A most interesting, thought provoking analysis. How can we impart this historical context to today as it's surely applicable.
In 1789 a group of men gathered in
Paris to sound the death knell for the ancien regime, and to inaugurate
the modern political world. But there were some differences among them. Some
wanted to abolish the old order more completely. Others wanted to retain some
vestiges of the old privileges. In this "National Constituent
Assembly" of France, the ideological birds of a feather sat together: the
more radical members on the left, the more conservative members on the right.
On that day, on the eve of the
French Revolution, not only was the modern political world born,
but so was its terminology. To this day, politics is bisected into a
"left wing" and "right wing." Much digital ink is daily
spilled in vain on the web over the "best" distinction between
"right" and "left." Now, with regard to specific, fleeting
political agendas, vague distinctions like this make sense. Movable umbrella
terms are necessary, because legislation involves shifting coalitions of people
who do not agree on every single point. The trouble starts when the terminology
of the political moment is imported wholesale into the language of science, in
which precise, fixed distinctions are called for. The left/right divide is
downright confusing for social science.
Where this confusion is most
pronounced is in intellectual discussion of Western society following World War
I. According to common opinion, there are two politicoeconomic extremes:
communism (or socialism) on the left, and fascism (or Nazism) on the right.
Sound policy, then, is considered a balancing act between two opposite forms of
totalitarianism. If one leans too far to the left toward the interests of the
poor and weak, one arrives at communism/socialism. Veer too far to the right
toward the interests of the rich and strong, and you get fascism. This
political taxonomy is entirely unscientific. Neither fascism nor Nazism has
ever been scientifically identifiable social orders. They are party platforms,
and thus are assemblages of often-contradictory ideas and slogans. Calling
fascism a "social order" makes as little sense as calling "Tea
Partyism" or "Blue Dog Democrat-ism" a social order.
Moreover, as Ludwig von Mises
demonstrated, the allegedly "right-wing" social order of Nazi Germany
was just as socialistic as was Lenin's Russia. Through economic interventions the
German government completely took over the economy. The only "market"
left was a sham. Private individuals owned the means of production in name
only. Real ownership of the means of production was in the hands of the state.
This is what Mises called "socialism of the German or Hindenburg
pattern." This variety of socialism is also known as Zwangswirtschaft,
which is basically German for "compulsory economy." Those who were
once entrepreneurs devolve in a Zwangswirtschaft into mere shop managers
(Betriebsfuhrer in Nazi legalese), following the orders of a central
command.
The only way in which
"socialism of the Russian or Lenin pattern" (as Mises termed the more
familiar variant of socialism) is distinct from the Zwangswirtschaft is
in the nonessential fact that it has no such veneer of faux-private
ownership. Its socialism is simply more overt.
Another way of stating this is as
follows. In the populist propaganda of Bolshevism, under "socialism of the
Russian or Lenin pattern" the people ostensibly own the state, and the
state in turn owns the means of production. While, under the sham capitalism of
Nazism and "socialism of the German or Hindenburg pattern," the
people ostensibly own the means of production, but the state in turn owns the
people.
Thus these occupants of different
political "poles" really occupy the same ground and are only
separated by a trivial technicality: the existence or absence of a sham market.
Each variant of socialism does indeed have its own distinctive path. But it has
nothing to do with "left vs. right," "poor vs. rich," or
"weak vs. powerful." Rather, it is a matter of
"bureaucratization vs. interventionism." Bureaucratization, by
forthrightly gobbling up the market bite by bite, leads to the overt socialism
of the Russian or Lenin pattern. Interventionism, by subtly crippling the
market and replacing it incrementally with a network of government diktats,
leads to the sham market of socialism of the German or Hindenburg pattern.
Revolutionary socialist governments,
like the Nazi and the Bolshevist states, will generally adopt one path or the
other. But it is by no means necessarily an either/or choice. Gradual
approaches toward socialism, like the one the United States is currently
taking, often rely on both: overtly socializing an industry via nationalization
here and covertly socializing an industry via market interventions there. And
one type of socialization often leads to the other. Thus through this gradual,
dual approach to socialization, one can imagine what one day might be called
"socialism of the American pattern" arising, characterized by a
hodgepodge of vast bureaus and sham markets.
Thus it is conceivable that there
can be a single socialist system that is a mixture of the two varieties of
socialism. However, a mixture of capitalism and socialism is entirely
inconceivable, in spite of the fact that most people think that all real-world
societies have only ever had "mixed economies."
As Mises wrote, the mere existence
of some bureaus and state-owned firms does not alter the capitalist nature of
society and make it a "mixed system" of capitalism and socialism.
