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• Foreword
• Author’s Preface
• Interventionism
• Introduction
• 1.: The Problem
• 2.: Capitalism Or Market Economy
• 3.: The Socialist Economy
• 4.: The Capitalist State and the Socialist State
• 5.: The Interventionist State
• 6.: The Plea For Moral Reform
• I.: Interference By Restriction
• 1.: The Nature of Restrictive Measures
• 2.: Costs and Benefits of Restrictive Measures
• 3.: The Restrictive Measure As a Privilege
• 4.: Restrictive Measures As Expenditures
• II.: Interference By Price Control
• 1.: The Alternative: Statutory Law Versus Economic Law
• 2.: The Reaction of the Market
• 3.: Minimum Wages and Unemployment
• 4.: The Political Consequences of Unemployment
• III.: Inflation and Credit Expansion
• 1.: Inflation
• 2.: Credit Expansion
• 3.: Foreign Exchange Control
• 4.: The Flight of Capital and the Problem of “hot Money”
• IV.: Confiscation and Subsidies
• 1.: Confiscation
• 2.: The Procurement of Funds For Public Expenditure
• 3.: Unprofitable Public Works and Subsidies
• 4.: “altruistic” Entrepreneurship
• V.: Corporativism and Syndicalism
• 1.: Corporativism
• 2.: Syndicalism
• VI.: War Economy
• 1.: War and the Market Economy
• 2.: Total War and War Socialism
• 3.: Market Economy and National Defense
• VII.: The Economic, Social, and Political Consequences of Interventionism
• 1.: The Economic Consequences
• 2.: Parliamentary Government and Interventionism
• 3.: Freedom and the Economic System
• 4.: The Great Delusion
• 5.: The Source of Hitler’s Success
• VIII.: Conclusions
• Reading References

5.

The Source of Hitler’s Success

Hitler, Stalin, and Mussolini constantly proclaim that they are chosen by destiny to bring salvation to this world. They claim they are the leaders of the creative youth who fight against their outlived elders. They bring from the East the new culture which is to replace the dying Western civilization. They want to give the coup de grâce to liberalism and capitalism; they want to overcome immoral egoism by altruism; they plan to replace the anarchic democracy by order and organization, the society of “classes” by the total state, the market economy by socialism. Their war is not a war for territorial expansion, for loot and hegemony like the imperialistic wars of the past, but a holy crusade for a better world to live in. And they feel certain of their victory because they are convinced that they are borne by “the wave of the future.”

It is a law of nature, they say, that great historic changes cannot take place peacefully or without conflict. It would be petty and stupid, they contend, to overlook the creative quality of their work because of some unpleasantness which the great world revolution must necessarily bring with it. They maintain one should not overlook the glory of the new gospel because of ill-placed pity for Jews and Masons, Poles and Czechs, Finns and Greeks, the decadent English aristocracy and the corrupt French bourgeoisie. Such softness and such blindness for the new standards of morality prove only the decadence of the dying capitalistic pseudo-culture. The whining and crying of impotent old men, they say, is futile; it will not stop the victorious advance of youth. No one can stop the wheel of history, or turn back the clock of time.

The success of this propaganda is overwhelming. People do not consider the content of alleged new gospel; they merely understand that it is new and believe to see in this fact its justification. As women welcome a new style in clothes just to have a change, so the supposedly new style in politics and economics is welcomed. People hasten to exchange their “old” ideas for “new” ones, because they fear to appear old-fashioned and reactionary. They join the chorus decrying the shortcomings of the capitalistic civilization and speak in elated enthusiasm of the achievements of the autocrats. Nothing is today more fashionable than slandering Western civilization.

This mentality has made it easy for Hitler to gain his victories. The Czechs and the Danes capitulated without a fight. Norwegian officers handed over large sections of their country to Hitler’s army. The Dutch and the Belgians gave in after only a short resistance. The French had the audacity to celebrate the destruction of their independence as a “national revival.” It took Hitler five years to effect the Anschluss of Austria; two-and-one-half years later he was master of the European continent.

Hitler does not have a new secret weapon at his disposal. He does not owe his victory to an excellent intelligence service which informs him of the plans of his opponents. Even the much-talked-of “fifth column” was not decisive. He won because the supposed opponents were already quite sympathetic to the ideas for which he stood.

