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CHAPTER 1: The Social Characteristics of Capitalism and the Psychological Causes of Its Vilification - Ludwig von Mises, The Anti-capitalistic Mentality 
The Anti-capitalist Mentality, edited and with a preface by Bettina Bien Greaves (Indianapolis: Liberty Fund, 2006).
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The Social Characteristics of Capitalism and the Psychological Causes of Its Vilification
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 serves—directly or indirectly—the 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 villeins 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 individual’s freedom is not other people’s 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 man’s 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 individual’s 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.
The Urge for Economic Betterment
Under capitalism the common man enjoys amenities 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 one’s own material conditions, is not a virtue. Such an attitude is rather animal behavior than conduct of reasonable human beings. Man’s 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 rightly understood vital interests. Too dull to see the inevitable long-run consequences of their conduct, they find delight in its passing short-run effects. They advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor and in a return to barbarism.
There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and political parties are eager to destroy this system.
Why do they all loathe capitalism? Why do they, while enjoying the well-being capitalism bestows upon them, cast longing glances upon the “good old days” of the past and the miserable conditions of the present-day Russian worker?
Status Society and Capitalism
Before answering this question it is necessary to put into better relief the distinctive feature of capitalism as against that of a status society.
It is quite customary to liken the entrepreneurs and capitalists of the market economy to the aristocrats of a status society. The basis of the comparison is the relative riches of both groups as against the relatively straitened conditions of the rest of their fellow men. However, in resorting to this metaphor, one fails to realize the fundamental difference between aristocratic riches and “bourgeois” or capitalistic riches.
The wealth of an aristocrat is not a market phenomenon; it does not originate from supplying the consumers and cannot be withdrawn or even affected by any action on the part of the public. It stems from conquest or from largess on the part of a conqueror. It may come to an end through revocation on the part of the donor or through violent eviction on the part of another conqueror, or it may be dissipated by extravagance. The feudal lord does not serve consumers and is immune to the displeasure of the populace.
The entrepreneurs and capitalists owe their wealth to the people who patronize their businesses. They lose it inevitably as soon as other men supplant them in serving the consumers better or cheaper.
It is not the task of this essay to describe the historical conditions which brought about the institutions of caste and status, of the subdivision of peoples into hereditary groups with different ranks, rights, claims, and legally sanctified privileges or disabilities. What alone is of importance for us is the fact that the preservation of these feudal institutions was incompatible with the system of capitalism. Their abolition and the establishment of the principle of equality under the law removed the barriers that prevented mankind from enjoying all those benefits which the system of private ownership of the means of production and private enterprise makes possible.
In a society based on rank, status or caste, an individual’s station in life is fixed. He is born into a certain station, and his position in society is rigidly determined by the laws and customs which assign to each member of his rank definite privileges and duties or definite disabilities. Exceptionally good or bad luck may in some rare cases elevate an individual into a higher rank or debase him into a lower rank. But as a rule, the conditions of the individual members of a definite order or rank can improve or deteriorate only with a change in the conditions of the whole membership. The individual is primarily not a citizen of a nation; he is a member of an estate (Stand, état) and only as such indirectly integrated into the body of his nation. In coming into contact with a countryman belonging to another rank, he does not feel any community. He perceives only the gulf that separates him from the other man’s status. This diversity was reflected in linguistic as well as in sartorial usages. Under the ancienrégime the European aristocrats spoke preferably French. The third estate used the vernacular, while the lower ranks of the urban population and the peasants clung to local dialects, jargons and argots which often were incomprehensible to the educated. The various ranks dressed differently. No one could fail to recognize the rank of a stranger whom he happened to see somewhere.
The main criticism leveled against the principle of equality under the law by the eulogists of the good old days is that it has abolished the privileges of rank and dignity. It has, they say, “atomized” society, dissolved its “organic” subdivisions into “amorphous” masses. The “much too many” are now supreme, and their mean materialism has superseded the noble standards of ages gone by. Money is king. Quite worthless people enjoy riches and abundance, while meritorious and worthy people go empty-handed.
