Front Page Titles (by Subject) 9: The Teachings of Soviet Experience - Socialism: An Economic and Sociological Analysis
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9: The Teachings of Soviet Experience - 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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The Teachings of Soviet Experience
Many people all over the world assert that the Soviet “experiment” has supplied conclusive evidence in favour of socialism and disproved all, or at least most, of the objections raised against it. The facts, they say, speak for themselves. It is no longer permissible to pay any attention to the spurious aprioristic reasoning of armchair economists criticizing the socialist plans. A crucial experiment has exploded their fallacies.
It is, first of all, necessary to comprehend that in the field of purposive human action and social relations no experiments can be made and no experiments have ever been made. The experimental method to which the natural sciences owe all their achievements is inapplicable in the social sciences. The natural sciences are in a position to observe in the laboratory experiment the consequences of the isolated change in one element only, while other elements remain unchanged. Their experimental observation refers ultimately to certain isolable elements in sense experience. What the natural sciences call facts are the causal relations shown in such experiments. Their theories and hypotheses must be in agreement with these facts.
But the experience with which the sciences of human action have to deal is essentially different. It is historical experience. It is an experience of complex phenomena, of the joint effects brought about by the co-operation of a multiplicity of elements. The social sciences are never in a position to control the conditions of change and to isolate them from one another in the way in which the experimenter proceeds in arranging his experiments. They never enjoy the advantage of observing the consequences of a change in one element only, other conditions being equal. They are never faced with facts in the sense in which the natural sciences employ this term. Every fact and every experience with which the social sciences have to deal is open to various interpretations. Historical facts and historical experience can never prove or disprove a statement in the way in which an experiment proves or disproves.
Historical experience never comments upon itself. It needs to be interpreted from the point of view of theories constructed without the aid of experimental observations. There is no need to enter into an epistemological analysis of the logical and philosophical problems involved. It is enough to refer to the fact that nobody—whether scientist or layman--ever proceeds otherwise when dealing with historical experience. Every discussion of the relevance and meaning of historical facts falls back very soon on a discussion of abstract general principles, logically antecedent to the facts to be elucidated and interpreted. Reference to historical experience can never solve any problem or answer any question. The same historical events and the same statistical figures are claimed as confirmations of contradictory theories.
If history could prove and teach us anything, it would be that private ownership of the means of production is a necessary requisite of civilization and material well-being. All civilizations have up to now been based on private property. Only nations committed to the principle of private property have risen above penury and produced science, art and literature. There is no experience to show that any other social system could provide mankind with any of the achievements of civilization. Nevertheless, only few people consider this as a sufficient and incontestable refutation of the socialist programme.
On the contrary, there are even people who argue the other way round. It is frequently asserted that the system of private property is done for precisely because it was the system that men applied in the past. However beneficial a social system may have been in the past, they say, it cannot be so in the future too; a new age requires a new mode of social organization. Mankind has reached maturity; it would be pernicious for it to cling to the principles to which it resorted in the earlier stages of its evolution. This is certainly the most radical abandonment of experimentalism. The experimental method may assert: because a produced in the past the result b, it will produce it in the future also. It must never assert: because a produced in the past the result b, it is proved that it cannot produce it any longer.
In spite of the fact that mankind has had no experience with the socialist mode of production, the socialist writers have constructed various schemes of socialist systems based on aprioristic reasoning. But as soon as anybody dares to analyse these projects and to scrutinize them with regard to their feasibility and their ability to further human welfare, the socialists vehemently object. These analyses, they say, are merely idle aprioristic speculations. They cannot disprove the correctness of our statements and the expediency of our plans. They are not experimental. One must try socialism and then the results will speak for themselves.
What these socialists ask for is absurd. Carried to its ultimate logical consequences, their idea implies that men are not free to refute by reasoning any scheme, however nonsensical, self-contradictory and impracticable, that any reformer is pleased to suggest. According to their view, the only method permissible for the refutation of such a—necessarily abstract and aprioristic—plan is to test it by reorganizing the whole of society according to its designs. As soon as a man sketches the plan for a better social order, all nations are bound to try it and to see what will happen.
