inasmuch as Liberalism, as Mises points out, includes more than economic freedom, it is really needed as the most suitable and inclusive term. For another, the need to communicate clearly and unambiguously with the general public—whose support is ultimately essential—we need a single, straightforward term and not some verbal contrivance that must sound “mealy-mouthed” to the man in the street. Furthermore, the present time and circumstances are relatively propitious—a growing general disenchantment with government interventions and the reviving awareness of individual freedom of choice can identify more readily with a respected and comprehensive name.

How can we proceed to reclaim our own name? Most probably by simply reversing the process by which we have been losing it; first by ceasing, ourselves using it in its incorrect meaning; then by insistently re-inforcing its correct use (the term has not completely passed over in some parts of the world); and finally by refusing as often as is necessary to go along with its continued occupancy by those with less than no legitimate claim to it—they should be urged to seek a label that fits their views as well as Liberalism does ours.

Some will fret unduly about the inevitable confusion of doctrines?I suspect this concern was partly responsible for our earlier unseemly haste in vacating the tent?but this is a price we should be ready to pay this time. For one thing some confusion still exists as matters stand now, so that a bit more, temporarily, is not intolerable. Also, confusion cuts both ways, so others will share the cost and this time, perhaps, the discomfort will cause the camel to withdraw.

Thus it is that the present reprint reverts to the original title of the book. It is to be hoped that others will concur in using the term without apology or qualification—it needs none—so that Liberalism may ultimately resume its traditional and correct meaning.

Louis M. Spadaro

Fordham University, August, 1977