This criticism tacitly implies that under the ancienrégime the aristocrats were distinguished by their virtue and that they owed their rank and their revenues to their moral and cultural superiority. It is hardly necessary to debunk this fable. Without expressing any judgment of value, the historian cannot help emphasizing that the high aristocracy of the main European countries were the descendants of those soldiers, courtiers and courtesans who, in the religious and constitutional struggles of the sixteenth and seventeenth centuries, had cleverly sided with the party that remained victorious in their respective countries.
While the conservative and the “progressive” foes of capitalism disagree with regard to the evaluation of the old standards, they fully agree in condemning the standards of capitalistic society. As they see it, not those who deserve well of their fellow men acquire wealth and prestige, but frivolous unworthy people. Both groups pretend to aim at the substitution of fairer methods of “distribution” for the manifestly unfair methods prevailing under laissez-faire capitalism.
Now, nobody ever contended that under unhampered capitalism those fare best who, from the point of view of eternal standards of value, ought to be preferred. What the capitalistic democracy of the market brings about is not rewarding people according to their “true” merits, inherent worth and moral eminence. What makes a man more or less prosperous is not the evaluation of his contribution from any “absolute” principle of justice, but evaluation on the part of his fellow men who exclusively apply the yardstick of their own personal wants, desires and ends. It is precisely this that the democratic system of the market means. The consumers are supreme—i.e., sovereign. They want to be satisfied.
Millions of people like to drink Pinkapinka, a beverage prepared by the world-embracing Pinkapinka Company. Millions like detective stories, mystery pictures, tabloid newspapers, bull fights, boxing, whiskey, cigarettes, chewing gum. Millions vote for governments eager to arm and to wage war. Thus, the entrepreneurs who provide in the best and cheapest way all the things required for the satisfaction of these wants succeed in getting rich. What counts in the frame of the market economy is not academic judgments of value, but the valuations actually manifested by people in buying or not buying.
To the grumbler who complains about the unfairness of the market system only one piece of advice can be given: If you want to acquire wealth, then try to satisfy the public by offering them something that is cheaper or which they like better. Try to supersede Pinkapinka by mixing another beverage. Equality under the law gives you the power to challenge every millionaire. It is—in a market not sabotaged by government-imposed restrictions—exclusively your fault if you do not outstrip the chocolate king, the movie star and the boxing champion.
But if you prefer, to the riches you may perhaps acquire in engaging in the garment trade or in professional boxing, the satisfaction you may derive from writing poetry or philosophy, you are free to do so. Then, of course, you will not make as much money as those who serve the majority. For such is the law of the economic democracy of the market. Those who satisfy the wants of a smaller number of people only collect fewer votes—dollars—than those who satisfy the wants of more people. In moneymaking the movie star outstrips the philosopher; the manufacturers of Pinkapinka outstrip the composer of symphonies.
It is important to realize that the opportunity to compete for the prizes society has to dispense is a social institution. It cannot remove or alleviate the innate handicaps with which nature has discriminated against many people. It cannot change the fact that many are born sick or become disabled in later life. The biological equipment of a man rigidly restricts the field in which he can serve. The class of those who have the ability to think their own thoughts is through an unbridgeable gulf separated from the class of those who cannot.
The Resentment of Frustrated Ambition
Now we can try to understand why people loathe capitalism.
In a society based on caste and status, the individual can ascribe adverse fate to conditions beyond his own control. He is a slave because the superhuman powers that determine all becoming had assigned him this rank. It is not his doing, and there is no reason for him to be ashamed of his humbleness. His wife cannot find fault with his station. If she were to tell him: “Why are you not a duke? If you were a duke, I would be a duchess,” he would reply: “If I had been born the son of a duke, I would not have married you, a slave girl, but the daughter of another duke; that you are not a duchess is exclusively your own fault; why were you not more clever in the choice of your parents?”
It is quite another thing under capitalism. Here everybody’s station in life depends on his own doing. Everybody whose ambitions have not been fully gratified knows very well that he has missed chances, that he has been tried and found wanting by his fellow man. If his wife upbraids him: “Why do you make only eighty dollars a week? If you were as smart as your former pal, Paul, you would be a foreman and I would enjoy a better life,” he becomes conscious of his own inferiority and feels humiliated.
