WEBVTT

NOTE 11. A Treatise on Socialism

1
00:00:00.000 --> 00:00:05.040
Chapter 11 A Treatise on Socialism

2
00:00:05.040 --> 00:00:10.560
The publication of the essay on economic calculation in socialist commonwealths was the first instalment

3
00:00:10.560 --> 00:00:18.320
of an entire treatise on socialism that Mises had begun in 1919. This new work would contain

4
00:00:18.320 --> 00:00:23.440
a detailed discussion of the profound implications of the calculation problem, but it was far

5
00:00:23.440 --> 00:00:29.040
more than that, with penetrating observations on virtually all aspects of socialist practice

6
00:00:29.040 --> 00:00:35.640
Socialism Doctrine, Mises painted an encompassing and breathtakingly original picture of socialism.

7
00:00:35.640 --> 00:00:41.040
The production of his new opus occurred under the usual circumstances. On top of full-time

8
00:00:41.040 --> 00:00:47.200
work days and evening seminars, two years of writing after hours produced a 500-page

9
00:00:47.200 --> 00:00:52.040
manuscript, but it is safe to assume that his intellectual work during these two years

10
00:00:52.040 --> 00:00:57.500
was in creating a synthesis of the previous twenty years of reflection. All the discussions

11
00:00:57.500 --> 00:01:02.940
is with his friends and opponents. All silent meditations on books he had read and lectures

12
00:01:02.940 --> 00:01:07.940
he had listened to ever since he became interested in the problems of social theory found their

13
00:01:07.940 --> 00:01:14.980
way into Gemeinwirtschaft. In this way, at least, it was his greatest book to date. Like

14
00:01:14.980 --> 00:01:20.380
his other works, it was full of original insights. The present subject provided him with a greater

15
00:01:20.380 --> 00:01:25.620
variety of topics than, say, the nature of money and fiduciary media. Yet the subject

16
00:01:25.620 --> 00:01:31.260
was not too big to prevent him from writing a true treatise, dealing with virtually all

17
00:01:31.260 --> 00:01:36.900
aspects of the problem. Moreover, in contrast with his later treatise on economics, Human

18
00:01:36.900 --> 00:01:43.460
Action, 1949, he did not burden himself or his readers with lengthy discussions of fundamental

19
00:01:43.460 --> 00:01:49.960
epistemological and conceptual problems. The book was also notable in that Mises here used

20
00:01:49.960 --> 00:01:54.500
the only diagram he would ever display in one of his publications, depicting typical

21
00:01:54.500 --> 00:01:59.460
All shapes are the curve of the utility of labour as a function of labour-time. The result

22
00:01:59.460 --> 00:02:03.940
can only be called astounding. It establishes Mises' reputation as the greatest living

23
00:02:03.940 --> 00:02:09.500
mind in Austria. These were the words Felix Kaufmann used to describe Mises to his future

24
00:02:09.500 --> 00:02:14.700
wife Margit Sereni after they first met in 1925.

25
00:02:14.700 --> 00:02:19.240
And it was the book that turned an entire generation of young intellectuals away from

26
00:02:19.240 --> 00:02:26.400
Marxism and Tuat Classical Liberalism. Lionel Robbins, Friedrich August von Hayek, Wilhelm

27
00:02:26.400 --> 00:02:32.160
Röpke, Eric Wöglin and many others later testified that Gemeindwirtschaft had had a

28
00:02:32.160 --> 00:02:40.200
decisive impact on them in their formative years. Hayek compared Mises to Voltaire, Montesquieu,

29
00:02:40.200 --> 00:02:46.600
Ducville and John Stuart Mill. As one correspondent observed, the success could have been greater

30
00:02:46.600 --> 00:02:52.840
If Mises had managed to find a more striking title than the cumbersome die Gemeinwirtschaft,

31
00:02:52.840 --> 00:02:59.200
literally the Commonwealth or the Common Economy, Fritz G. Steiner wrote in a letter to Mises

32
00:02:59.200 --> 00:03:05.200
dated December 8th, 1930, It was always my opinion that its current title was the reason

33
00:03:05.200 --> 00:03:10.520
this brilliant book did not find the broad circulation it could have earned. Anglo-Saxon

34
00:03:10.520 --> 00:03:15.040
readers would have a less difficult time finding out what the book was all about when thirteen

35
00:03:15.040 --> 00:03:24.560
In the opening of part one, Mises analysed socialism not on its own merits but from a

36
00:03:24.560 --> 00:03:29.540
comparative point of view, contrasting it to the workings of a society organised according

37
00:03:29.540 --> 00:03:34.520
to classical liberal principles. Following in the tradition of Frederic Bastiat and other

38
00:03:34.520 --> 00:03:40.160
libertarian philosophers, Mises here emphasised the central role private property plays in

39
00:03:40.160 --> 00:03:45.440
and the Constitution of Free Societies. He also stressed the importance of contract and

40
00:03:45.440 --> 00:03:50.480
democracy for the peaceful resolution of conflicts, and made a brilliant application of these

41
00:03:50.480 --> 00:03:56.720
considerations to the case of the family or, as some would say today, gender relations.

42
00:03:56.720 --> 00:04:01.960
In the next four parts of the book, parts two through five, Mises elaborated four general

43
00:04:01.960 --> 00:04:08.240
theses. One, the promises of socialism were empty because its program for a central direction

44
00:04:08.240 --> 00:04:13.640
Production of production was a theoretical and practical impossibility. 2. There was

45
00:04:13.640 --> 00:04:19.740
no process of social evolution that necessarily led to socialist regimes. 3. None of the major

46
00:04:19.740 --> 00:04:25.680
ethical justifications of socialism suited up to rational scrutiny. And 4. The true character

47
00:04:25.680 --> 00:04:31.220
of socialism was not to improve the human condition but to worsen it, because socialist

48
00:04:31.220 --> 00:04:36.100
policies destroy the capital base of society.

49
00:04:36.100 --> 00:04:44.520
One of the most common charges against the classical liberal program of elevating the

50
00:04:44.520 --> 00:04:50.220
respect of private property into the first principle of human cooperation is that private

51
00:04:50.220 --> 00:04:55.740
property benefits the haves at the expense of the great mass of have-nots. As the word

52
00:04:55.740 --> 00:05:00.940
private insinuates, the have-nots are deprived of the benefits of the goods that are under

53
00:05:00.940 --> 00:05:10.340
Mises addresses this charge head-on in the opening pages of socialism by demonstrating

54
00:05:10.340 --> 00:05:17.620
the social function of private property. To have a good in the economic sense, Mises argues,

55
00:05:17.620 --> 00:05:22.120
means to enjoy the benefits derived from this good. There are benefits that can only be

56
00:05:22.120 --> 00:05:27.640
enjoyed by one person at a time. This is most notably the case with certain personal services

57
00:05:27.640 --> 00:05:32.520
Things such as haircuts, as well as with a great number of consumer goods, such as food

58
00:05:32.520 --> 00:05:39.200
stuffs, of which a given unit can only be consumed, that is, enjoyed, by one person.

59
00:05:39.200 --> 00:05:43.280
Things are somewhat different in the case of durable consumer goods, such as TV sets

60
00:05:43.280 --> 00:05:48.320
or sofas, which can be enjoyed by several people, though not always at the same time.

61
00:05:48.320 --> 00:05:53.400
But things are fundamentally different once we turn to production goods, such as factories,

62
00:05:53.400 --> 00:05:56.120
plantations, machine tools and so on.

63
00:05:56.120 --> 00:06:00.680
The benefits derived from these goods do not exclusively accrue to their owner, that is,

64
00:06:00.680 --> 00:06:05.600
to the person who controls them in a narrow legal sense. Rather, they accrue to the consumers

65
00:06:05.600 --> 00:06:10.640
of the final consumer goods that are produced with the help of those production goods. By

66
00:06:10.640 --> 00:06:14.600
the very nature of things, therefore, the benefits derived from factors of production

67
00:06:14.600 --> 00:06:20.720
cannot be limited to their legal owners. It is therefore not these legal owners who have

68
00:06:20.720 --> 00:06:26.480
them in the economic sense, the economic halves of production goods are older people who enjoy

69
00:06:26.480 --> 00:06:32.800
the consumer goods produced with their help. Now the crucial point is that this is truly

70
00:06:32.800 --> 00:06:38.720
independent of the prevalent social organisation. Consumers have the factors of production not

71
00:06:38.720 --> 00:06:44.520
only in a socialist system, in which they are the collective legal owners of those factors,

72
00:06:44.520 --> 00:06:50.880
but also in capitalism. Mises explained, To have production goods in the economic sense,

73
00:06:50.880 --> 00:06:56.560
that is, to make them serve one's own economic purpose, it is not necessary to have them physically

74
00:06:56.560 --> 00:07:01.800
in the way that one must have consumption goods, if one is to use them up or to use

75
00:07:01.800 --> 00:07:07.980
them lastingly. To drink coffee I do not need to own a coffee plantation in Brazil, an ocean

76
00:07:07.980 --> 00:07:12.800
steamer and a coffee roasting plant, though all these means of production must be used

77
00:07:12.800 --> 00:07:18.000
to bring a cup of coffee to my table, sufficient that others own these means of production

78
00:07:18.000 --> 00:07:20.700
and employ them for me.

79
00:07:20.700 --> 00:07:25.360
In the society which divides labour, no one is exclusive owner of the means of production,

80
00:07:25.360 --> 00:07:30.620
either of the material things or of the personal element, capacity to work. All means of production

81
00:07:30.620 --> 00:07:36.340
render services to everyone who buys or sells on the market. Hence, if we are disinclined

82
00:07:36.340 --> 00:07:41.720
here to speak of ownership as shared between consumers and owners of the means of production,

83
00:07:41.720 --> 00:07:46.860
We should have to regard consumers as the true owners in the natural sense, and describe

84
00:07:46.860 --> 00:07:51.500
those who are considered as the owners in the legal sense as administrators of other

85
00:07:51.500 --> 00:07:57.200
people's property. Ever wary of terminological innovations, Mises stressed that he would

86
00:07:57.200 --> 00:08:01.860
not henceforth refer to consumers as the true owners of the means of production, but use

87
00:08:01.860 --> 00:08:05.400
the accepted terminology according to which the owners of the means of production are

88
00:08:05.400 --> 00:08:11.520
those who have immediate legal control over them. But of course this terminological decision

89
00:08:11.520 --> 00:08:16.760
could not alter his findings. Mises had delivered the explanation of the fact recognized by

90
00:08:16.760 --> 00:08:22.600
all serious opponents of classical liberalism, from Marx to Philipowitz, that capitalism

91
00:08:22.600 --> 00:08:27.780
was not just a rip-off to benefit the happy few at the expense of the great majority.

92
00:08:27.780 --> 00:08:32.700
It was no accident that capitalism had incomparably improved the living conditions of the broad

93
00:08:32.700 --> 00:08:38.640
masses. It was in the very nature of capital accumulation that its ultimate benefits accrued

94
00:08:38.640 --> 00:08:44.640
to the community of consumers, that is, to all members of society.