Defining "economy" as a social system of production, there is no such
thing as a "mixed economy." Bureaucracies in society are not an
integral aspect of the social system of production. They operate as (basically consumptive)
elements within a market economy. But they do not contribute any social
coordination to it. Rather, it is the market economy that contributes
coordination to bureaucracies, in that the latter wholly depend on market
prices to be able to attain even the severely impaired budget rationality
characteristic of bureaucratic management. The social system of production can
only ever be rationalized by market processes. Even the crippled social
production that occurred in Lenin's Russia and Hitler's Germany was only
possible because recourse could be taken to the prices that formed in the
surviving market processes of the outside world. As Mises wrote
in Human Action,
Soviet Russia and Nazi Germany …
were not isolated socialist systems. They were operating in an environment in
which the price system still worked. They could resort to economic calculation
on the ground of the prices established abroad.
This is why the actual economies of
Lenin's Russia and Hitler's Germany were referred to above as
"socialistic" and not "socialist."
Another important distinction is
that, according to Mises, bureaucratization is not a form of interventionism.
Bureaucratization makes people poorer to be sure, but it does so by
constraining the ambit of the market, not by interfering in its workings.
Some have said
"interventionism" is a system in-and-of itself, and they propose it
as a sensible, "middle-of-the-road" policy between capitalism and
socialism. Mises exploded this fallacy. Utilizing the findings of classical
political economy, as well as the findings of modern economics (including his
own original insights), he demonstrated that all economic interventions are, in
effect, contrary to the purposes of all, including the purposes of those who
advocate them. They are thus destructive, not constructive. Interventionism is
not a system of social production; it is nothing but a hampering of capitalism.
A hampered capitalist order is still a capitalist order. The social system of
production in a hampered capitalist order is always rationalized by the sectors
of the market that have not yet been crippled by interventions.
When one is confronted by the
contrary-to-purpose effects of an intervention, one has two choices in dealing
with those effects. One can undo the intervention, in which case one chooses
capitalism. Or one can try to eliminate the harm with further intervention.
However, further intervention can only lead to still more harm, which would
thus call for yet further intervention, leading to a "cycle of
interventionism." Thus, if one does not choose capitalism, one must choose
ever-increasing interventions, which ultimately will completely destroy the
market and culminate in socialism of the German pattern. If one does not choose
capitalism, one chooses socialism.
Not everybody associates
"fascism" with the economic policy of the Nazis. Those who know their
history remember that part of the economic policy platform of Benito Mussolini,
the founder of fascism, was "corporativism," in which production was
directed by "corporatives," each of which represented the
participants of a specific industry. Some even call our present economic order
"fascist," because they equate "corporatism" with the
"corporativism" that they identify with fascism. But corporations
lobbying for privileges (corporatism) is not the same thing as whole industries
collectively owning the means of production relevant to their industry
(corporativism). The two notions are distinct, and must be treated separately.
Corporatism is not a system of
social production. Corporations lobby for privileges that hamper capitalism, it
is true. But, regardless of who instigates the hampering, hampered capitalism
is capitalism nonetheless.
And as Mises explained,
corporativism is no more a permanent social order than is interventionism. The
crux of the matter is the question of who is to determine policy decisions
within a given corporative: the landowners, the capitalists, or the workers? If
the state adjudicates between them, then it is the state that is essentially
disposing of the means of production, and thus corporativism devolves into
socialism. If the corporatives operate according to a democratic principle,
then it is the majority workers who will dictate policy, and thus corporativism
devolves into syndicalism.
Under syndicalism, the means of
production of each industry are owned by the workers of that industry. The
syndicalist program is distilled by the slogans "the railroads to the
railroadmen!" and "the mines to the miners!" Syndicalism too has
been put forth as another candidate, as a "third way" between
capitalism and socialism. But syndicalism is no system of social production
either. As soon as the needs of society change in the slightest, how is a
syndicalist order to adapt? Under capitalism, shifts in consumer demand adjust
prices. In seeking profits, entrepreneurs try to anticipate these price
adjustments, and thereby adjust the structure of production to best satisfy
consumer wants in the new state of affairs. In the flux of the market,
resources shift from one industry to another, in response to consumer demand.
But, under syndicalism, why would
any producer's syndicate acquiesce to a diminution of its importance and wealth
in society? Production is for the sake of consumption, never the other way
around. Therefore, any system of social production worthy of the name must have
some means of at least conceivably adjusting production for the sake of
consumption. Even socialism ostensibly fits this bill, because the central
administration at least has the authority to adjust production by diktat in
order to try to better serve society (if not the intellectual means to do so rationally).