The much talked about sternness of capitalism consists in the fact that it handles everybody according to his contribution to the well-being of his fellow men. The sway of the principle, to each according to his accomplishments, does not allow of any excuse for personal shortcomings. Everybody knows very well that there are people like himself who succeeded where he himself failed. Everybody knows that many of those whom he envies are self-made men who started from the same point from which he himself started. And, much worse, he knows that all other people know it too. He reads in the eyes of his wife and his children the silent reproach: “Why have you not been smarter?” He sees how people admire those who have been more successful than he and look with contempt or with pity on his failure.
What makes many feel unhappy under capitalism is the fact that capitalism grants to each the opportunity to attain the most desirable positions which, of course, can only be attained by a few. Whatever a man may have gained for himself, it is mostly a mere fraction of what his ambition has impelled him to win. There are always before his eyes people who have succeeded where he failed. There are fellows who have outstripped him and against whom he nurtures, in his subconsciousness, inferiority complexes. Such is the attitude of the tramp against the man with a regular job, the factory hand against the foreman, the executive against the vice-president, the vice-president against the company’s president, the man who is worth three hundred thousand dollars against the millionaire and so on. Everybody’s self-reliance and moral equilibrium are undermined by the spectacle of those who have given proof of greater abilities and capacities. Everybody is aware of his own defeat and insufficiency.
The long line of German authors who radically rejected the “Western” ideas of the Enlightenment and the social philosophy of rationalism, utilitarianism and laissez faire as well as the policies advanced by these schools of thought was opened by Justus Möser. One of the novel principles which aroused Möser’s anger was the demand that the promotion of army officers and civil servants should depend on personal merit and ability and not on the incumbent’s ancestry and noble lineage, his age and length of service. Life in a society in which success would exclusively depend on personal merit would, says Möser, simply be unbearable. As human nature is, everybody is prone to overrate his own worth and deserts. If a man’s station in life is conditioned by factors other than his inherent excellence, those who remain at the bottom of the ladder can acquiesce in this outcome and, knowing their own worth, still preserve their dignity and self-respect. But it is different if merit alone decides. Then the unsuccessful feel themselves insulted and humiliated. Hate and enmity against all those who superseded them must result.*
The price and market system of capitalism is such a society in which merit and achievements determine a man’s success or failure. Whatever one may think of Möser’s bias against the merit principle, one must admit that he was right in describing one of its psychological consequences. He had an insight into the feelings of those who had been tried and found wanting.
In order to console himself and to restore his self-assertion, such a man is in search of a scapegoat. He tries to persuade himself that he failed through no fault of his own. He is at least as brilliant, efficient and industrious as those who outshine him. Unfortunately this nefarious social order of ours does not accord the prizes to the most meritorious men; it crowns the dishonest unscrupulous scoundrel, the swindler, the exploiter, the “rugged individualist.” What made himself fail was his honesty. He was too decent to resort to the base tricks to which his successful rivals owe their ascendancy. As conditions are under capitalism, a man is forced to choose between virtue and poverty on the one hand, and vice and riches on the other. He, himself, thank God, chose the former alternative and rejected the latter.
This search for a scapegoat is an attitude of people living under the social order which treats everybody according to his contribution to the well-being of his fellow men and where thus everybody is the founder of his own fortune. In such a society each member whose ambitions have not been fully satisfied resents the fortune of all those who succeeded better. The fool releases these feelings in slander and defamation. The more sophisticated do not indulge in personal calumny. They sublimate their hatred into a philosophy, the philosophy of anti-capitalism, in order to render inaudible the inner voice that tells them that their failure is entirely their own fault. Their fanaticism in defending their critique of capitalism is precisely due to the fact that they are fighting their own awareness of its falsity.
The suffering from frustrated ambition is peculiar to people living in a society of equality under the law. It is not caused by equality under the law, but by the fact that in a society of equality under the law the inequality of men with regard to intellectual abilities, will power and application becomes visible. The gulf between what a man is and achieves and what he thinks of his own abilities and achievements is pitilessly revealed. Daydreams of a “fair” world which would treat him according to his “real worth” are the refuge of all those plagued by a lack of self-knowledge.
