Front Page Titles (by Subject) 2: Estates and Classes - Socialism: An Economic and Sociological Analysis
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2: Estates and Classes - Ludwig von Mises, Socialism: An Economic and Sociological Analysis 
Socialism: An Economic and Sociological Analysis, trans. J. Kahane, Foreword by F.A. Hayek (Indianapolis: Liberty Fund, 1981).
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Estates and Classes
The theory of the class war constantly confuses the notions of Estate (“Stand”) and class.65 Estates were legal institutions, not economically determined facts. Every man was born into an estate and generally remained in it until he died. All through life one possessed estate-membership, the quality of being a member of a certain estate. One was master or serf, freeman or slave, lord of the land or tied to it, patrician or plebeian, not because one occupied a certain position in economic life, but because one belonged to a certain estate. Admittedly the estates were in their origins an economic institution, in the sense that, like every social order, they had arisen ultimately from the need to safeguard social co-operation. But the social theory underlying this institution was fundamentally different from the liberal theory, for human co-operation was conceived only as a “taking” by some and a “giving” by others. That the give and take could be mutual and all parties gain thereby was utterly incomprehensible to such a theory. A later epoch, seeking to justify the estate system which, in the light of the liberal ideas then slowly dawning in the world, had begun to appear unsocial and also unjust, based on a one-sided burdening of the lower orders, fabricated an artificial reciprocity in the relationship: the higher orders gave the lower protection, sustenance, the use of the land, and so on. But the very existence of this doctrine reveals that the decay of the estate ideology had already begun. Such ideas were alien to the institution in its heyday, when the relationship was frankly one of violence, as may be clearly seen in the first essential distinction drawn by estate—the distinction between free and unfree. The reason why the slave looked on slavery as natural, resigning himself to his lot instead of continuing to rebel and run away as long as there was breath in his body, was not that he believed slavery to be a just institution, equally advantageous to master and slave, but simply that he did not want to erdanger his life by insubordination.
By stressing the historical role of slavery it has been sought to refute the literal view of subjection and of the institution of the estate also. Slavery was said to mark an advance in civilization, when men taken in battle were enslaved instead of being killed. Without slavery a society dividing labour, in which trades are separated from primary production, could not have developed until all free soil had been disposed of; for everyone would have preferred to be free master of his own land rather than a landless worker on raw materials produced by others, let alone a propertyless labourer on someone else’s land. On this view slavery has an historical justification, as higher civilization is inconceivable without the division of labour which gives part of the population a life of leisure, freed from common worries over daily bread.66
It is only for those who study history with the eyes of the moralist that the question of whether an historical institution can be justified or not can arise at all. The fact that it has appeared in history shows that forces were active to bring it about. The only question that can be asked scientifically is whether the institution actually fulfilled the function ascribed to it. In this instance the answer is definitely in the negative. Slavery did not prepare the way for division of labour. On the contrary it blocked the way. Indeed modern industrial society, with its highly developed division of labour, could not begin to grow until slavery had been abolished. Free, ownerless land has continued to exist for settlement without preventing the rise of special trades or of a class of free wage earners. For the free land had first to be made cultivable. Before it yielded its fruits it needed stock and improvements. Often in its fertility and nearly always in its situation, it was worse than land already under cultivation.67 Private ownership in the means of production is the only necessary condition for the extensive development of the division of labour. The enslavement of the worker was not necessary to create it.
In the relation between estates, two types are characteristic. One is the relation between feudal lord and the cultivator. The feudal lord stands quite outside the process of production. He appears on the stage only when the crop has been harvested and the process of production has been completed. Then he takes his share. To understand the nature of this relationship we do not need to know whether it originated in the subjection of formerly free peasants or in the settlement of people on land owned by the lord. The one relevant fact is that the relationship is outside production and cannot, therefore, be dissolved through an economic process, such as commutation of rent and tithes by the cultivator. As soon as the rent is commutable it ceases to be a dependent relationship and becomes a property right. The second typical relation is that of master to slave. Here the master demands labour, not goods, and receives what he demands without any counterservice to the slave. For giving food, clothing, and shelter is not a counterservice, but a necessary expenditure unless he is to lose the slave’s labour. Under the strictly developed institution of slavery the slave is fed only so long as his labour brings in a surplus over his subsistence costs.