95
00:08:44.640 --> 00:08:49.200
Some hundred and sixty years earlier, Adam Smith had analysed the economic impact of

96
00:08:49.200 --> 00:08:55.880
unequal land ownership in very similar terms. He argued that this inequality had a negligible

97
00:08:55.880 --> 00:09:00.920
impact on how the land was actually used. Land owners, he said, are led by an invisible

98
00:09:00.920 --> 00:09:05.560
hand to make nearly the same distribution of the necessaries of life which would have

99
00:09:05.560 --> 00:09:10.960
had been made had the earth been divided into equal portions among its inhabitants. The

100
00:09:10.960 --> 00:09:15.600
only question was whether socialistic schemes could enhance the living conditions of the

101
00:09:15.600 --> 00:09:20.640
working classes beyond what capitalism had in store for them, and Mises had already answered

102
00:09:20.640 --> 00:09:26.040
this question. In the light of his 1920 article on socialist calculation, the promise of greater

103
00:09:26.040 --> 00:09:30.840
productivity under socialism looked rather vacuous.

104
00:09:30.840 --> 00:09:36.080
The Utilitarian Case for Democracy Closer analysis revealed that private property

105
00:09:36.080 --> 00:09:40.800
and the factors of production was not just a privilege of the happy few capitalists but

106
00:09:40.800 --> 00:09:45.440
had a genuine social function. Mises brought the same perspective to bear on government

107
00:09:45.440 --> 00:09:51.160
and thus discovered an original rationale for democracy. This institution was not an

108
00:09:51.160 --> 00:09:56.720
end in itself, it fulfilled the social function that no other system of government could fulfill.

109
00:09:56.720 --> 00:10:03.920
Traditionally, the champions of democracy had defended this political form with the help of arguments rooted in ethics or natural law.

110
00:10:03.920 --> 00:10:12.320
All men are born equal, they claimed, and therefore all men should be equally involved in political decision-making, but this could only be realized in a democracy.

111
00:10:12.320 --> 00:10:26.320
Mises did not find this line of reasoning convincing. He believed it was rather obvious that all men were born unequal, and yet little patience with arguments based on claims about natural law, which he considered to be a fiction of the intellect.

112
00:10:26.320 --> 00:10:37.120
No agreement could ever be reached on the fiction. Rather, it was to be expected that everybody made up his own version of natural law to buttress his political agenda.

113
00:10:37.120 --> 00:10:47.120
Thus, natural law considerations were simply unfit to be applied in politics, because the very point of politics was, from Mises's perspective at any rate, to resolve conflicts.

114
00:10:47.120 --> 00:10:53.320
In socialism, it became obvious that Mises believed in Republican democracy nevertheless,

115
00:10:53.320 --> 00:10:57.720
but his rationale for endorsing it differed substantially from the traditional justification

116
00:10:57.720 --> 00:11:03.320
of democracy. For Mises, social institutions could be justified only to the extent that

117
00:11:03.320 --> 00:11:08.300
they improved the living conditions of the members of society. Accordingly, the starting

118
00:11:08.300 --> 00:11:12.740
point for his reflections was that these living conditions could be improved only through

119
00:11:12.740 --> 00:11:23.620
to improve living conditions as far as possible was therefore tantamount to encouraging the

120
00:11:23.620 --> 00:11:29.460
division of labour and to making it as productive as possible. This had been the guiding light

121
00:11:29.460 --> 00:11:33.980
in his analysis of the problems of economic calculation, which had led him to the conclusion

122
00:11:33.980 --> 00:11:38.380
that in capitalism the division of labour is more productive than in socialism because

123
00:11:38.380 --> 00:11:42.440
only in the former could it be based on economic calculation.

124
00:11:42.440 --> 00:11:47.440
In socialism, Mises stressed another implication of the same basic idea. Labour can only be

125
00:11:47.440 --> 00:11:52.380
divided among people who live in peace with one another. Violent conflicts necessarily

126
00:11:52.380 --> 00:11:57.780
disrupt social cooperation. They split society into parties that work against one another

127
00:11:57.780 --> 00:12:02.720
rather than for one another. They destroy scarce resources rather than producing more

128
00:12:02.720 --> 00:12:07.880
resources. The improvement of living conditions therefore requires choosing those political

129
00:12:07.880 --> 00:12:20.080
It's function is to make peace, to avoid violent revolutions.

130
00:12:20.080 --> 00:12:25.160
In non-democratic states, too, only a government which can count on the backing of public opinion

131
00:12:25.160 --> 00:12:28.080
is able to maintain itself in the long run.

132
00:12:28.080 --> 00:12:32.600
The strength of all government lies not in weapons, but in the spirit which puts the

133
00:12:32.600 --> 00:12:35.480
weapons at their disposal.

134
00:12:35.480 --> 00:12:40.880
Those in power, always necessarily a small minority against an enormous majority, can

135
00:12:40.880 --> 00:12:47.100
attain and maintain power only by making the spirit of the majority pliant to their rule.

136
00:12:47.100 --> 00:12:51.960
If there is a change, if those on who support the government depend lose the conviction

137
00:12:51.960 --> 00:12:57.820
that they must support this particular government, then the ground is undermined beneath it and

138
00:12:57.820 --> 00:13:03.360
it must sooner or later give way. Persons and systems in the government of non-democratic

139
00:13:03.360 --> 00:13:07.760
Economic states can be changed by violence alone. The system and the individuals that

140
00:13:07.760 --> 00:13:12.720
have lost the support of the people are swept away in the upheaval, and the new system and

141
00:13:12.720 --> 00:13:18.800
other individuals take their place. But any violent revolution costs blood and money.

142
00:13:18.800 --> 00:13:24.280
Lives are sacrificed, and destruction impedes economic activity. Democracy tries to prevent

143
00:13:24.280 --> 00:13:29.640
such material loss and the accompanying physical shock by guaranteeing accord between the will

144
00:13:29.640 --> 00:13:48.640
The Will of the State has expressed through the organs of the State and the will of the majority. This it achieves by making the organs of the State legally dependent on the will of the majority of the moment. In internal policy it realizes what pacifism seeks to realize in external policy.

145
00:13:48.640 --> 00:13:54.800
He notes that Marcellus of Padua seemed to have urged along similar lines in Defensel Parties.

146
00:13:55.440 --> 00:14:01.200
Today this line of argument is often attributed to Carl Popper, the open society and its enemies,

147
00:14:01.200 --> 00:14:06.560
but the young Popper is likely to have learned it, as did many other intellectuals of his time,

148
00:14:06.560 --> 00:14:12.720
from socialism. Notice that the premise of Mises' argument that governments cannot rule against the

149
00:14:12.720 --> 00:14:18.320
will of the majority has a long tradition in Western thought. Mises did not blindly advocate

150
00:14:18.320 --> 00:14:25.680
Quoting Max Weber, Mises said,

151
00:14:48.320 --> 00:14:53.620
The entire man, dilettante politicians, are of no use. And he also stressed that democracy

152
00:14:53.620 --> 00:14:58.620
must not be conceived as the unlimited rule of the general will. There is really no essential

153
00:14:58.620 --> 00:15:02.200
difference between the unlimited power of the democratic state and the unlimited power

154
00:15:02.200 --> 00:15:07.560
of the autocrat. The idea that carries away our demagogues and their supporters, the idea

155
00:15:07.560 --> 00:15:11.800
that the state can do whatever it wishes, and that nothing should resist the will of

156
00:15:11.800 --> 00:15:15.780
the sovereign people, has done more evil, perhaps, than decease our mania of degenerate

157
00:15:15.780 --> 00:15:23.640
Mises concluded that only within the framework of liberalism does democracy fulfil a social

158
00:15:23.640 --> 00:15:28.700
function. Democracy without liberalism is a hollow form. The great danger inherent in

159
00:15:28.700 --> 00:15:34.120
democracy is to turn the libertarian postulate of equality before the law into the postulate

160
00:15:34.120 --> 00:15:39.820
of economic equality. Here is a fertile field for the demagogue. Whoever stirs up the resentment

161
00:15:39.820 --> 00:15:44.960
of the poor against the rich can count on securing a big audience. Democracy creates

162
00:15:44.960 --> 00:16:05.360
Political Economy of the Family

163
00:16:05.360 --> 00:16:10.840
One of the most successful rhetorical ploys in defence of socialism is to present socialism

164
00:16:10.840 --> 00:16:17.240
Capitalism as going beyond liberalism in liberating the human being. Socialists such as Karl Marx

165
00:16:17.240 --> 00:16:23.040
and Friedrich Engels had praised capitalism for unfettering production, but capitalism

166
00:16:23.040 --> 00:16:27.920
had not gone far enough in abolishing the institutions that hampered the flowering of

167
00:16:27.920 --> 00:16:33.080
the human race. There was still private ownership in the means of production. Socialism would

168
00:16:33.080 --> 00:16:38.600
do away with this last bulwark of the exploitation of man by man. Only then would the reign of

169
00:16:38.600 --> 00:16:46.820
The Socialist feminists of the 18th and 19th century had used an analogous argument to

170
00:16:46.820 --> 00:16:51.700
make their case. They conceded that the condition of women had vastly improved in the course

171
00:16:51.700 --> 00:16:57.800
of the previous centuries, but it had not improved enough. Further progress was prevented

172
00:16:57.800 --> 00:17:02.920
through the institution of marriage, which enshrined male domination over the inherently

173
00:17:02.920 --> 00:17:10.000
and curtailed their productive powers. The solution was to outlaw marriage and to replace

174
00:17:10.000 --> 00:17:14.680
it with spontaneous and loose bonds between mates.

175
00:17:14.680 --> 00:17:19.460
The exact analogy in the two arguments could not fail to attract Mises's attention just

176
00:17:19.460 --> 00:17:25.480
as he had shown that the socialist case against the institution of private property was fallacious,

177
00:17:25.480 --> 00:17:31.000
so he now proceeded in socialism to denounce the fallacies of the feminist case against

178
00:17:31.000 --> 00:17:36.520
the Institution of Marriage. He showed that the historical progress in the condition of

179
00:17:36.520 --> 00:17:41.960
women had resulted from advances of the contractual principle, which is based on the recognition

180
00:17:41.960 --> 00:17:47.000
of private property rights and from the elimination of violence against the property rights of

181
00:17:47.000 --> 00:17:54.240
women. Men could dominate women only so long as they owned their wives, person and property.

182
00:17:54.240 --> 00:17:58.880
At the time of his writing, this was still the case in various Western countries. For

183
00:17:58.880 --> 00:18:04.360
For example, in an early case of social engineering, the French god Napoleon paired and shrined

184
00:18:04.360 --> 00:18:09.680
male dominance into the law by making the husband the sole legal owner of all family

185
00:18:09.680 --> 00:18:16.380
assets. The female right to vote had been introduced in Austria only in 1918. The dates

186
00:18:16.380 --> 00:18:25.420
for other countries, Germany 1919, Canada 1920, Great Britain 1928, France 1946, Italy

187
00:18:25.420 --> 00:18:36.260
40, 1946, Japan, 1947, Switzerland, 1971. When women came to be recognised as legitimate

188
00:18:36.260 --> 00:18:41.460
property owners, the economic basis for that domination was destroyed. It followed that

189
00:18:41.460 --> 00:18:46.380
feminism was but a branch of liberalism to the extent that it advocated liberty within

190
00:18:46.380 --> 00:18:51.980
the confines of private property and full legal equality between men and women. These

191
00:18:51.980 --> 00:18:57.220
These claims were indeed the rational basis for the development of individual personality.