The Resentment of the Intellectuals
The common man as a rule does not have the opportunity of consorting with people who have succeeded better than he has. He moves in the circle of other common men. He never meets his boss socially. He never learns from personal experience how different an entrepreneur or an executive is with regard to all those abilities and faculties which are required for successfully serving the consumers. His envy and the resentment it engenders are not directed against a living being of flesh and blood, but against pale abstractions like “management,” “capital” and “Wall Street.” It is impossible to abominate such a faint shadow with the same bitterness of feeling that one may bear against a fellow creature whom one encounters daily.
It is different with people whom special conditions of their occupation or their family affiliation bring into personal contact with the winners of the prizes which—as they believe—by rights should have been given to themselves. With them the feelings of frustrated ambition become especially poignant because they engender hatred of concrete living beings. They loathe capitalism because it has assigned to this other man the position they themselves would like to have.
Such is the case with those people who are commonly called the intellectuals. Take for instance the physicians. Daily routine and experience make every doctor cognizant of the fact that there exists a hierarchy in which all medical men are graded according to their merits and achievements. Those more eminent than he himself is, those whose methods and innovations he must learn and practice in order to be up to date were his classmates in the medical school, they served with him as internes, they attend with him the meetings of medical associations. He meets them at the bedside of patients as well as in social gatherings. Some of them are his personal friends or related to him, and they all behave toward him with the utmost civility and address him as their dear colleague. But they tower far above him in the appreciation of the public and often also in height of income. They have outstripped him and now belong to another class of men. When he compares himself with them, he feels humiliated. But he must watch himself carefully lest anybody notice his resentment and envy. Even the slightest indication of such feelings would be looked upon as very bad manners and would depreciate him in the eyes of everybody. He must swallow down his mortification and divert his wrath toward a vicarious target. He indicts society’s economic organization, the nefarious system of capitalism. But for this unfair regime his abilities and talents, his zeal and his achievements would have brought him the rich reward they deserve.
It is the same with many lawyers and teachers, artists and actors, writers and journalists, architects and scientific research workers, engineers and chemists. They, too, feel frustrated because they are vexed by the ascendancy of their more successful colleagues, their former schoolfellows and cronies. Their resentment is deepened by precisely those codes of professional conduct and ethics that throw a veil of comradeship and colleagueship over the reality of competition.
To understand the intellectual’s abhorrence of capitalism one must realize that in his mind this system is incarnated in a definite number of compeers whose success he resents and whom he makes responsible for the frustration of his own farflung ambitions. His passionate dislike of capitalism is a mere blind for his hatred of some successful “colleagues.”
The Anti-capitalistic Bias of American Intellectuals
The anti-capitalistic bias of the intellectuals is a phenomenon not limited to one or a few countries only. But it is more general and more bitter in the United States than it is in the European countries. To explain this rather surprising fact one must deal with what one calls “society” or, in French, also le monde.
In Europe “society” includes all those eminent in any sphere of activity. Statesmen and parliamentary leaders, the heads of the various departments of the civil service, publishers and editors of the main newspapers and magazines, prominent writers, scientists, artists, actors, musicians, engineers, lawyers and physicians form together with outstanding businessmen and scions of aristocratic and patrician families what is considered the good society. They come into contact with one another at dinner and tea parties, charity balls and bazaars, at first-nights, and varnishing-days; they frequent the same restaurants, hotels and resorts. When they meet, they take their pleasure in conversation about intellectual matters, a mode of social intercourse first developed in Italy of the Renaissance, perfected in the Parisian salons and later imitated by the “society” of all important cities of Western and Central Europe. New ideas and ideologies find their response in these social gatherings before they begin to influence broader circles. One cannot deal with the history of the fine arts and literature in the nineteenth century without analyzing the role “society” played in encouraging or discouraging their protagonists.
