Economic Prosperity Is a Prerequisite for All Other Kinds of Prosperity
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Recently, while reading Liberalism: In the Classical Tradition, written by Ludwig von Mises in the year 1927, I noted a striking passage, right in the beginning on page 4:
All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself. It is not from a disdain of spiritual goods that liberalism concerns itself exclusively with man’s material well-being, but from a conviction that what is highest and deepest in man cannot be touched by any outward regulation. It seeks to produce only outer well-being because it knows that inner, spiritual riches cannot come to man from without, but only from within his own heart. It does not aim at creating anything but the outward preconditions for the development of the inner life. And there can be no doubt that the relatively prosperous individual of the twentieth century can more readily satisfy his spiritual needs than, say, the individual of the tenth century, who was given no respite from anxiety over the problem of eking out barely enough for survival or from the dangers that threatened him from his enemies.
Reading this passage felt like a lesson in the very basics of psychology. This is not surprising: Mises, in addition to his contributions to the field of economics, is well remembered as someone who had a lot to say about matters across a wide a variety of related social sciences.
As Jeff Deist has commented recently, given the sort of prevailing “stay in your lane” attitude many have today, who knows if Human Action would even be published in the year 2021, given how many areas the book covers.
Regardless, Mises in the passage above delivered quite a prescient insight: that basic survival, along with the attainment of some level of material wealth and comfort, are necessary preconditions for an individual human being to achieve satisfaction in psychological and spiritual areas as well.
Years later, we would hear Mises's views above echoed in Abraham Maslow’s hierarchy of needs, which he developed in 1943 as a core concept of the "humanistic" approach to psychology. The essence of Maslow’s theory is that there are various levels of internal needs that people have; these needs, for conceptual understanding, are described in a hierarchical format such that the needs at higher levels cannot be met without the needs at lower levels being met first.
Safety needs cannot be met unless physiological needs are met; love and belonging needs cannot be met without safety needs first being taken care of; love and belonging is then a requirement for esteem; and finally, there is no “self-actualization” without esteem.
Identifying whether Mises and Maslow ever interacted in any meaningful way, or if Mises had any influence on Maslow at all, is beyond the scope of this article. At least at a first glance, it does not look like Maslow cited Mises, praxeology, or economics in his work behind his well-known theory of humanistic psychology.
Nonetheless, both Mises and Maslow illustrate the importance of economic progress. If we seek to empower human beings to pursue ends above and beyond a mere physical existence, we must also seek to raise the standard of living so that people are able to focus on noneconomic ends more freely and pursue what each individual believes to be spiritual maximization.
Unfortunately—and as Mises warned in Liberalism and elsewhere—as the winds shifted away from laissez-faire and liberalism, peace, prosperity, and human flourishing suffered mightily. The tragic episodes of World War I, the Great Depression, World War II, and the Cold War are just some of the most tragic examples.
In other words, as the world embraces illiberal policies—such as socialism, war, and central planning—economic well-being will suffer. These policies will thus become impoverishing in terms of both economic and noneconomic goals for every individual.