192
00:18:57.220 --> 00:19:01.700
Woman's struggle to preserve her personality in marriage is part of that struggle for personal

193
00:19:01.700 --> 00:19:07.100
integrity which characterises the rationalist society of the economic order based on private

194
00:19:07.100 --> 00:19:12.320
ownership of the means of production. It is not exclusively to the interest of woman that

195
00:19:12.320 --> 00:19:18.740
she should succeed in this struggle. To contrast the interests of men and women, as extreme

196
00:19:18.740 --> 00:19:24.460
Feminism feminists try to do is very foolish. All mankind would suffer if woman should fail

197
00:19:24.460 --> 00:19:30.260
to develop her ego, and be unable to unite with man as equal, free-born companions and

198
00:19:30.260 --> 00:19:37.100
comrades. On another page we find, So far as feminism seeks to adjust the legal position

199
00:19:37.100 --> 00:19:43.100
of woman to that of man, so far as it seeks to offer her legal and economic freedom to

200
00:19:43.100 --> 00:19:49.500
to develop and act in accordance with their inclinations, desires and economic circumstances.

201
00:19:49.500 --> 00:19:54.620
So far it is nothing more than a branch of the great liberal movement, which advocates

202
00:19:54.620 --> 00:20:00.180
peaceful and free evolution. When going beyond this, it attacks the institutions of social

203
00:20:00.180 --> 00:20:05.440
life under the impression that it will thus be unable to remove the natural barriers.

204
00:20:05.440 --> 00:20:10.860
It is a spiritual child of socialism. But socialist feminists got it wrong. They called

205
00:20:10.860 --> 00:20:26.660
The case against private property was untenable because private property fulfilled a social

206
00:20:26.660 --> 00:20:32.420
function that no other institution could. But what was the social function of marriage?

207
00:20:32.420 --> 00:20:36.260
There had to be such a function. After all, there was no legal obligation for women to

208
00:20:36.260 --> 00:20:42.000
To get married, they chose to marry. Therefore they could easily avoid the fate that, according

209
00:20:42.000 --> 00:20:47.900
to the feminists, marriage would entail for them. But why did women choose to marry? He

210
00:20:47.900 --> 00:20:53.420
argued that marriage served specific female needs, and that it served them better than

211
00:20:53.420 --> 00:20:59.660
any alternative social arrangement. These specific needs were rooted in the fact that

212
00:20:59.660 --> 00:21:15.180
Clearly, Mises would not do well in the court of current left-wing feminist opinion. However,

213
00:21:15.180 --> 00:21:20.540
the opinions he professed in socialism were not the idiosyncrasies of a resentful chauvinist.

214
00:21:20.540 --> 00:21:25.100
Rather, they were a cautiously worded version of the most widely accepted theory of gender

215
00:21:25.100 --> 00:21:30.640
The General Theory of Men and Women that Otto Weininger had construed at the turn

216
00:21:30.640 --> 00:21:36.300
of the century based on a comprehensive review of the scientific data available at the time.

217
00:21:36.300 --> 00:21:41.420
Weininger distinguished between a male principle M and a female principle F that were present

218
00:21:41.420 --> 00:21:47.340
in different proportions in each individual. Women were of course dominated by the F principle,

219
00:21:47.340 --> 00:21:52.220
said Weininger. The state of sexual arousal is for the woman merely the highest increase

220
00:21:52.220 --> 00:21:59.380
of her total being. The latter is always and quite sexual. F is completely immersed in

221
00:21:59.380 --> 00:22:04.020
her sex life, in the sphere of intercourse and reproduction, that is, in the relation

222
00:22:04.020 --> 00:22:10.500
to man and child. Her existence is completely filled up with these things, while M is not

223
00:22:10.500 --> 00:22:17.180
merely sexual. Thus, whereas F is totally fulfilled and taken by sexuality, M knows

224
00:22:17.180 --> 00:22:25.100
Fight and Play, Social Ability and Galaga, Discussion and Science, Business and Politics,

225
00:22:25.100 --> 00:22:33.180
Religion and Art, F is nothing but sexuality, M is sexual and also something above.

226
00:22:33.180 --> 00:22:37.900
In chapter 12, Weininger goes on to argue that the only vital positive interest of women

227
00:22:37.900 --> 00:22:43.820
is in sexual intercourse. Only because women are also essentially passive and receptive,

228
00:22:43.820 --> 00:22:50.900
They tend to adopt male values such as chastity and interest in art and science. Thus it comes

229
00:22:50.900 --> 00:22:56.660
to an inner conflict between their true sexual nature and the values that they officially

230
00:22:56.660 --> 00:23:01.800
endorse. The natural reaction is hysteria, about which Weininger has not much to say

231
00:23:01.800 --> 00:23:07.060
except that Boyer and Freud study it with a promising new method. This is why women

232
00:23:07.060 --> 00:23:12.980
had a tendency to choose marriage, and by that same decision they renounced the achievements

233
00:23:12.980 --> 00:23:30.180
It may be that a woman is able to choose between renouncing either the most profound womanly

234
00:23:30.180 --> 00:23:35.580
joy, the joy of motherhood, or the more masculine development of her personality in action and

235
00:23:35.580 --> 00:23:41.460
endeavour. It may be that she has no such choice. It may be that in suppressing her

236
00:23:41.460 --> 00:23:54.560
The truth about this, the fact remains that when she becomes a mother, with or without

237
00:23:54.560 --> 00:24:01.680
marriage, she is prevented from leading her life as freely and independently as man. Extraordinarily

238
00:24:01.680 --> 00:24:06.160
gifted women may achieve fine things in spite of motherhood, but because the functions of

239
00:24:06.160 --> 00:24:12.600
of Sex have the first claim upon woman, genius and the greatest achievements have been denied

240
00:24:12.600 --> 00:24:16.120
her. Mises was one of the few men in a leadership

241
00:24:16.120 --> 00:24:21.960
position who actively promoted young female intellectuals. Lene Liese, Marianne Herzfeld

242
00:24:21.960 --> 00:24:28.600
and others wrote their doctoral dissertations under his supervision. Liese, Herzfeld, Ilse

243
00:24:28.600 --> 00:24:33.840
Mintz, Martha Stephanie Braun, Elisabeth de Fruzzi and others were regular members of

244
00:24:33.840 --> 00:25:01.840
When Mises rejected the claims of radical

245
00:25:01.840 --> 00:25:06.440
Social Feminism. It was not because he lacked sympathy with his female associates, or because

246
00:25:06.440 --> 00:25:11.920
he was driven by some vicious desire to keep women in their place, rather it was intellectual

247
00:25:11.920 --> 00:25:17.360
integrity that led him to insist on his views about gender relations, views that even in

248
00:25:17.360 --> 00:25:24.860
his circle were likely to be resented by ambitious women such as M. S. Barne. As Mises saw it,

249
00:25:24.860 --> 00:25:29.500
these were the facts, and it was pointless to argue around them. The difference between

250
00:25:29.500 --> 00:25:35.000
Human sexual character and sexual destiny can no more be decreed away than other inequalities

251
00:25:35.000 --> 00:25:41.260
of mankind. It is not marriage which keeps woman inwardly unfree, but the fact that her

252
00:25:41.260 --> 00:25:47.080
sexual character demands surrender to a man, and that her love for husband and children

253
00:25:47.080 --> 00:25:52.740
consumes her best energies. There is no human law to prevent the woman who looks for happiness

254
00:25:52.740 --> 00:25:58.140
in a career from renouncing love and marriage, but those who do not renounce them are not

255
00:25:58.140 --> 00:26:26.860
Implications of the Calculation Problem

256
00:26:26.860 --> 00:26:31.840
The discussion of gender relations closed the first part of the book. In part two Mises

257
00:26:31.840 --> 00:26:38.380
turned to examining socialism on its own terms. After the exposition of the socialist calculation

258
00:26:38.380 --> 00:26:44.820
argument he reprinted the 1920 article. He set out to discuss its further implications.

259
00:26:44.820 --> 00:26:49.340
Paymentful work would be quite arbitrary, for the methods of calculating value used

260
00:26:49.340 --> 00:26:53.800
in a free economic society based on private ownership of the means of production would

261
00:26:53.800 --> 00:26:59.040
would be inaccessible to it, since, as we have seen, such imputation is impossible in

262
00:26:59.040 --> 00:27:05.420
a socialistic society. Economic facts would clearly limit the power of society to reward

263
00:27:05.420 --> 00:27:11.920
the labourer arbitrarily. In the long run, the wage total can in no circumstances exceed

264
00:27:11.920 --> 00:27:17.800
the income of society. Within this limit, however, the community is free to act. It

265
00:27:17.800 --> 00:27:23.560
can decide to pay all work equally, regardless of quality. It can just as easily make a

266
00:27:23.560 --> 00:27:39.680
In practice this meant that the individual members were defenceless against arbitrary

267
00:27:39.680 --> 00:27:44.640
decisions taken by the community or rather, as it was in practice, by those in charge

268
00:27:44.640 --> 00:27:49.860
of the central decisions. The directors of the socialist commonwealth would decide about

269
00:27:49.860 --> 00:27:56.140
about the allocation of all factors of production. This implied not only that they decide how

270
00:27:56.140 --> 00:28:02.140
each stretch of land should be used, but also how to allocate human resources. The directors

271
00:28:02.140 --> 00:28:07.500
would be in a position to give orders to individuals and families, telling them where to move and

272
00:28:07.500 --> 00:28:13.820
live and when to move on. They would do this not out of bad faith or personal abuse of

273
00:28:13.820 --> 00:28:18.560
power, but because it was in the very nature of socialism. Common ownership of all the

274
00:28:18.560 --> 00:28:33.880
The Socialist Community is a great authoritarian association in which orders are issued and

275
00:28:33.880 --> 00:28:40.200
obeyed. This is what is implied by the words planned economy and the abolition of anarchy

276
00:28:40.200 --> 00:28:45.560
of production. The inner structure of a socialist community is best understood if we compare

277
00:28:45.560 --> 00:28:51.200
with the inner structure of an army. Socialism could not alter the fact that the individual

278
00:28:51.200 --> 00:28:55.840
mind was free but the mind cannot express itself if all physical means of expression

279
00:28:55.840 --> 00:29:02.760
are under the control of the authorities. No censor, no emperor, no pope has ever possessed

280
00:29:02.760 --> 00:29:08.480
the power to suppress intellectual freedom which would be possessed by a socialist community.