Even the most stubborn socialists cannot fail to admit that there are various plans for the construction of the future utopia, incompatible with one another. There is the Soviet pattern of all-round socialization of all enterprises and their outright bureaucratic management; there is the German pattern of Zwangswirtschaft, towards the complete adoption of which the Anglo-Saxon countries are manifestly tending; there is guild socialism, under the name of corporativism still very popular in some Catholic countries. There are many other varieties. The supporters of most of these competing schemes assert that the beneficial results to be expected from their own scheme will appear only when all nations will have adopted it; they deny that socialism in one country only can already bring the blessings they ascribe to socialism. The Marxians declare that the bliss of socialism will emerge only in its “higher phase” which, as they hint, will appear only after the working class will have passed “through long struggles, through a whole series of historical processes, wholly transforming both circumstances and men.”80 The inference from all this is that one must realize socialism and quietly wait for a very long time until its promised benefits come. No unpleasant experiences in the period of transition, no matter how long this period may be, can disprove the assertion that socialism is the best of all conceivable modes of social organization. He that believeth shall be saved.
But which of the many socialist plans, contradicting one another, should be adopted? Every socialist sect passionately proclaims that its own brand is alone genuine socialism and that all other sects advocate counterfeit, entirely pernicious measures. In fighting one another, the various socialist factions resort to the same methods of abstract reasoning which they stigmatize as vain apriorism whenever they are applied against the correctness of their own statements and the expediency and practicability of their own schemes. There is, of course, no other method available. The fallacies implied in a system of abstract reasoning—such as socialism is—cannot be smashed otherwise than by abstract reasoning.
The fundamental objection advanced against the practicability of socialism refers to the impossibility of economic calculation. It has been demonstrated in an irrefutable way that a socialist commonwealth would not be in a position to apply economic calculation. Where there are no market prices for the factors of production because they are neither bought nor sold, it is impossible to resort to calculation in planning future action and in determining the result of past action. A socialist management of production would simply not know whether or not what it plans and executes is the most appropriate means to attain the ends sought. It will operate in the dark, as it were. It will squander the scarce factors of production both material and human (labour). Chaos and poverty for all will unavoidably result.
All earlier socialists were too narrow-minded to see this essential point. Neither did the earlier economists conceive its full importance. When the present writer in 1920 showed the impossibility of economic calculation under socialism, the apologists of socialism embarked upon the search for a method of calculation applicable to a socialist system. They utterly failed in these endeavours. The futility of the schemes they produced could easily be shown. Those communists who were not entirely intimidated by the fear of the Soviet executioners, for instance Trotsky, freely admitted that economic accounting is unthinkable without market relations.81 The intellectual bankruptcy of the socialist doctrine can no longer be disguised. In spite of its unprecedented popularity, socialism is done for. No economist can any longer question its impracticability. The avowal of socialist ideas is today the proof of a complete ignorance of the basic problems of economics. The socialist’s claims are as vain as those of the astrologers and the magicians.
With regard to this essential problem of socialism, viz., economic calculation, the Russian “experiment” is of no avail. The Soviets are operating within a world the greater part of which still clings to a market economy. They base the calculations on which they make their decisions on the prices established abroad. Without the help of these prices their actions would be aimless and planless. Only as far as they refer to this foreign price system are they able to calculate, keep books and prepare their plans. In this respect one may agree with the statement of various socialist and communist authors that socialism in one or a few countries only is not yet true socialism. Of course, these authors attach a quite different meaning to their assertion. They want to say that the full blessings of socialism can be reaped only in a world-embracing socialist community. Those familiar with the teachings of economics must, on the contrary, recognize that socialism will result in full chaos precisely if it is applied in the greater part of the world.
The second main objection raised against socialism is that it is a less efficient mode of production than is capitalism and that it will impair the productivity of labour. Consequently, in a socialist commonwealth the standard of living of the masses will be low when compared with conditions prevailing under capitalism. There is no doubt that this objection has not been disproved by the Soviet experience. The only certain fact about Russian affairs under the Soviet regime with regard to which all people agree is: that the standard of living of the Russian masses is much lower than that of the masses in the country which is universally considered as the paragon of capitalism, the United States of America. If we were to regard the Soviet regime as an experiment, we would have to say that the experiment has clearly demonstrated the superiority of capitalism and the inferiority of socialism.
It is true that the advocates of socialism are intent upon interpreting the lowness of the Russian standard of living in a different way. As they see things, it was not caused by socialism, but was—in spite of socialism—brought about by other agencies. They refer to various factors, e.g., the poverty of Russia under the Czars, the disastrous effects of the wars, the alleged hostility of the capitalist democratic nations, the alleged sabotage of the remnants of the Russian aristocracy and bourgeoisie and of the Kulaks. There is no need to enter into an examination of these matters. For we do not contend that any historical experience could prove or disprove a theoretical statement in the way in which a crucial experiment can verify or falsify a statement concerning natural events. It is not the critics of socialism, but its fanatical advocates, who maintain that the Soviet “experiment” proves something with regard to the effects of socialism. However, what they are really doing in dealing with the manifest and undisputed facts of Russian experience is to push them aside by impermissible tricks and fallacious syllogisms. They disavow the obvious facts by commenting upon them in such a way as to deny their bearing and their significance upon the question to be answered.