Access to European society is open to everybody who has distinguished himself in any field. It may be easier to people of noble ancestry and great wealth than to commoners with modest incomes. But neither riches nor titles can give to a member of this set the rank and prestige that is the reward of great personal distinction. The stars of the Parisian salons are not the millionaires, but the members of the Académie Française. The intellectuals prevail and the others feign at least a lively interest in intellectual concerns.
Society in this sense is foreign to the American scene. What is called “society” in the United States almost exclusively consists of the richest families. There is little social intercourse between the successful businessmen and the nation’s eminent authors, artists and scientists. Those listed in the Social Register do not meet socially the molders of public opinion and the harbingers of the ideas that will determine the future of the nation. Most of the “socialites” are not interested in books and ideas. When they meet and do not play cards, they gossip about persons and talk more about sports than about cultural matters. But even those who are not averse to reading, consider writers, scientists and artists as people with whom they do not want to consort. An almost unsurmountable gulf separates “society” from the intellectuals.
It is possible to explain the emergence of this situation historically. But such an explanation does not alter the facts. Neither can it remove or alleviate the resentment with which the intellectuals react to the contempt in which they are held by the members of “society.” American authors or scientists are prone to consider the wealthy businessman as a barbarian, as a man exclusively intent upon making money. The professor despises the alumni who are more interested in the university’s football team than in its scholastic achievements. He feels insulted if he learns that the coach gets a higher salary than an eminent professor of philosophy. The men whose research has given rise to new methods of production hate the businessmen who are merely interested in the cash value of their research work. It is very significant that such a large number of American research physicists sympathize with socialism or communism. As they are ignorant of economics and realize that the university teachers of economics are also opposed to what they disparagingly call the profit system, no other attitude can be expected from them.
If a group of people secludes itself from the rest of the nation, especially also from its intellectual leaders, in the way American “socialites” do, they unavoidably become the target of rather hostile criticisms on the part of those whom they keep out of their own circles. The exclusivism practiced by the American rich has made them in a certain sense outcasts. They may take a vain pride in their own distinction. What they fail to see is that their self-chosen segregation isolates them and kindles animosities which make the intellectuals inclined to favor anti-capitalistic policies.
The Resentment of the White Collar Workers
Besides being harassed by the general hatred of capitalism common to most people, the white collar worker labors under two special afflictions peculiar to his own category.
Sitting behind a desk and committing words and figures to paper, he is prone to overrate the significance of his work. Like the boss he writes and reads what other fellows have put on paper and talks directly or over the telephone with other people. Full of conceit, he imagines himself to belong to the enterprise’s managing elite and compares his own tasks with those of his boss. As a “worker by brain” he looks arrogantly down upon the manual worker whose hands are calloused and soiled. It makes him furious to notice that many of these manual laborers get higher pay and are more respected than he himself. What a shame, he thinks, that capitalism fondles the simple drudgery of the “uneducated” and does not appraise his “intellectual” work according to its “true” value.
In nursing such atavistic ideas about the significance of office work and manual work, the white collar man shuts his eyes to a realistic evaluation of the situation. He does not see that his own clerical job consists in the performance of routine tasks which require but a simple training, while the “hands” whom he envies are the highly skilled mechanics and technicians who know how to handle the intricate machines and contrivances of modern industry. It is precisely this complete misconstruction of the real state of affairs that discloses the clerk’s lack of insight and power of reasoning.
On the other hand, the clerical worker, like professional people, is plagued by daily contact with men who have succeeded better than he. He sees some of his fellow employees who started from the same level with him make a career within the hierarchy of the office while he remains at the bottom. Only yesterday Paul was in the same rank with him. Today Paul has a more important and better paid assignment. And yet, he thinks, Paul is in every regard inferior to himself. Certainly, he concludes, Paul owes his advancement to those mean tricks and artifices that can further a man’s career only under this unfair system of capitalism which all books and newspapers, all scholars and politicians denounce as the root of all mischief and misery.