281
00:29:08.480 --> 00:29:14.620
This may seem obvious to us now but in 1922 this assertion seemed to be contradicted by

282
00:29:14.620 --> 00:29:21.100
by recent events in Russia, where a new artistic avant-garde had risen under the Soviet regime,

283
00:29:21.100 --> 00:29:26.940
Mises remained unshaken. The nationalisation of intellectual life, which must be attempted

284
00:29:26.940 --> 00:29:32.500
under socialism, must make all intellectual progress impossible. It is possible to deceive

285
00:29:32.500 --> 00:29:38.300
oneself about this because in Russia new kinds of art have become the fashion, but the authors

286
00:29:38.300 --> 00:29:43.880
of these innovations were already working when the Soviets came into power. They sided

287
00:29:43.880 --> 00:30:03.840
Subsequent events proved his point. Long before the Soviet Empire collapsed in 1989, the artistic

288
00:30:03.840 --> 00:30:09.120
and intellectual institutions in the countries of Eastern Europe had enshrined the avant-garde

289
00:30:09.120 --> 00:30:15.600
of the 1920s and 1930s into eternal standards of truth and beauty, just as the writings

290
00:30:15.600 --> 00:30:21.280
of Marx and Engels were treated as holy writ. The Bolshoi Ballet in Moscow dutifully continued

291
00:30:21.280 --> 00:30:26.560
the revolutionary tradition, and the Berliner Ensemble faithfully replicated the plays of

292
00:30:26.560 --> 00:30:31.080
Bertolt Brecht in the same way they had always been played.

293
00:30:31.080 --> 00:30:35.320
Mises also restated the more conventional arguments concerning work and motivation,

294
00:30:35.320 --> 00:30:40.020
starting from the distinction between immediate satisfaction derived from labour, the satisfaction

295
00:30:40.020 --> 00:30:45.700
derived from the work itself, and indirect satisfaction, remuneration. Mises contested

296
00:30:45.700 --> 00:30:50.540
the assumption that the establishment of a socialist regime would by itself turn whatever

297
00:30:50.540 --> 00:30:57.740
work had to be performed into a pure joy. Absurd as it was, this assumption was pervasive

298
00:30:57.740 --> 00:31:03.220
among socialists. Mises observed that in a socialist regime the individual worker would

299
00:31:03.220 --> 00:31:08.420
would reap but a fraction of the return of his labours. There was therefore a strong

300
00:31:08.420 --> 00:31:14.540
incentive for each member of a socialist society to avoid hard work.

301
00:31:14.540 --> 00:31:20.020
So far as can be judged, there is no convincing reason for supposing that labour under socialism

302
00:31:20.020 --> 00:31:25.420
would be more productive than under capitalism. On the contrary, it can be asserted that under

303
00:31:25.420 --> 00:31:30.420
a system which provides no incentive to the worker to overcome the irksomeness of labour

304
00:31:30.420 --> 00:31:36.600
and to strive his utmost, the productivity of labour must, inevitably, decline.

305
00:31:36.600 --> 00:31:41.560
Mises argued that this problem went beyond the supply of labour. It also affected the

306
00:31:41.560 --> 00:31:46.800
supply of capital. The decision to save one's income increases the capital available for

307
00:31:46.800 --> 00:31:52.060
productive ventures. As in the case of all capital goods, the benefits derived from saving

308
00:31:52.060 --> 00:31:59.520
do not accrue primarily to the capitalist himself, but to the consumers. In modern parlance,

309
00:31:59.520 --> 00:32:05.560
Banking is a public good, but where is the incentive to save in a socialist regime?

310
00:32:05.560 --> 00:32:12.040
To maintain and accumulate capital involves costs. It involves sacrificing present satisfactions

311
00:32:12.040 --> 00:32:17.320
in order that greater satisfactions may be obtained in the future. Under capitalism the

312
00:32:17.320 --> 00:32:22.420
sacrifice has to be made by the possessors of the means of production, and those who,

313
00:32:22.420 --> 00:32:28.040
by limiting consumption, are on the way to being possessors of the means of production.

314
00:32:28.040 --> 00:32:32.920
The advantage which they thereby procure for the future does indeed not entirely accrue

315
00:32:32.920 --> 00:32:38.920
to them. They are obliged to share it with those whose incomes are derived from work,

316
00:32:38.920 --> 00:32:43.680
since other things being equal, the accumulation of capital increases the marginal productivity

317
00:32:43.680 --> 00:32:49.640
of labour, and therewith wages. But the fact that, in the main, the gain of not living

318
00:32:49.640 --> 00:32:54.920
beyond their means, that is, not consuming capital, and saving, that is, increasing capital,

319
00:32:54.920 --> 00:33:00.980
does pay them is a sufficient stimulus to incite them to maintain and extend it, and

320
00:33:00.980 --> 00:33:06.200
this stimulus is the stronger, the more completely their immediate needs are satisfied. For the

321
00:33:06.200 --> 00:33:10.600
less urgent are those present needs, which are not satisfied when provision is made for

322
00:33:10.600 --> 00:33:16.980
the future, the easier it is to make the sacrifice. Under capitalism, the maintenance and accumulation

323
00:33:16.980 --> 00:33:22.480
of capital is one of the functions of the unequal distribution of property and income.

324
00:33:22.480 --> 00:33:26.560
and the moral hazard, the other nemesis of socialism.

325
00:33:26.560 --> 00:33:31.140
Having dealt with the consequences that in one way or another resulted from the inability

326
00:33:31.140 --> 00:33:36.600
of a socialist management to calculate the contributions of the various factors of production,

327
00:33:36.600 --> 00:33:41.540
Mises pointed out that there was another equally insurmountable obstacle for the realisation

328
00:33:41.540 --> 00:33:43.720
of the socialist scheme.

329
00:33:43.720 --> 00:33:48.480
It is impossible to find a form of organisation which makes the economic action of the individual

330
00:33:48.480 --> 00:33:53.600
independent of the cooperation of other citizens without leaving it open to all the risks of

331
00:33:53.600 --> 00:34:00.360
mere gambling. In other words, socialism makes subordinate decision-makers irresponsible.

332
00:34:00.360 --> 00:34:06.560
By socialising the costs of individual action, socialism induces moral hazard at every level

333
00:34:06.560 --> 00:34:11.820
of society. All members of a socialist society know that most of the negative consequences

334
00:34:11.820 --> 00:34:17.280
of their behaviour fall on others. Everyone has an incentive to behave more recklessly

335
00:34:17.280 --> 00:34:22.820
be then in a strict private property system where costs are borne by individual actors,

336
00:34:22.820 --> 00:34:27.400
it is impossible to solve the problem with payment schemes to provide incentives for

337
00:34:27.400 --> 00:34:32.640
suitable behaviour. The problem is not nearly so much the question of the manager's share

338
00:34:32.640 --> 00:34:38.640
in the profit as of his share in the losses which arise through his conduct of business,

339
00:34:38.640 --> 00:34:43.720
except in a purely moral sense the property-less manager of a public undertaking can be made

340
00:34:43.720 --> 00:35:13.200
In capitalism, the individual responsibility of each property owner for his property is

341
00:35:13.200 --> 00:35:18.700
is a strong force that harmonises its actions with those of all other members of society.

342
00:35:18.700 --> 00:35:24.220
In contrast, a characteristic feature of socialism is to sever the link between an action and

343
00:35:24.220 --> 00:35:30.600
its consequences. Under such conditions, individual actions are necessarily out of step with what

344
00:35:30.600 --> 00:35:35.640
is required for the system to perform well. This not only concerned questions of business

345
00:35:35.640 --> 00:35:42.100
management but also private decisions about the number and timing of offspring. In socialist

346
00:35:42.100 --> 00:35:46.900
Systems, individuals had no incentive to harmonise the number of births with the limitations

347
00:35:46.900 --> 00:35:50.340
of the means of subsistence. Mises concluded,

348
00:35:50.340 --> 00:35:57.060
Without coercive regulation of the growth of population, a socialist community is inconceivable.

349
00:35:57.060 --> 00:36:01.300
This too turned out to be a prophetic statement. The People's Republic of China found it

350
00:36:01.300 --> 00:36:06.460
necessary to limit births with the help of the death penalty. There is only one remedy

351
00:36:06.460 --> 00:36:13.100
The imposition of strict rules for subordinate behaviour. To safeguard the economic system

352
00:36:13.100 --> 00:36:17.500
against the recklessness of irresponsible underlings, the central authorities would

353
00:36:17.500 --> 00:36:23.140
have to deprive them of all autonomous power of decision-making to give detailed prescriptions

354
00:36:23.140 --> 00:36:27.820
for the actions of subordinates, and reserve for itself the right of decision-making in

355
00:36:27.820 --> 00:36:34.580
all cases not covered by the rules. In short, socialism requires an all-encompassing bureaucratic

356
00:36:34.580 --> 00:36:42.320
The Feeble and Compromising John Stuart Mill Mises devoted particular attention to the discussion

357
00:36:42.320 --> 00:36:48.980
of time wages. According to a widespread opinion, the economic theory of time wages had refuted

358
00:36:48.980 --> 00:36:53.700
the standard charge against the socialists, namely that their schemes would suffer from

359
00:36:53.700 --> 00:36:58.500
incentives problems that were absent under capitalism. On this issue, the socialists

360
00:36:58.500 --> 00:37:04.220
had found an unexpected ally in John Stuart Mill, long regarded as the patron saint of

361
00:37:04.220 --> 00:37:10.580
of Classical Liberalism. In his elegant prose, Mill had stressed that capitalism too suffered

362
00:37:10.580 --> 00:37:15.940
from an incentive problem as soon as wages were paid for labour time, time wages, rather

363
00:37:15.940 --> 00:37:21.700
than for the work performed, peace work. Mises noticed that Mill's arguments have provided

364
00:37:21.700 --> 00:37:26.780
for decades one of the main prompts of the socialist idea and have contributed more to

365
00:37:26.780 --> 00:37:31.980
its popularity than the hate-inspired and frequently contradictory arguments of socialist

366
00:37:31.980 --> 00:37:47.220
The English economist had not taken account of the fact that time wages are different

367
00:37:47.220 --> 00:37:52.500
for different kinds of work. Therefore, workers under capitalism still do have an incentive

368
00:37:52.500 --> 00:37:58.060
to overcome the irksomeness of labour. Doubtless the individual working for a time

369
00:37:58.060 --> 00:38:03.780
Time Wage has no interest in doing more than will keep his job, but if he can do more,

370
00:38:03.780 --> 00:38:08.820
if his knowledge, capability and strength permit. He seeks for a post where more is

371
00:38:08.820 --> 00:38:14.220
wanted and where he can thus increase his income. It may be that he fails to do this

372
00:38:14.220 --> 00:38:19.740
out of laziness, but this is not the fault of the system. The system does all that it

373
00:38:19.740 --> 00:38:25.780
can to incite everyone to the utmost diligence, since it ensures to everyone the fruits of

374
00:38:25.780 --> 00:38:38.540
The discussion of Mill's mistake on a question of labour economics was Mises's first blow

375
00:38:38.540 --> 00:38:43.380
against the hallowed reputation of Mill. He had come to the conclusion that Mill's reputation

