Ludwig von Mises - The Anti-capitalistic Mentality

THE LUDWIG VON MISES INSTITUTE

AUBURN, ALABAMA

2008

Originally

Copyright, , 1956 by

D. VAN NOSTRAND COMPANY, INc.

Published simultaneously in Canada by

D. VAN NosTRAND CoMPANY {Canada), LTD.

Library of Congress Catalogue Card No.: 56-12097

The substitution of laissez-faire capitalism for the precapitalistic methods of economic management has multiplied population figures and raised in an unprecedented way the average standard of living. A nation is the more prosperous today the less it has tried to put obstacles in the way of the spirit of free enterprise and private initiative. The people of the United States are more prosperous than the inhabitants of all other countries because their government embarked later than the governments in other parts of the world upon the policy of obstructing business. Nonetheless many people, and especially intellectuals, passionately loathe capitalism. As they see it, this ghastly mode of societys economic organization has brought about nothing but mischief and misery. Men were once happy and prosperous in the good old days preceding the Industrial Revolution. Now under capitalism the immense majority are starving paupers ruthlessly exploited by rugged individualists. For these scoundrels nothing counts but their moneyed interests. They do not produce good and really useful things, but only what will yield the highest profits. They poison bodies with alcoholic beverages and tobacco, and souls and minds with tabloids, lascivious books and silly moving pictures. The ideological superstructure of capitalism is a literature of decay and degradation, the burlesque show and the art of strip-tease, the Hollywood pictures and the detective stories.

The bias and bigotry of public opinion manifests itself most clearly in the fact that it attaches the epithet capitalistic exclusively to things abominable, never to those of which everybody approves. How can any good come from capitalism! What is valuable has been produced in spite of capitalism, but the bad things are excrescences of capitalism.

It is the task of this essay to analyze this anti-capitalistic bias and to disclose its roots and its consequences.

1. THE SOVEREIGN CONSUMER

The characteristic feature of modern capitalism is mass production of goods destined for consumption by the masses. The result is a tendency towards a continuous improvement in the average standard of living, a progressing enrichment of the many. Capitalism deproletarianizes the common man and elevates him to the rank of a bourgeois.

On the market of a capitalistic society the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality. Those shops and plants which cater exclusively or predominantly to the wealthier citizens demand for refined luxuries play merely a subordinate role in the economic setting of the market economy. They never attain the size of big business. Big business always servesdirectly or indirectlythe masses.

It is this ascension of the multitude in which the radical social change brought about by the Industrial Revolution consists. Those underlings who in all the preceding ages of history had formed the herds of slaves and serfs, of paupers and beggars, became the buying public, for whose favor the businessmen canvass. They are the customers who are always right, the patrons who have the power to make poor suppliers rich and rich suppliers poor.

There are in the fabric of a market economy not sabotaged by the nostrums of governments and politicians no grandees and squires keeping the populace in submission, collecting tributes and imposts, and gaudily feasting while the villains must put up with the crumbs. The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public. In a daily repeated plebiscite in which every penny gives a right to vote the consumers determine who should own and run the plants, shops and farms. The control of the material means of production is a social function, subject to the confirmation or revocation by the sovereign consumers.

This is what the modern concept of freedom means. Every adult is free to fashion his life according to his own plans. He is not forced to live according to the plan of a planning authority enforcing its unique plan by the police, i.e., the social apparatus of compulsion and coercion. What restricts the individuals freedom is not other peoples violence or threat of violence, but the physiological structure of his body and the inescapable nature-given scarcity of the factors of production. It is obvious that mans discretion to shape his fate can never trespass the limits drawn by what are called the laws of nature.

To establish these facts does not amount to a justification of the individuals freedom from the point of view of any absolute standards or metaphysical notions. It does not express any judgment on the fashionable doctrines of the advocates of totalitarianism, whether right or left. It does not deal with their assertion that the masses are too stupid and ignorant to know what would serve best their true needs and interests and badly need a guardian, the government, lest they hurt themselves. Neither does it enter into a scrutiny of the statements that there are supermen available for the office of such guardianship.

2. THE URGE FOR ECONOMIC BETTERMENT

Under capitalism the common man enjoys amemtles which in ages gone by were unknown and therefore inaccessible even to the richest people. But, of course, these motorcars, television sets and refrigerators do not make a man happy. In the instant in which he acquires them, he may feel happier than he did before. But as soon as some of his wishes are satisfied, new wishes spring up. Such is human nature.

Few Americans are fully aware of the fact that their country enjoys the highest standard of living and that the way of life of the average American appears as fabulous and out of the reach to the immense majority of people inhabiting non-capitalistic countries. Most people belittle what they have and could possibly acquire, and crave those things which are inaccessible to them. It would be idle to lament this insatiable appetite for more and more goods. This lust is precisely the impulse which leads man on the way toward economic betterment. To content oneself with what one has already got or can easily get, and to abstain apathetically from any attempts to improve ones own material conditions, is not a virtue. Such an attitude is rather animal behavior than conduct of reasonable human beings. Mans most characteristic mark is that he never ceases in endeavors to advance his well-being by purposive activity.

However, these endeavors must be fitted for the purpose. They must be suitable to bring about the effects aimed at. What is wrong with most of our contemporaries is not that they are passionately longing for a richer supply of various goods, but that they choose inappropriate means for the attainment of this end. They are misled by spurious ideologies.They favor policies which are contrary to their own