The classical expression of the clerks’ conceit and their fanciful belief that their own subaltern jobs are a part of the entrepreneurial activities and congeneric with the work of their bosses is to be found in Lenin’s description of the “control of production and distribution” as provided by his most popular essay. Lenin himself and most of his fellow-conspirators never learned anything about the operation of the market economy and never wanted to. All they knew about capitalism was that Marx had described it as the worst of all evils. They were professional revolutionaries. The only sources of their earnings were the party funds which were fed by voluntary and more often involuntary—extorted—contributions and subscriptions and by violent “expropriations.” But, before 1917, as exiles in Western and Central Europe, some of the comrades occasionally held subaltern routine jobs in business firms. It was their experience—the experience of clerks who had to fill out forms and blanks, to copy letters, to enter figures into books and to file papers—which provided Lenin with all the information he had acquired about entrepreneurial activities.
Lenin correctly distinguishes between the work of the entrepreneurs on the one hand, and that of “the scientifically educated staff of engineers, agronomists and so on” on the other hand. These experts and technologists are mainly executors of orders. They obey under capitalism the capitalists, they will obey under socialism “the armed workers.” The function of the capitalists and entrepreneurs is different; it is, according to Lenin, “control of production and distribution, of labor and products.” Now the tasks of the entrepreneurs and capitalists are in fact the determination of the purposes for which the factors of production are to be employed in order to serve in the best possible way the wants of the consumers—i.e., to determine what should be produced, in what quantities and in what quality. However, this is not the meaning that Lenin attaches to the term “control.” As a Marxian he was unaware of the problems the conduct of production activities has to face under any imaginable system of social organization: the inevitable scarcity of the factors of production, the uncertainty of future conditions for which production has to provide, and the necessity of picking out from the bewildering multitude of technological methods suitable for the attainment of ends already chosen those which obstruct as little as possible the attainment of other ends—i.e., those with which the cost of production is lowest. No allusion to these matters can be found in the writings of Marx and Engels. All that Lenin learned about business from the tales of his comrades who occasionally sat in business offices was that it required a lot of scribbling, recording and ciphering. Thus, he declares that “accounting and control” are the chief things necessary for the organizing and correct functioning of society. But “accounting and control,” he goes on saying, have already been “simplified by capitalism to the utmost, till they have become the extraordinarily simple operations of watching, recording and issuing receipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic.”*
Here we have the philosophy of the filing clerk in its full glory.
The Resentment of the “Cousins”
On the market not hampered by the interference of external forces, the process which tends to convey control of the factors of production into the hands of the most efficient people never stops. As soon as a man or a firm begins to slacken in endeavors to meet, in the best possible way, the most urgent of the not yet properly satisfied needs of the consumers, dissipation of the wealth accumulated by previous success in such endeavors sets in. Often this dispersion of the fortune starts already in the lifetime of the businessman when his buoyancy, energy and resourcefulness become weakened by the impact of old age, fatigue, and sickness, and his ability to adjust the conduct of his affairs to the unceasingly changing structure of the market fades away. More frequently it is the sluggishness of his heirs that fritters away the heritage. If the dull and stolid progeny do not sink back into insignificance and in spite of their incompetence remain moneyed people, they owe their prosperity to institutions and political measures which were dictated by anti-capitalistic tendencies. They withdraw from the market where there is no means of preserving acquired wealth other than acquiring it anew each day in tough competition with everybody, with the already existing firms as well as with newcomers “operating on a shoestring.” In buying government bonds they flee under the wings of the government which promises to safeguard them against the dangers of the market in which losses are the penalty of inefficiency.*
However, there are families in which the eminent capacities required for entrepreneurial success are propagated through several generations. One or two of the sons or grandsons or even great-grandsons equal or excel their forebear. The ancestor’s wealth is not dissipated, but grows more and more.
These cases are, of course, not frequent. They attract attention not only on account of their rarity, but also on account of the fact that men who know how to enlarge an inherited business enjoy a double prestige, the esteem shown to their fathers and that shown to themselves. Such “patricians,” as they are sometimes called by people who ignore the difference between a status society and the capitalistic society, for the most part combine in their persons breeding, fineness of taste and gracious manners with the skill and industriousness of a hardworking businessman. And some of them belong to the country’s or even the world’s richest entrepreneurs.