376
00:38:43.380 --> 00:38:48.780
had done much damage to the intellectual appeal of the case for political liberalism. Five

377
00:38:48.780 --> 00:38:53.940
years after the publication of socialism, Mises set the record straight. John Stuart

378
00:38:53.940 --> 00:38:58.740
Mill mirrors an epigone of classical liberalism and, especially in his later years, under

379
00:38:58.740 --> 00:39:05.320
the influence of his wife full of feeble compromises, he slips slowly into socialism and is the

380
00:39:05.320 --> 00:39:10.420
originator of the thoughtless confounding of liberal and socialist ideas that led to

381
00:39:10.420 --> 00:39:15.020
the decline of English liberalism and to the undermining of the living standards of the

382
00:39:15.020 --> 00:39:21.500
English people. Nevertheless, or perhaps because of this, one must become acquainted with Mill's

383
00:39:21.500 --> 00:39:23.420
Principle Writings

384
00:39:23.420 --> 00:39:25.900
The Law of Association

385
00:39:25.900 --> 00:39:31.580
After his analysis of the workings of socialist societies, Mises turned to the doctrine of

386
00:39:31.580 --> 00:39:36.860
the inevitability of socialism. Karl Marx and his followers had claimed that social

387
00:39:36.860 --> 00:39:42.780
evolution led with the necessity of natural law to the establishment of socialism. The

388
00:39:42.780 --> 00:39:48.460
driving forces in this process were a. the dialectics of class struggle and b. the tendency

389
00:39:48.460 --> 00:40:03.500
One might think that addressing this Marxist claim was a waste of Mises's time since

390
00:40:03.500 --> 00:40:08.980
he had already shown that socialism was inferior to capitalism, but Mises did not think so,

391
00:40:08.980 --> 00:40:14.660
even though socialism was demonstrably inferior to capitalism. There might still be a tendency

392
00:40:14.660 --> 00:40:21.700
for Society to Evolve Toward Socialism. The question therefore required a separate treatment.

393
00:40:21.700 --> 00:40:26.620
One of the centrepieces of Marxist sociology was the theory of class struggle according

394
00:40:26.620 --> 00:40:31.520
to which social evolution results from the necessarily conflicting interests of different

395
00:40:31.520 --> 00:40:38.140
social classes. History was one long drama featuring the interactions of antagonistic

396
00:40:38.140 --> 00:40:43.360
groups. The groups themselves varied over time – kings against nobility, nobility

397
00:40:43.360 --> 00:40:56.520
In socialism, Mises delivered an in-depth critique of the concept of class struggle, which had

398
00:40:56.520 --> 00:41:01.940
been adopted in a modified form by many thinkers outside the Marxist camp, including the champions

399
00:41:01.940 --> 00:41:07.380
of Aryan supremacy. Mises did not contest the fact that violent conflict had played

400
00:41:07.380 --> 00:41:12.220
a large role in the process of social evolution. Rather, he took issue with the notion that

401
00:41:12.220 --> 00:41:17.540
Violence had played a constructive role. Mises argued that, by its very nature, violence

402
00:41:17.540 --> 00:41:22.020
could not have played the role that the advocates of the concept of class struggle ascribed to

403
00:41:22.020 --> 00:41:28.540
it. Class struggle could not explain the emergence and growth of human society. At best, it could

404
00:41:28.540 --> 00:41:34.300
explain how the members of a given association behaved vis-à-vis other given associations.

405
00:41:34.300 --> 00:41:40.180
The dynamics of social evolution would remain a mystery, without a sound theory of cooperative

406
00:41:40.180 --> 00:41:46.300
Association. So why do people cooperate at all? Generalising a discovery that David Ricardo

407
00:41:46.300 --> 00:41:52.140
had famously made in this special case of foreign trade, Mises gave a simple answer.

408
00:41:52.140 --> 00:41:57.060
Human beings associate with one another because the division of labour is more physically

409
00:41:57.060 --> 00:42:02.140
productive than the atomistic production of isolated individuals.

410
00:42:02.140 --> 00:42:06.500
The theory of the international division of labour is one of the most important contributions

411
00:42:06.500 --> 00:42:12.140
of Classical Political Economy. It shows that, as long as, for any reasons, movements of

412
00:42:12.140 --> 00:42:18.320
capital and labour between countries are prevented, it is the comparative, not the absolute, costs

413
00:42:18.320 --> 00:42:23.460
of production which govern the geographical division of labour. When the same principle

414
00:42:23.460 --> 00:42:28.220
is applied to the personal division of labour, it is found that the individual enjoys an

415
00:42:28.220 --> 00:42:34.260
advantage in co-operating not only with people superior to himself in this or that capacity,

416
00:42:34.260 --> 00:42:39.160
but also with those who are inferior to himself in every relevant way.

417
00:42:39.160 --> 00:42:45.160
He goes on to illustrate the principle. If, through his superiority to B, A needs 3 hours

418
00:42:45.160 --> 00:42:51.500
labour for the production of 1 unit of commodity P compared with B's 5, and for the production

419
00:42:51.500 --> 00:42:57.580
of commodity Q, 2 hours, against B's 4, then A will gain if he confines his labour

420
00:42:57.580 --> 00:43:08.980
If each gives 60 hours to producing both P and Q, the result of A's labour is 20 P plus

421
00:43:08.980 --> 00:43:19.380
30 Q of B's 12 P and 15 Q, and for both together 32 P and 45 Q. If, however, A confines

422
00:43:19.380 --> 00:43:27.460
himself to producing Q alone, he produces 60 units in 120 hours, whilst B, if he confines

423
00:43:27.460 --> 00:43:32.820
sends himself to producing p, produces in the same time 24 units. The result of the

424
00:43:32.820 --> 00:43:40.700
activity is then 24p plus 60q, which as p has for a, a substitution value of 3 divided

425
00:43:40.700 --> 00:43:50.580
by 2q and for b, 1 of 5 divided by 4q signifies a larger production than 32p plus 45q.

426
00:43:50.580 --> 00:43:57.020
Ricardo had barely mentioned what was later called the theory of comparative cost advantages,

427
00:43:57.020 --> 00:44:03.380
Relegating the Crucial Passage to a Mere Footnote in Chapter 7 of his Principles. Later economists

428
00:44:03.380 --> 00:44:08.620
realised that this principle applied not only to the particular case of foreign trade, but

429
00:44:08.620 --> 00:44:14.660
also to the general case of exchange between individuals. Thus is covered all form of the

430
00:44:14.660 --> 00:44:21.660
vision of labour. It explained why human association was worthwhile not only for the inferior worker

431
00:44:21.660 --> 00:44:33.700
The advantages are mutual, even if not necessarily symmetrical. This explains why children, handicapped

432
00:44:33.700 --> 00:44:38.380
and very old persons could be welcome in the division of labour, even though they might

433
00:44:38.380 --> 00:44:44.420
be inferior in all practical respects to their associates. It explained why the members of

434
00:44:44.420 --> 00:44:49.980
industrial nations, such as the United States or Japan, could benefit from the cooperation

435
00:44:49.980 --> 00:44:54.680
and of the residence of other countries in which capital was much more scarce and unit

436
00:44:54.680 --> 00:45:00.580
costs therefore higher. In short, the principle that the division of labour between two persons

437
00:45:00.580 --> 00:45:06.760
A and B is beneficial even in the hard case that A is superior to B in all respects is

438
00:45:06.760 --> 00:45:10.420
a true law of association.

439
00:45:10.420 --> 00:45:17.220
Mises used this expression only in his later treatises on economics. He spoke of the Ricardian

440
00:45:17.220 --> 00:45:23.820
der Gesellschaftungsgesetze and of the Ricardian Law of Association.

441
00:45:23.820 --> 00:45:29.140
But the generalisation of Ricardo's discovery had occurred already in socialism.

442
00:45:29.140 --> 00:45:34.460
Mises had independently discovered a general law of human action. More than any other economist,

443
00:45:34.460 --> 00:45:40.580
he highlighted its far-reaching implications. The law applies under virtually all circumstances

444
00:45:40.580 --> 00:45:46.320
because it presupposes only that the susceptible associate be different in talent or location

445
00:45:46.320 --> 00:45:52.180
which is almost always the case. Historically, division of labour originates in two facts

446
00:45:52.180 --> 00:45:57.540
of nature – the inequality of human abilities and the variety of the external conditions

447
00:45:57.540 --> 00:46:02.840
of human life on the earth. These two facts are really one – the diversity of nature,

448
00:46:02.840 --> 00:46:09.040
which does not repeat itself, but creates the universe in infinite, inexhaustible variety.

449
00:46:09.040 --> 00:46:13.920
This led to a surprising conclusion – the very differences in which the theory of class

450
00:46:13.920 --> 00:46:40.740
The greater productivity of work under the division of labour is a unifying influence.

451
00:46:40.740 --> 00:46:46.020
It leads men to regard each other as comrades in a joint struggle for welfare rather than

452
00:46:46.020 --> 00:46:50.780
as competitors in a struggle for existence. It makes friends out of enemies, peace out

453
00:46:50.780 --> 00:46:57.100
of war, society out of individuals. The fact that social differences harbour great potentials

454
00:46:57.100 --> 00:47:02.820
for mutual gains through cooperation had, of course, momentous policy implications.

455
00:47:02.820 --> 00:47:06.900
In the light of this fact, it was clear that government should regulate the economy as

456
00:47:06.900 --> 00:47:24.900
This runs directly counter to the notion that government should level the playing field on the market both domestically and in international trade. The law of association sustained the case for unilateralism.

457
00:47:24.900 --> 00:47:28.900
Many years later, Mises stated in private correspondence,

458
00:47:54.900 --> 00:48:23.260
After presenting the law of association, Mises returned to answering his initial question

459
00:48:23.260 --> 00:48:29.180
about Social Dynamics. Does social evolution necessarily lead to an ever greater expansion

460
00:48:29.180 --> 00:48:34.020
of the division of labour? He examined whether the Darwinian principle of natural selection

461
00:48:34.020 --> 00:48:39.460
would answer this question and found that societies based on a more extensive and intensive

462
00:48:39.460 --> 00:48:44.420
division of labour have more prospect of preserving their members from misery and poverty. They

463
00:48:44.420 --> 00:48:49.660
are also better equipped to defend themselves from the enemy. This fact by itself does not

464
00:48:49.660 --> 00:48:55.100
not provide a satisfying answer, it merely pushes back the question. Why do some societies

465
00:48:55.100 --> 00:49:00.660
cultivate a higher division of labour? Quoting the French sociologist Isoulé, Mises answers

466
00:49:00.660 --> 00:49:06.360
that the reason is a purely intellectual one. It is the social spirit, the spirit of social

467
00:49:06.360 --> 00:49:12.620
cooperation which forms, develops and upholds societies. Once it is lost, the society falls

468
00:49:12.620 --> 00:49:17.540
apart again. The death of a nation is social retrogression, the decline from the division

469
00:49:17.540 --> 00:49:23.300
of Labour to Self-Sufficiency. The social organism disintegrates into the cells from

470
00:49:23.300 --> 00:49:28.260
which it began. Man remains, but society dies.