But no syndicalist has ever put forth any idea of how a syndicalist state would
do so that did not involve becoming, in essence, capitalism or socialism.
Thus, every economic policy decision
is a two-pronged fork in the road; there is no third prong. And neither are the
two prongs toward the "Left" and the "Right." There is
capitalism, and there is socialism.
One is tempted to say that the two
prongs are "forward" and "backward." This would be to adopt
the strategy of the Marxists who characterized everything they liked as
"progressive" (as well as everything they disliked as
"reactionary"). But again, this would be eschewing scientific
distinctions for political word games. The honest man does not rely on
catchwords and slogans in hopes that the gullible public will latch onto his
program by dint of its association with words that resound favorably in their
ears. The honest man tries to speak to the mind of his listeners, not to their
ears, because he is confident in the inherent strength of his ideas. He will
even accept unflattering names for his position, and grant flattering names to
his opponent's position, if that will but put an end to the distracting word
games and allow the true debate to begin.
What is more "social" than
the coordinated, ecumenical society of mutual benefactors produced by
capitalism? It is true that capitalism progresses via the accumulation of
capital. But the upshot of increased capital in proportion to labor is an
increase in the marginal productivity of labor, and thus a rise in real wages.
And if anything is prejudicial to the vested interests of the already-rich
capitalist, is it not pure capitalism — which does not let him rest on his
laurels but demands that he never cease putting himself up to the test of the market,
lest his fortune gradually dwindle? Thus should not the market order be given a
more flattering (and descriptive) name than "capitalism"? Should not
socialism, that fundamentally antisocial program, be stigmatized with an ugly
appellation?
Such are the distracting games of
demagogues, and they would only slow liberalism down. The most direct path to
success is to use the terms at hand, as they are found in the best literature
in our tradition (which happens to be the oeuvre of Ludwig von Mises), and simply
explain what we mean by them. Any sane person who learns what is truly entailed
in "that which is called capitalism" and what is truly entailed in
"that which is called socialism" will choose the former over the
latter. That is because socialism (which, again, is the only direction one can
choose besides capitalism) is social suicide. As Mises irrefutably proved as
early as 1920, the socialist state has no way of rationally directing
production. Socialism means discoordination, capital consumption, famine, and
death. Thus between capitalism and socialism (which, once more, are the only
two choices), the informed chooser could not have an easier choice to make.
And this is the choice that is
before everybody. The fact that everybody in their right mind would choose
capitalism, if only they knew what the choice really meant, is why there is a
harmony of interests. Cognizance of this harmony of interests is what underpinned
the scientific liberalism (one might call it "harmonist" doctrine as
Mises does) that first arose in the writings of men like Hume, Smith, and
Condillac; that intellectually won the field in the days of Ricardo and Say;
and that had its greatest impact on policy in the days of Cobden and Bastiat.
And it was the denial of this harmony of interests — what amounted to a
philosophy of irreconcilable conflict (or, as Mises termed it, an
"anti-harmonist" doctrine) — that underpinned the revolt against
liberalism that reached its culmination in the 20th century.
This philosophy of irreconcilable
conflict is yet another common feature between the totalitarians of the
so-called Left and Right. With the overthrow of liberalism, the world once
again came to embrace the "Montaigne dogma": the incorrect notion
that no group can gain except by another group's loss. This was the social
philosophy of the mercantalists, which was heroically overthrown by the early
liberals. The people of the early-20th-century West came under the sway of the
new "anti-harmonism," dominant among the intellectuals of the time.
Thus, adherence (or at least acquiescence) to the party programs of the both
the "far Right" and "far Left" came naturally to them. They
either adopted the Lebensraum doctrine of national conquest promoted by
the Nazis, Fascists, and other national imperialists, or the doctrine of class
warfare promoted by the internationalist Marxists. As Mises brilliantly
characterized it, the only important difference between the two doctrines was
that one divided society into irreconcilable camps vertically (along national
lines) and the other did the same horizontally (along class lines).
The sooner classical liberals
abandon the sloppy distinctions of party politics and adopt the scientific
distinctions of Ludwig von Mises, the better will it be for our efforts in
explaining to our fellow human beings the stark choice that lies before them.
Right vs. Left, fascist vs. communist, all the alleged "middle ways"
(interventionism, syndicalism, corporativism, etc.) — these are all false
choices. As Mises demonstrated, ultimately there is one true dilemma in
political economy. As he wrote in Liberalism,
There is simply no other choice than
this: either to abstain from interference in the free play of the market, or to
delegate the entire management of production and distribution to the
government. Either capitalism or socialism: there exists no middle way.
Source:
False-Choices-and-the-True-Dilemma