It is the conditions of these few richest among these so-called patrician families which we must scrutinize in order to explain a phenomenon that plays an important role in modern anti-capitalistic propaganda and machinations.
Even in these lucky families, the qualities required for the successful conduct of big business are not inherited by all sons and grandsons. As a rule only one, or at best two, of each generation are endowed with them. Then it is essential for the survival of the family’s wealth and business that the conduct of affairs be entrusted to this one or to these two and that the other members be relegated to the position of mere recipients of a quota of the proceeds. The methods chosen for such arrangements vary from country to country, according to the special provisions of the national and local laws. Their effect, however, is always the same. They divide the family into two categories—those who direct the conduct of affairs and those who do not.
The second category consists as a rule of people closely related to those of the first category whom we propose to call the bosses. They are brothers, cousins, nephews of the bosses, more often their sisters, widowed sisters-in-law, female cousins, nieces and so on. We propose to call the members of this second category the cousins.
The cousins derive their revenues from the firm or corporation. But they are foreign to business life and know nothing about the problems an entrepreneur has to face. They have been brought up in fashionable boarding schools and colleges, whose atmosphere was filled by a haughty contempt for banausic moneymaking. Some of them pass their time in night clubs and other places of amusement, bet and gamble, feast and revel, and indulge in expensive debauchery. Others amateurishly busy themselves with painting, writing, or other arts. Thus, most of them are idle and useless people.
It is true that there have been and are exceptions, and that the achievements of these exceptional members of the group of cousins by far outweigh the scandals raised by the provoking behavior of the playboys and spendthrifts. Many of the most eminent authors, scholars and statesmen were such “gentlemen of no occupation.” Free from the necessity of earning a livelihood by a gainful occupation and independent of the favor of those addicted to bigotry, they became pioneers of new ideas. Others, themselves lacking the inspiration, became the Maecenas of artists who, without the financial aid and the applause received, would not have been in a position to accomplish their creative work. The role that moneyed men played in Great Britain’s intellectual and political evolution has been stressed by many historians. The milieu in which the authors and artists of nineteenth-century France lived and found encouragement was le monde, “society.”
However, we deal here neither with the sins of the playboys nor with the excellence of other groups of wealthy people. Our theme is the part which a special group of cousins took in the dissemination of doctrines aiming at the destruction of the market economy.
Many cousins believe that they have been wronged by the arrangements regulating their financial relation to the bosses and the family’s firm. Whether these arrangements were made by the will of their father or grandfather, or by an agreement which they themselves have signed, they think that they are receiving too little and the bosses too much. Unfamiliar with the nature of business and the market, they are—with Marx—convinced that capital automatically “begets profits.” They do not see any reason why those members of the family who are in charge of the conduct of affairs should earn more than they. Too dull to appraise correctly the meaning of balance sheets and profit and loss accounts, they suspect in every act of the bosses a sinister attempt to cheat them and to deprive them of their birthright. They quarrel with them continually.
It is not astonishing that the bosses lose their temper. They are proud of their success in overcoming all the obstacles which governments and labor unions place in the way of big business. They are fully aware of the fact that, but for their efficiency and zeal, the firm would either have long since gone astray or the family would have been forced to sell out. They believe that the cousins should do justice to their merits, and they find their complaints simply impudent and outrageous.
The family feud between the bosses and the cousins concerns only the members of the clan. But it attains general importance when the cousins, in order to annoy the bosses, join the anti-capitalistic camp and provide the funds for all kinds of “progressive” ventures. The cousins are enthusiastic in supporting strikes, even strikes in the factories from which their own revenues originate.* It is a well-known fact that most of the “progressive” magazines and many “progressive” newspapers entirely depend on the subsidies lavishly granted by them. These cousins endow progressive universities and colleges and institutes for “social research” and sponsor all sorts of communist party activities. As “parlor socialists” and “penthouse Bolsheviks,” they play an important role in the “proletarian army” fighting against the “dismal system of capitalism.”