471
00:49:28.260 --> 00:49:29.260
He emphasised,

472
00:49:29.260 --> 00:49:35.260
There is no evidence that social evolution must move steadily upwards in a straight line.

473
00:49:35.260 --> 00:49:40.540
Social standstill and social retrogression are historical facts which we cannot ignore.

474
00:49:40.540 --> 00:49:46.540
World history is the graveyard of dead civilisations, and in India and Eastern Asia we see large-scale

475
00:49:46.540 --> 00:49:52.660
examples of civilization at a standstill. Mises argued that the social spirit received

476
00:49:52.660 --> 00:49:57.620
a decisive boost from classical liberalism, which developed a sophisticated theory of

477
00:49:57.620 --> 00:50:02.700
the division of labour and highlighted the social function of private property. In later

478
00:50:02.700 --> 00:50:08.460
works, most notably in Theory and History, 1957, Mises elaborates on the role of ideas

479
00:50:08.460 --> 00:50:13.580
in social evolution, presenting them as the ultimate cause of social dynamics, but he

480
00:50:13.580 --> 00:50:23.220
Monopoly Theory Having dealt with the theory of class struggle,

481
00:50:23.220 --> 00:50:28.660
Mises turned to exhibit B in the Marxist case for the historical inevitability of socialism,

482
00:50:28.660 --> 00:50:34.700
monopoly theory. To do so, he examined not only the Marxist doctrine that capitalism produces

483
00:50:34.700 --> 00:50:39.940
ever more economic concentration, but also the emerging neoclassical theory of monopoly

484
00:50:39.940 --> 00:50:45.360
the prices, which had been widely used as an indictment of the market economy and as

485
00:50:45.360 --> 00:50:51.480
a prima facie justification for government intervention in the form of antitrust policies.

486
00:50:51.480 --> 00:50:56.360
Beginning with the Marxist tenants, Mises observed that the available statistical material

487
00:50:56.360 --> 00:51:01.360
contradicted the Marxist contention that there was a higher concentration of capital

488
00:51:01.360 --> 00:51:07.340
in private hands. Schumpeter just recently had endorsed this theory.

489
00:51:07.340 --> 00:51:11.700
On the other hand, it was clear that industrial production was increasingly organised in large

490
00:51:11.700 --> 00:51:19.020
plants. The Marxist case seemed to rely on a conflation of very different types of concentration.

491
00:51:19.020 --> 00:51:23.900
Mises therefore set out to distinguish and analyse three types of concentration – production

492
00:51:23.900 --> 00:51:30.020
plants, establishments, enterprises and individual fortunes. He showed that there is indeed a

493
00:51:30.020 --> 00:51:34.940
marked tendency toward the concentration of plants, but stressed that this was merely

494
00:51:34.940 --> 00:51:40.940
and offshoot of the division of labour. Larger plants can serve larger markets. For similar

495
00:51:40.940 --> 00:51:45.900
reasons, there might also be concentrations of enterprises, but, Mises emphasised, there

496
00:51:45.900 --> 00:51:51.540
was no concentration of individual fortunes, especially of fortunes derived from profitable

497
00:51:51.540 --> 00:51:56.460
industrial enterprise. The main reason was that, contrary to widespread assumption, capital

498
00:51:56.460 --> 00:52:02.740
investment does not guarantee profits. It is an essentially risky venture that thrives

499
00:52:02.740 --> 00:52:24.100
This analysis reconciled the observations on which the persuasiveness of the Marxist

500
00:52:24.100 --> 00:52:29.020
case relied, concentration of plants and enterprises, with the statistical evidence

501
00:52:29.020 --> 00:52:34.500
against any marked concentration of individual fortunes. Ever larger plans were owned by

502
00:52:34.500 --> 00:52:40.380
ever larger groups of stock owners and bondholders. The beneficial concentration in industry,

503
00:52:40.380 --> 00:52:45.120
which allowed for production at ever lower unit costs, did not necessarily go in hand

504
00:52:45.120 --> 00:52:49.920
with the concentration of wealth. This result was directly in line with the position that

505
00:52:49.920 --> 00:52:56.120
Max Weber and Friedrich Naumann had defended before the First World War, when in the meetings

506
00:52:56.120 --> 00:53:02.280
of the Verein für Sozialpolitik, they confronted the champions of antitrust policies.

507
00:53:02.280 --> 00:53:07.040
Economic concentration could be a very beneficial phenomenon. It might even be necessary to

508
00:53:07.040 --> 00:53:14.240
provide for the needs of a growing population. By 1922 Weber and Naumann had died. Now Mises's

509
00:53:14.240 --> 00:53:19.920
discussion of economic concentration and socialism made him the most prominent advocate of their

510
00:53:19.920 --> 00:53:25.280
cause. Mises would defend his position against antitrust policies for the rest of his life,

511
00:53:25.280 --> 00:53:30.620
often isolated in his stance, most notably when, as an octogenarian, he made the case

512
00:53:30.620 --> 00:53:37.480
for concentration in the debates of the Mont-Pleurin Society in the 1960s. During the 1920s he

513
00:53:37.480 --> 00:53:42.800
confronted the antitrust movement in Austria in his double capacity as a writer and as

514
00:53:42.800 --> 00:53:47.720
a secretary of the Vienna Commer, in which Austria's big industrialists and bankers

515
00:53:47.720 --> 00:53:53.240
had a forum. He opposed the promotion of the handicrafts by subsidies, not because he disliked

516
00:53:53.240 --> 00:53:57.940
like small firms or because he ignored their virtues but because the case for these subsidies

517
00:53:57.940 --> 00:54:03.360
was untenable from any larger social point of view. The handicrafts had difficulties

518
00:54:03.360 --> 00:54:07.800
because they could not compete against big industry, but it was wrong to jump from this

519
00:54:07.800 --> 00:54:13.120
fact to the conclusion that the competition from the big firms was unfair. Quite apart

520
00:54:13.120 --> 00:54:18.700
from the corruption that plagued the implementation of antitrust policies, Mittelstandspolitik,

521
00:54:18.700 --> 00:54:23.060
these policies often proved to be disastrous in practice because they benefited the more

522
00:54:23.060 --> 00:54:27.640
or inefficient chops at the expense of the better ones without improving their overall

523
00:54:27.640 --> 00:54:31.880
situation vis-à-vis the big industry. There was no critical study accounting for these

524
00:54:31.880 --> 00:54:38.420
practical failures. Mises obtained information from Hofrad Persendiner, a civil servant charged

525
00:54:38.420 --> 00:54:43.700
with the implementation of industrial policy. He tried to persuade him to put these experiences

526
00:54:43.700 --> 00:54:49.780
into print. Could economic concentration on a free market ever be harmful? Mises answered

527
00:54:49.780 --> 00:54:54.820
This question in the affirmative distinguishing two types of harmful monopoly as distinct

528
00:54:54.820 --> 00:55:00.540
from beneficial concentration. The first type of monopoly was given when one market participant

529
00:55:00.540 --> 00:55:06.980
provided a service that was indispensable, unique and without substitute, but this case

530
00:55:06.980 --> 00:55:12.340
seemed to be a mere theoretical possibility. To which concrete goods would it apply? To

531
00:55:12.340 --> 00:55:17.140
air and water? These were certainly indispensable goods, but in most cases they were not economic

532
00:55:17.140 --> 00:55:23.500
Goods at All. Mises argued that this form of monopoly was indeed exceedingly rare. Perhaps

533
00:55:23.500 --> 00:55:27.980
the nearest approach to such a monopoly was the power to administer grace to believers,

534
00:55:27.980 --> 00:55:33.540
exercised by the medieval church. Excommunication and interdict were no less terrible than death

535
00:55:33.540 --> 00:55:38.620
from thirst or suffocation. In a socialist community the state as organised society would

536
00:55:38.620 --> 00:55:44.520
form such a monopoly. All economic goods would be united in its hands and it would therefore

537
00:55:44.520 --> 00:56:00.260
Mises turned to the second type of monopoly, which was an offspring of the theory of prices.

538
00:56:00.260 --> 00:56:05.520
The case of price monopoly was given when a seller could restrict his production to increase

539
00:56:05.520 --> 00:56:10.360
his price and obtain higher total selling proceeds because the demand for his product

540
00:56:10.360 --> 00:56:12.800
was sufficiently inelastic.

541
00:56:12.800 --> 00:56:17.840
Of course this could work only in the absence of competitors, because any competitors in

542
00:56:17.840 --> 00:56:22.980
the field would expand their production and bit down the price as soon as our would-be

543
00:56:22.980 --> 00:56:28.960
monopolist set out to restrict his production. But Mises emphasised that, besides the absence

544
00:56:28.960 --> 00:56:34.800
of competition, a second condition had to be given, namely a relative inelasticity of

545
00:56:34.800 --> 00:56:40.460
demand. These circumstances brought about an anomaly on the market, whereas under competitive

546
00:56:40.460 --> 00:56:59.660
The one and only peculiarity of monopoly is that, assuming a certain shape for the demand

547
00:56:59.660 --> 00:57:05.260
curve, the maximum net profit lies at a higher price than would have been the case in competition

548
00:57:05.260 --> 00:57:06.940
between sellers.

549
00:57:06.940 --> 00:57:09.500
Monopoly under such conditions has three results.

550
00:57:09.500 --> 00:57:15.100
The market price is higher, the profit is greater, both the quantity sold and the consumption

551
00:57:15.100 --> 00:57:20.160
are smaller than they would have been under free competition. However, this argument was

552
00:57:20.160 --> 00:57:25.640
vulnerable to the objection that the restriction of production in one firm or industry must

553
00:57:25.640 --> 00:57:31.400
not be equated with a reduced overall production in society. When the price monopolist restricted

554
00:57:31.400 --> 00:57:36.140
his production, he automatically freed up factors of production that, henceforth, could

555
00:57:36.140 --> 00:57:41.740
could be used to produce other goods and services. The reduced supply of the monopoly good thus

556
00:57:41.740 --> 00:57:47.940
entails a larger supply of some other good, and if this is so, then what is wrong with

557
00:57:47.940 --> 00:57:53.300
price monopoly? Where is the harm? Price monopoly is certainly detrimental to the interests

558
00:57:53.300 --> 00:57:59.140
of the consumers of the monopoly good, but it benefits the producers and consumers of

559
00:57:59.140 --> 00:58:05.620
other goods. Can purely factual analysis strike a balance between these conflicting individual

560
00:58:05.620 --> 00:58:13.180
He very clearly saw that against the smaller production of the monopolised goods, one must

561
00:58:13.180 --> 00:58:18.820
set the increased production of other goods, yet he introduced another consideration.