Nothing is less reasonable than to compare these two relationships with that of entrepreneur and worker in a free economy. Historically, free wage labour grew to a certain extent out of the labour of slaves and serfs, and it was a long time before it cast off all trace of its origin and became what it is in the capitalist economy. But it is a complete misunderstanding of the capitalist economy to equate economically free labour for wages with the work done by the unfree. One may draw sociological comparisons between the two systems. For both involve division of labour and social co-operation, and in this reveal common features. But sociological study must not overlook the fact that the economic character of the two systems is quite different. Analysis of the economic character of free labour with arguments derived from the study of slave labour is bound to be worthless. The free worker receives in wages what is economically imputed to his labour. The slave owner expends the same amount by providing for the sustenance of the slave and by paying the slave dealer a price for the slave that corresponds to the present value of the amounts by which the wages of free labour are or would be higher than the slave’s sustenance costs. The surplus of the wages of labour over the workers’ sustenance costs thus goes to the man who transforms free men into slaves—to the slave hunter, not to the slave dealer or the slave owner. These two do not derive any specific income in the slave economy. It is clear, therefore, that anyone who tries to support the exploitation theory by referring to conditions of a slave economy completely misunderstands the problem.68
In a society divided into estates all members of the estates who lack complete rights before the law have one interest in common with other members: they struggle to improve the legal position of their estate. All who are bound to the soil strive to have the burden of rent lightened; all slaves strive for freedom, that is, for a condition under which they can use their labour for themselves. The community of interest of all the members of an estate is stronger, the less the individual is able to raise himself above the legal sphere of his estate. It does not matter very much here that in some rare cases, especially gifted individuals, aided by happy accidents, are able to rise into higher estates. No mass movements are born of the unsatisfied wishes and hopes of isolated individuals. Desire to renew their own strength rather than a wish to smother social discontent is what causes the privileged estates to clear the way for the rise of the talented. Gifted individuals who have been prevented from rising can become dangerous only if their call to violent action finds an echo in wide strata of discontented men.
[65. ]Cunow, Die Marxsche Geschichts-,Gesellschafts-und Staatstheorie, Vol. II (Berlin, 1921), pp. 61 ff., tried to protect Marx from the accusation that he has mixed up the concepts class and estate. But his own remarks and the passages he quotes from Marx and Engels show how justified is this accusation. Read, for example, the first six paragraphs of the first part of the Communist Manifesto, headed “Bourgeois and Proletarians” and you will be convinced that there at least the expressions “Stand” and class are used indiscriminately. We have already said that when, later on in London, Marx became familiar with the Ricardian system, he separated his concept class from the concept “stand” and connected it with the three factors of production of the Ricardian system. But he never developed this new concept of class. Neither has Engels or any other Marxist tried to show what really welds the competitors—for these are the people of whom the “uniformity of incomes and of sources of incomes” makes a conceptual unit—into a class inspired by the same special interests.
[66. ]Bagehot, Physics and Politics (London, 1872), pp. 71 ff.
[67. ]Even today there is plenty of ownerless land which anyone who wishes can appropriate. Yet the European proletarian does not migrate to the interior of Africa or Brazil, but remains a wage labourer at home.
[68. ]“The source of the slave owner’s profits,” says Lexis (in discussing Wicksell’s “Über Wert, Kapital, und Rente” in Schmoller’s Jahrbuch, Vol. XIX, pp. 335 ff.) “is unmistakable, and this is probably still true of the ’sweater.’ In the normal relationship between entrepreneur and worker there is no such exploitation, but rather an economic dependence on the part of the worker, which undeniably influences the distribution of the produce of labour. The propertyless worker must absolutely procure ’present goods’ for himself; otherwise he dies. He can generally realize his labour only by collaborating in the production of ’future goods.’ But this is not the decisive factor, for even though he produces, like the baker’s labourer, a commodity to be consumed on the day of its production, yet his share in the yield is conditioned by the circumstances disadvantageous to him, that he cannot make an independent use of his labour, but is forced to sell it against more or less sufficient means of life, renouncing his claim to its product. These are trivial propositions, but I believe that they will always have a convincing force for unprejudiced observers because of their direct self-evidence.” One agrees with Böhm-Bawerk, Einige strittige Fragen der Kapitalstheorie (Vienna and Leipzig, 1900), p. 112; and Engels, Preface to the third volume of Das Kapital, p. xii, that in these ideas, which, by the way, only reproduce the views dominant in German “Popular Economics,” is to be found a recognition dressed up in careful words, of the socialist theory of exploitation. The economic fallacies of the exploitation theory are nowhere exposed more clearly than in this attempt of Lexis to find a basis for it. Publisher’s Note: The reference to page xii in the Engels citation is in Vol. III, pp. 19-21 of the English translation.