The Communism of Broadway and Hollywood
The many to whom capitalism gave a comfortable income and leisure are yearning for entertainment. Crowds throng to the theatres. There is money in show business. Popular actors and playwrights enjoy a six-figure income. They live in palatial houses with butlers and swimming pools. They certainly are not “prisoners of starvation.” Yet Hollywood and Broadway, the world-famous centers of the entertainment industry, are hotbeds of communism. Authors and performers are to be found among the most bigoted supporters of Sovietism.
Various attempts have been made to explain this phenomenon. There is in most of these interpretations a grain of truth. However, they all fail to take account of the main motive that drives champions of the stage and the screen into the ranks of revolutionaries.
Under capitalism, material success depends on the appreciation of a man’s achievements on the part of the sovereign consumers. In this regard there is no difference between the services rendered by a manufacturer and those rendered by a producer, an actor or a playwright. Yet the awareness of this dependence makes those in the show business much more uneasy than those supplying the customers with tangible amenities. The manufacturers of tangible goods know that their products are purchased because of certain physical properties. They may reasonably expect that the public will continue to ask for these commodities as long as nothing better or cheaper is offered to them, for it is unlikely that the needs which these goods satisfy will change in the near future. The state of the market for these goods can, to some extent, be anticipated by intelligent entrepreneurs. They can, with a degree of confidence, look into the future.
It is another thing with entertainment. People long for amusement because they are bored. And nothing makes them so weary as amusements with which they are already familiar. The essence of the entertainment industry is variety. The patrons applaud most what is new and therefore unexpected and surprising. They are capricious and unaccountable. They disdain what they cherished yesterday. A tycoon of the stage or the screen must always fear the waywardness of the public. He awakes rich and famous one morning and may be forgotten the next day. He knows very well that he depends entirely on the whims and fancies of a crowd hankering after merriment. He is always agitated by anxiety. Like the master-builder in Ibsen’s play, he fears the unknown newcomers, the vigorous youths who will supplant him in the favor of the public.
It is obvious that there is no relief from what makes these stage people uneasy. Thus they catch at a straw. Communism, some of them think, will bring their deliverance. Is it not a system that makes all people happy? Do not very eminent men declare that all the evils of mankind are caused by capitalism and will be wiped out by communism? Are not they themselves hardworking people, comrades of all other working men?
It may be fairly assumed that none of the Hollywood and Broadway communists has ever studied the writings of any socialist author and still less any serious analysis of the market economy. But it is this very fact that, to these glamour girls, dancers and singers, to these authors and producers of comedies, moving pictures and songs, gives the strange illusion that their particular grievances will disappear as soon as the “expropriators” will be expropriated.
There are people who blame capitalism for the stupidity and crudeness of many products of the entertainment industry. There is no need to argue this point. But it is noteworthy to remember that no other American milieu was more enthusiastic in the endorsement of communism than that of people cooperating in the production of these silly plays and films. When a future historian searches for those little significant facts which Taine appreciated highly as source material, he should not neglect to mention the role which the world’s most famous strip-tease artist played in the American radical movement.*
[* ]Justus Möser, No Promotion According to Merit (1772; repr. in vol. 2 of Sämmtliche Werke, ed. B. R. Abeken, Berlin, 1842, pp. 187–91).
[* ]Cf. Lenin, State and Revolution, Little Lenin Library, no. 14 (New York: International Publishers), pp. 83–84.
[* ]In Europe there was, until a short time ago, still another opportunity offered to make a fortune safe against clumsiness and extravagance on the part of the owner. Wealth acquired in the market could be invested in big landed estates which tariffs and other legal provisions protected against competition of outsiders. Entails in Great Britain and similar settlements of succession as practiced on the Continent prevented the owner from disposing of his property to the prejudice of his heirs.
[* ]“Limousines with liveried chauffeurs delivered earnest ladies to the picket lines, sometimes in strikes against businesses which helped to pay for the limousines.” Eugene Lyons, The Red Decade (New York, 1941), p. 186. (Italics mine.)
[* ]Cf. Eugene Lyons, l.c., p. 293. [Editor’s note: Gypsy Rose Lee gained success as an entertainer and also as the author of best-selling detective stories and an autobiography.]