562
00:58:18.820 --> 00:58:23.020
But these other goods, of course, are less important goods, which would not have been

563
00:58:23.020 --> 00:58:27.860
produced and consumed if the more pressing demands for a larger quantity of the monopolised

564
00:58:27.860 --> 00:58:33.060
commodity could have been satisfied. The difference between the value of these goods and the higher

565
00:58:33.060 --> 00:58:38.220
The sheer value of the quantity of the monopolised commodity not produced represents the loss

566
00:58:38.220 --> 00:58:44.020
of welfare which the monopoly has inflicted on the national economy. Here private profit

567
00:58:44.020 --> 00:58:49.700
and social productivity are at variance. A socialist society under such circumstances

568
00:58:49.700 --> 00:58:55.260
would act differently from a capitalist society. No other writer had ever come far enough to

569
00:58:55.260 --> 00:59:00.940
see the problem. Before 1922, the most elaborate exposition of the theory of monopoly price

570
00:59:00.940 --> 00:59:06.180
Mises could be found in the work of John Bates Clarke, who was much admired among Viennese

571
00:59:06.180 --> 00:59:11.140
theoreticians. Clarke had claimed that monopoly weakens free competition and that private

572
00:59:11.140 --> 00:59:16.640
monopoly was worse than public monopoly. Many years later, Mises said about the significance

573
00:59:16.640 --> 00:59:18.040
of his contribution,

574
00:59:18.040 --> 00:59:22.680
All those who have dealt with the monopoly problem have emphasized that the limitation

575
00:59:22.680 --> 00:59:27.700
of the total consumption of the monopoly good reduces the welfare of the person's concern.

576
00:59:27.700 --> 00:59:32.100
Now, in that passage of Gemeinwirtschaft, I deal with the extension of production that

577
00:59:32.100 --> 00:59:37.340
eventually must result from the liberation of non-specific factors of production formerly

578
00:59:37.340 --> 00:59:42.300
bound up in the production of the monopoly good. I explain that this extension of production

579
00:59:42.300 --> 00:59:47.140
can only concern less important goods, of course from the point of view of the consumers.

580
00:59:47.140 --> 00:59:52.100
They are less important because they would not have been produced and consumed if the

581
00:59:52.100 --> 00:59:56.340
more pressing demands for a larger quantity of the monopolised commodity could have been

582
00:59:56.340 --> 01:00:01.440
satisfied. There is no proof for the welfare-reducing effect of monopoly prices other than the one

583
01:00:01.440 --> 01:00:07.140
I propose. Mises's devotion to the facts, as he perceived them, was greater than his

584
01:00:07.140 --> 01:00:12.540
political incarnations. Certainly he would have been happy to find that the market process

585
01:00:12.540 --> 01:00:17.700
always caters to consumers in the best possible way, but he did not find this to be the case,

586
01:00:17.700 --> 01:00:24.600
and he insisted on what he did find. Mises would uphold his argument even when his American

587
01:00:24.600 --> 01:00:29.840
and disciple Murray Rothbard many years later reformulated monopoly theory in a way that

588
01:00:29.840 --> 01:00:36.300
completely exculpated the free market. While Mises conceded the theoretical possibility

589
01:00:36.300 --> 01:00:43.060
of monopoly prices, he stressed that in practice virtually all cases of monopoly were artificial

590
01:00:43.060 --> 01:00:48.360
creations of government intervention. In Das Finanzkapital, Rudolf Hilferding had made

591
01:00:48.360 --> 01:00:54.000
very similar observations in his influential book. However, the Austro-Marxist theoretician

592
01:00:54.000 --> 01:00:58.000
Friedrich Hayek argued that state monopolies were an outgrowth of capitalism. Mises was

593
01:00:58.000 --> 01:01:02.160
therefore unable to endorse Hilferding's analysis and preferred to recommend a study

594
01:01:02.160 --> 01:01:07.560
by the Freiburg professor Robert Liefmann, which detailed how the German government had

595
01:01:07.560 --> 01:01:13.120
created monopolies in the recent past. On a free market, monopoly is unlikely to occur

596
01:01:13.120 --> 01:01:18.480
in any field other than primary production. Mining, in the widest sense of the word, is

597
01:01:18.480 --> 01:01:23.940
and their true domain. But even in this case, monopoly prices are not as harmful as they

598
01:01:23.940 --> 01:01:30.640
appear under monopoly theory because the restricted exploitation of minds means that irreplaceable

599
01:01:30.640 --> 01:01:35.640
natural resources are used with greater thrift.

600
01:01:35.640 --> 01:01:40.740
Christian Ethics vs. The Market Having completed the analysis of the factual

601
01:01:40.740 --> 01:01:45.960
questions on socialism, Mises turned to a critique of the ethical doctrines that had

602
01:01:45.960 --> 01:01:51.800
served to justify socialist schemes. Here he devoted particular attention to Christianity

603
01:01:51.800 --> 01:01:57.200
and examined the question of how much it supported a free society and how much it would tend

604
01:01:57.200 --> 01:02:03.260
to justify violations of private property. Mises began by noting that of all the great

605
01:02:03.260 --> 01:02:08.560
monotheistic religions, Christianity alone was a living faith. Its doctrine covered all

606
01:02:08.560 --> 01:02:14.440
dimensions of human existence. It not only addressed the narrowly spiritual questions

607
01:02:14.440 --> 01:02:20.180
of Man. It also dealt with his ethical concerns, that is, his social and political relationships

608
01:02:20.180 --> 01:02:25.480
with other human beings. This could not be otherwise, Mises argued, lest religion force

609
01:02:25.480 --> 01:02:31.080
its adherents to look for an answer elsewhere. This would mean losing its hold on its adherents

610
01:02:31.080 --> 01:02:36.740
and its power over the spirit. Without social ethics, religion would be dead. Thus Mises

611
01:02:36.740 --> 01:02:41.640
joined hands with the champions of the notion that Christianity was a living faith, not

612
01:02:41.640 --> 01:02:46.440
in spite of its meddling with politics, but rather because of its political dimension.

613
01:02:46.440 --> 01:02:50.560
The same point had been made, though from a completely different point of view in Carl

614
01:02:50.560 --> 01:02:55.800
Schmitt's Politische Theologie. A great critic of classical liberal legal doctrines,

615
01:02:55.800 --> 01:03:01.080
Schmitt attacked the notion that modern juridical scholarship had done away with the theological

616
01:03:01.080 --> 01:03:06.360
foundation of politics. Ottmar Spunn, too, was a Catholic intellectual of the old school

617
01:03:06.360 --> 01:03:12.800
who believed with Pius IX that all things had to be remade in Christ. In Mises' own

618
01:03:12.800 --> 01:03:19.040
circle of friends, Erich Voegelin was most interested in these questions. But in 1922,

619
01:03:19.040 --> 01:03:23.720
the acknowledgement of Christianity's social and political dimension was more than a point

620
01:03:23.720 --> 01:03:30.360
of doctrine. The advice of Jesuits, Catholic bishops and Protestant pastors had a noticeable

621
01:03:30.360 --> 01:03:36.060
impact on daily life. The concrete embodiment of political Christianity with which Mises

622
01:03:36.060 --> 01:03:41.680
had long been acquainted was the Christian Socialist Movement, which had merged in the

623
01:03:41.680 --> 01:03:48.020
1860s in the Austrian Alps and other rural areas predominantly inhabited by Catholic

624
01:03:48.020 --> 01:03:54.960
Germans. The movement arose as a reaction to the liberal reforms of the 1850s and 1860s,

625
01:03:54.960 --> 01:04:00.960
which had enabled efficient factory production, in conjunction with bank credit and railways,

626
01:04:00.960 --> 01:04:07.320
to displace the old handicraft-based modes of production. With amazing speed, this transformation

627
01:04:07.320 --> 01:04:13.280
had undermined the social positions of the old elites, landed nobility and clergy, who

628
01:04:13.280 --> 01:04:19.440
were increasingly challenged and displaced by industrial upstarts who were often Jewish.

629
01:04:19.440 --> 01:04:24.400
Christian socialism was a product of old elite intellectuals seeking to discredit these changes

630
01:04:24.400 --> 01:04:28.760
by contesting the legitimacy of liberalism and capitalism.

631
01:04:28.760 --> 01:04:34.740
President Egbert Belcredi, Freiherr von Vogelsang and Rudolf Mayer called for the re-establishment

632
01:04:34.740 --> 01:04:40.160
of medieval guilds, for credit organisations under state control, for factory laws, for

633
01:04:40.160 --> 01:04:45.120
the protection of national labour through tariffs and through social insurance schemes.

634
01:04:45.120 --> 01:04:51.900
This was how Mises experienced political Christianity first hand. In Chapter 29 of Socialism he

635
01:04:51.900 --> 01:04:56.940
gave a theoretical interpretation of this experience. Was Christian Socialism actually

636
01:04:56.940 --> 01:05:05.100
Mises answered this question affirmatively. Christ, he said, had left his disciples no

637
01:05:05.100 --> 01:05:09.900
rules whatever that could be of any use for building a society on earth because he believed

638
01:05:09.900 --> 01:05:14.860
the Kingdom of God was imminent. The expectation of God's own reorganisation when the time

639
01:05:14.860 --> 01:05:21.060
came and the exclusive transfer of all action and thought to the future Kingdom of God made

640
01:05:21.060 --> 01:05:26.580
Jesus' teaching utterly negative. He rejects everything that exists without offering anything

641
01:05:26.580 --> 01:05:32.580
to Replace it. He arrives at dissolving all existing social ties. The disciple shall not

642
01:05:32.580 --> 01:05:38.340
merely be indifferent to supporting himself, shall not merely refrain from work and dispossess

643
01:05:38.340 --> 01:05:44.260
himself of all goods, but he shall hate father and mother and wife and children and brethren

644
01:05:44.260 --> 01:05:51.060
and sister, yea, and his own life. Jesus is able to tolerate the worldly laws of the Roman

645
01:05:51.060 --> 01:05:57.660
Empire, and the prescriptions of the Jewish law because he is indifferent to them, despising

646
01:05:57.660 --> 01:06:03.440
them as things important only within the narrow limits of time and not because he acknowledges

647
01:06:03.440 --> 01:06:09.780
their value. His zeal in destroying social ties knows no limits. The motive force behind

648
01:06:09.780 --> 01:06:15.460
the purity and power of his complete negation is a static inspiration and enthusiastic hope

649
01:06:15.460 --> 01:06:21.240
Hope of a New World. Hence his passionate attack upon everything that exists. Everything

650
01:06:21.240 --> 01:06:26.540
may be destroyed because God in his omnipotence will rebuild the future order. No need to

651
01:06:26.540 --> 01:06:31.060
scrutinise whether anything can be carried over from the old to the new order because

652
01:06:31.060 --> 01:06:36.860
this new order will arise without human aid. It demands, therefore, from its adherents,

653
01:06:36.860 --> 01:06:42.060
no system of ethics, no particular conduct in any positive direction. Faith and hope

654
01:06:42.060 --> 01:07:05.020
The very fact that Christ's teachings were utterly unconcerned with the material conditions

655
01:07:05.020 --> 01:07:10.420
on earth, Mises argued, explains the great flexibility with which Christianity has adapted

656
01:07:10.420 --> 01:07:16.740
to a great variety of political systems throughout the ages. Again this thesis parallels a contemporary

657
01:07:16.740 --> 01:07:22.620
work by the anti-liberal Carl Schmitt, Römischer Katholizismus und Politischer Form. Schmitt

658
01:07:22.620 --> 01:07:27.980
however did not believe that Christ's teachings were utterly otherworldly. He held that the

659
01:07:27.980 --> 01:07:33.620
Catholic Church survived because she always enjoyed the margin of liberty necessary to

660
01:07:33.620 --> 01:07:39.180
accomplish her mission. But is the otherworldliness of the teachings of Christ really a sufficient

661
01:07:39.180 --> 01:07:44.740
and proof for the contention that these teachings are at odds with political liberty.