Let us, for the sake of argument, assume that their interpretation is correct. But then it would still be absurd to assert that the Soviet experiment has evidenced the superiority of socialism. All that could be said is: the fact that the masses’ standard of living is low in Russia does not provide conclusive evidence that socialism is inferior to capitalism.
A comparison with experimentation in the field of the natural sciences may clarify the issue. A biologist wants to test a new patent food. He feeds it to a number of guinea pigs. They all lose weight and finally die. The experimenter believes that their decline and death were not caused by the patent food, but by merely accidental affliction with pneumonia. It would nevertheless be absurd for him to proclaim that his experiment had evidenced the nutritive value of the compound because the unfavourable result is to be ascribed to accidental occurrences, not causally linked with the experimental arrangement. The best he could contend is that the outcome of the experiment was not conclusive, that it does not prove anything against the nutritive value of the food tested. Things are, he could assert, as if no experiment had been tried at all.
Even if the Russian masses’ standard of living were much higher than that of the capitalist countries, this still would not be conclusive proof of the superiority of socialism. It may be admitted that the undisputed fact that the standard of living in Russia is lower than that in the capitalist West does not conclusively prove the inferiority of socialism. But it is nothing short of idiocy to announce that the experience of Russia has demonstrated the superiority of public control of production.
Neither does the fact that the Russian armies, after having suffered many defeats, finally—with armament manufactured by American big business and donated to them by the American taxpayers—could aid the Americans in the conquest of Germany prove the pre-eminence of communism. When the British forces had to sustain a temporary reverse in North Africa, Professor Harold Laski, that most radical advocate of socialism, was quick to announce the final failure of capitalism. He was not consistent enough to interpret the German conquest of the Ukraine as the final failure of Russian communism. Neither did he retract his condemnation of the British system when his country emerged victorious from the war. If the military events are to be considered as the proof of any social system’s excellence, it is rather the American than the Russian system for which they bear witness.
Nothing that has happened in Russia since 1917 contradicts any of the statements of the critics of socialism and communism. Even if one bases one’s judgment exclusively on the writings of communists and fellow-trav ellers, one cannot discover any feature in Russian conditions that tells in favour of the Soviet’s social and political system. All the technological improvements of the last decades originated in the capitalistic countries. It is true that the Russians have tried to copy some of these innovations. But so did all backward oriental peoples too.
Some communists are eager to have us believe that the ruthless oppression of dissenters and the radical abolition of the freedom of thought, speech and the press are not inherent marks of the public control of business. They are, they argue, only accidental phenomena of communism, its signature in a country which—as was the case with Russia—never enjoyed freedom of thought and conscience. However, these apologists for totalitarian despotism are at a loss to explain how the rights of man could be safeguarded under government omnipotence.
Freedom of thought and conscience is a sham in a country in which the authorities are free to exile everybody whom they dislike into the Arctic or the desert, and to assign him hard labour for life. The autocrat may always try to justify such arbitrary acts by pretending that they are motivated exclusively by considerations of public welfare and economic expediency. He alone is the supreme arbiter to decide all matters referring to the execution of the plan. Freedom of the press is illusory when the government owns and operates all paper mills, printing offices and publishing houses, and ultimately decides what is to be printed and what not. The right of assembly is vain if the government owns all assembly halls and determines for what purposes they shall be used. And so it is with all other liberties too. In one of his lucid intervals Trotsky—of course Trotsky the hunted exile, not the ruthless commander of the Red army—saw things realistically and declared: “In a country where the sole employer is the State, opposition means death by slow starvation. The old principle: who does not work shall not eat, has been replaced by a new one: who does not obey shall not eat.”82 This confession settles the issue.
What the Russian experience shows is a very low level of the standard of living of the masses and unlimited dictatorial despotism. The apologists of communism are intent upon explaining these uncontested facts as accidental only; they are, they say, not the fruit of communism, but occurred in spite of communism. But even if one were to accept these excuses for the sake of argument, it would be nonsensical to maintain that the Soviet “experiment” has demonstrated anything in favour of communism and socialism.
[80. ]Marx, Der Bürgerkrieg in Frankreich, ed. Pfemfert (Berlin, 1919), p. 54. Publisher’s Note: In English, “The Civil War in France,” p. 408.
[81. ]Hayek, Individualism and the Economic Order (Chicago University Press, 1948), pp. 89-91.
[82. ]Quoted by Hayek, The Road to Serfdom (1944), Chapter IX, p. 119.