662
01:07:44.740 --> 01:07:50.820
Mises thought so, moving on to Exhibit B in the case against Christianity. Not only was

663
01:07:50.820 --> 01:07:55.860
it impossible to find a single passage in the New Testament that could be read as upholding

664
01:07:55.860 --> 01:08:02.200
private property, but Jesus Christ also topped this sin of omission with a sin of commission.

665
01:08:02.200 --> 01:08:07.960
One thing of course is clear and no skilful interpretation can obscure it. Jesus' words

666
01:08:07.960 --> 01:08:14.080
are full of resentment against the rich, and the apostles are no meeker in this respect.

667
01:08:14.080 --> 01:08:20.300
The rich man is condemned because he is rich, the beggar praised because he is poor. The

668
01:08:20.300 --> 01:08:25.640
only reason why Jesus does not declare war against the rich and preach revenge on them

669
01:08:25.640 --> 01:08:31.240
is that God has said, Revenge is mine. Up to the time of modern socialism no movement

670
01:08:31.240 --> 01:08:35.840
against private poverty, which has arisen in the Christian world, has failed to seek

671
01:08:35.840 --> 01:08:58.840
The Redeemer's words bore evil seed. More harm has been done and more blood shed on account of them than by the persecution of heretics and the burning of witches.

672
01:08:58.840 --> 01:09:04.600
One can only imagine how these passages must have endeared Mises to his Christian readers.

673
01:09:04.600 --> 01:09:09.240
But not only the Christian faithful will wonder if he had a proper understanding of political

674
01:09:09.240 --> 01:09:14.740
Christianity. It is clear that the Gospel of Christ had been abused many times in history.

675
01:09:14.740 --> 01:09:18.660
There is no doctrine that has been spared to this fate, not even the doctrines of Adam

676
01:09:18.660 --> 01:09:24.600
Smith and David Ricardo. But Mises' claims seem to be more than extravagant. They also

677
01:09:24.600 --> 01:09:30.360
also raised a puzzle. How is it that Western civilization arose under the dominion of Christian

678
01:09:30.360 --> 01:09:36.200
doctrine, which seemed to be so steadfastly opposed to anything that makes society possible?

679
01:09:36.200 --> 01:09:41.880
Up to 1922, according to Mises's own admission, Christianity was a vibrant faith, and it had

680
01:09:41.880 --> 01:09:46.720
been so during the very centuries that witnessed the development of the West. How was this

681
01:09:46.720 --> 01:09:52.120
possible? Mises answered that these cultural achievements were the work of the Church,

682
01:09:52.120 --> 01:09:58.960
of Christianity and that the social ethics of Jesus have no part in this cultural development.

683
01:09:58.960 --> 01:10:03.320
This evidence leads to the negation of the question asked above. Whether it might not

684
01:10:03.320 --> 01:10:09.000
be possible to reconcile Christianity with a free social order based on private ownership

685
01:10:09.000 --> 01:10:14.560
and the means of production, a living Christianity cannot exist side by side with and within

686
01:10:14.560 --> 01:10:20.160
capitalism. For unknown reasons, the published English translation sounds less categorical

687
01:10:20.160 --> 01:10:26.120
In face of all this evidence it would seem that only a negative answer can be made to

688
01:10:26.120 --> 01:10:30.760
the question asked above, whether it might not be possible to reconcile Christianity

689
01:10:30.760 --> 01:10:35.680
with a free social order based on private ownership in the means of production. A living

690
01:10:35.680 --> 01:10:41.120
Christianity cannot, it seems, exist side by side with capitalism.

691
01:10:41.120 --> 01:10:45.200
Liberalism and Christianity were foes by their very nature, engaged in a struggle of life

692
01:10:45.200 --> 01:10:49.840
or death. Either Christianity would maintain the upper hand or liberalism would crowd it

693
01:10:49.840 --> 01:10:55.960
out, no compromise was possible. Ten years later Mises had changed his mind. In the second

694
01:10:55.960 --> 01:11:02.080
edition of socialism, he added two paragraphs that gave a much milder and reconciling tone

695
01:11:02.080 --> 01:11:08.480
to the conclusion. Mises now claimed that Christianity and liberalism might not be quite

696
01:11:08.480 --> 01:11:14.480
as antagonistic as he had at first assumed. They could flourish together, provided there

697
01:11:14.480 --> 01:11:20.500
was a new synthesis. But there may be an alternative. No one can foresee with certainty how Church

698
01:11:20.500 --> 01:11:26.240
and Christianity may change in the future. Papacy and Catholicism now face problems incomparably

699
01:11:26.240 --> 01:11:31.700
more difficult than all those they have had to solve for over a thousand years. The Worldwide

700
01:11:31.700 --> 01:11:37.320
Universal Church is threatened in its very being by chauvinist nationalism. By refinement

701
01:11:37.320 --> 01:11:41.740
of political art it has succeeded in maintaining the principle of Catholicism through all the

702
01:11:41.740 --> 01:11:47.080
and the turmoil of national wars, but it must realise more clearly every day that its continuance

703
01:11:47.080 --> 01:11:52.760
is incompatible with nationalist ideas. Unless it is prepared to succumb and make way for

704
01:11:52.760 --> 01:11:58.800
national churches, it must drive out nationalism by an ideology which makes it possible for

705
01:11:58.800 --> 01:12:04.720
nations to live and work together in peace. But in so doing, the Church would find itself

706
01:12:04.720 --> 01:12:10.040
inevitably committed to liberalism, no other doctrine would serve. If the Roman Church

707
01:12:10.040 --> 01:12:38.840
It is not known what changed his mind. It is possible Mises had second thoughts on Christianity

708
01:12:38.840 --> 01:12:44.120
and Liberalism as a consequence of his activity as a counselor to Monsignor Injatz-Zeipel,

709
01:12:44.120 --> 01:12:49.160
who according to many Catholic witnesses had a saintly character. He also came to realize

710
01:12:49.160 --> 01:12:54.880
that other scholars worked to bridge the gap that he saw between capitalism and Catholicism.

711
01:12:54.880 --> 01:13:00.680
Thus, he would eventually characterize the influential Jesuit Au von Nell Breuning as

712
01:13:00.680 --> 01:13:06.480
one of the few German economists who in the interwar period advocated economic freedom.

713
01:13:06.480 --> 01:13:14.320
Mises had Nell Boining sent a copy of the Tax Foundation's handbook Fiscal Facts 453.

714
01:13:14.320 --> 01:13:19.040
Socialism is Destructionism Mises' analysis of socialism left nothing

715
01:13:19.040 --> 01:13:24.120
intact of the grandiose edifice that Marx and many other generations of socialist writers

716
01:13:24.120 --> 01:13:30.200
had worked to build. The Bolshevist reaction was predictable. He was presented as a theoretician

717
01:13:30.200 --> 01:13:36.040
of fascism, but then what was the true significance of socialism? The answer seemed by now to

718
01:13:36.040 --> 01:13:41.600
to be apparent. In fact, socialism is not in the least what it pretends to be. It is

719
01:13:41.600 --> 01:13:46.760
not the pioneer of a better and finer world, but the spoiler of what thousands of years

720
01:13:46.760 --> 01:13:54.140
of civilisation have created. It does not build. It destroys. For destruction is the

721
01:13:54.140 --> 01:14:00.560
essence of it. It produces nothing. It only consumes what the social order based on private

722
01:14:00.560 --> 01:14:05.220
ownership and the means of production has created. Since a socialist order of society

723
01:14:05.220 --> 01:14:24.240
The work of destruction had been underway for a long time. Intellectuals and artists had

724
01:14:24.240 --> 01:14:29.560
been at the forefront of this movement. One can say without exaggeration that nothing

725
01:14:29.560 --> 01:14:34.800
has been prepared so thoroughly and from all sides for decades than the general collapse

726
01:14:34.800 --> 01:14:50.700
Here Mises sounds not unlike Carl Ludwig Haller, one of the great 19th century European reactionary

727
01:14:50.700 --> 01:14:56.780
thinkers who claimed that the egalitarian spirit of destruction characterised the Jacobin liberal

728
01:14:56.780 --> 01:15:02.180
movement and the French Revolution. Haller argued that egalitarian programs are always

729
01:15:02.180 --> 01:15:08.340
were smashed on the hard rock of natural social inequalities. Rather than abandoning their

730
01:15:08.340 --> 01:15:14.660
impossible goal, the egalitarian set out to transform the world according to their scheme.

731
01:15:14.660 --> 01:15:19.900
They led a war against all forms of authority and all social institutions that sprang from

732
01:15:19.900 --> 01:15:26.020
them, scholarship, church, priesthood, nobility, government, family, parents. But because this

733
01:15:26.020 --> 01:15:31.860
war merely destroyed the specific social bonds that resulted from inequalities and not the

734
01:15:31.860 --> 01:15:37.740
The factual existence of these inequalities, the Jacobins destroyed society. Anticipating

735
01:15:37.740 --> 01:15:43.740
Mises, he observed, If not everything had collapsed, if we could salvage some fragments

736
01:15:43.740 --> 01:15:50.060
of society, this is only thanks to the material impossibility of executing the Jacobin program,

737
01:15:50.060 --> 01:15:55.620
to the sometimes blatant nonsense, and the happy inconsistency of human beings, even

738
01:15:55.620 --> 01:16:01.820
in evil things. Mises and Holler certainly agreed on the fact of egalitarian destructionism.

739
01:16:01.820 --> 01:16:07.040
But Mises did not join Haller in condemning all institutional innovation after the French

740
01:16:07.040 --> 01:16:13.700
Revolution. Neither did he join English professor F. J. C. Hernshaw in representing socialism

741
01:16:13.700 --> 01:16:19.380
as systematised robbery. Bringing the notion of robbery into play was much too moralistic

742
01:16:19.380 --> 01:16:26.340
for Mises's taste. The point was a technical one. Socialism was just impossible. Commenting

743
01:16:26.340 --> 01:16:31.460
Working on Hernshaw, Mises wrote to a correspondent at the London School of Economics,

744
01:16:31.460 --> 01:16:37.780
I entirely agree with you that it is quite wrong to consider socialism as robbery. The

745
01:16:37.780 --> 01:16:43.100
socialist system would be just as honest and fair as the capitalist one, if a social order

746
01:16:43.100 --> 01:16:48.340
based on common ownership of the means of production was feasible.

747
01:16:48.340 --> 01:16:50.340
www.fieggen.com