Only those who unconditionally and unrestrictedly consider the market economy as the only workable form of social cooperation are opponents of the totalitarian systems and are capable of fighting them successfully. Those who want socialism intend to bring to their country the system which Russia and Germany enjoy. To favor interventionism means to enter a road which inevitably leads to socialism.

An ideological struggle cannot be fought successfully with constant concessions to the principles of the enemy. Those who refute capitalism because it supposedly is inimical to the interest of the masses, those who proclaim “as a matter of course” that after the victory over Hitler the market economy will have to be replaced by a better system and, therefore, everything should be done now to make the government control of business as complete as possible, are actually fighting for totalitarianism. The “progressives” who today masquerade as “liberals” may rant against “fascism”; yet it is their policy that paves the way for Hitlerism.

Nothing could have been more helpful to the success of the National-Socialist (Nazi) movement than the methods used by the “progressives,” denouncing Nazism as a party serving the interests of “capital.” The German workers knew this tactic too well to be deceived by it again. Was it not true that, since the seventies of the [nineteenth] century, the ostensibly pro-labor Social-Democrats had fought all the pro-labor measures of the German government vigorously, calling them “bourgeois” and injurious to the interests of the working class? The Social-Democrats had consistently voted against the nationalization of the railroads, the municipalization of the public utilities, labor legislation, and compulsory accident, sickness, and old-age insurance, the German social security system which was adopted later throughout the world. Then after the war [World War I] the Communists branded the German Social-Democratic party and the Social-Democratic unions as “traitors to their class.” So the German workers realized that every party wooing them called the competing parties “willing servants of capitalism,” and their allegiance to Nazism would not be shattered by such phrases.

Unless we are utterly oblivious to the facts, we must realize that the German workers are the most reliable supporters of the Hitler regime. Nazism has won them over completely by eliminating unemployment and by reducing the entrepreneurs to the status of shop managers (Betriebsführer). Big business, shopkeepers, and peasants are disappointed. Labor is well satisfied and will stand by Hitler, unless the war takes a turn which would destroy their hope for a better life after the peace treaty. Only military reverses can deprive Hitler of the backing of the German workers.

The fact that the capitalists and entrepreneurs, faced with the alternative of Communism or Nazism, chose the latter, does not require any further explanation. They preferred to live as shop managers under Hitler than to be “liquidated” as “bourgeois” by Stalin. Capitalists don’t like to be killed any more than other people do.

What pernicious effects may be produced by believing that the German workers are opposed to Hitler was proved by the English tactics during the first year of the war. The government of Neville Chamberlain* firmly believed that the war would be brought to an end by a revolution of the German workers. Instead of concentrating on vigorous arming and fighting, they had their planes drop leaflets over Germany telling the German workers that England was not fighting this war against them, but against their oppressor, Hitler. The English government knew very well, they said, that the German people, particularly labor, were against war and were only forced into it by their self-imposed dictator.

The workers in the Anglo-Saxon countries, too, knew that the socialist parties competing for their favor usually accused each other of favoring capitalism. Communists of all shades advance this accusation against socialists. And within the Communist groups the Trotskyites used this same argument against Stalin and his men. And vice versa. The fact that the “progressives” bring the same accusation against Nazism and Fascism will not prevent labor someday from following another gang wearing shirts of a different color.

What is wrong with Western civilization is the accepted habit of judging political parties merely by asking whether they seem new and radical enough, not by analyzing whether they are wise or unwise, or whether they are apt to achieve their aims. Not everything that exists today is reasonable; but this does not mean that everything that does not exist is sensible.

The usual terminology of political language is stupid. What is “left” and what is “right”? Why should Hitler be “right” and Stalin, his temporary friend, be “left”?† Who is “reactionary” and who is “progressive”? Reaction against an unwise policy is not to be condemned. And progress towards chaos is not to be commended. Nothing should find acceptance just because it is new, radical, and fashionable. “Orthodoxy” is not an evil if the doctrine on which the “orthodox” stand is sound. Who is anti-labor, those who want to lower labor to the Russian level, or those who want for labor the capitalistic standard of the United States? Who is “nationalist,” those who want to bring their nation under the heel of the Nazis, or those who want to preserve its independence?

What would have happened to Western civilization if its peoples had always shown such liking for the “new”? Suppose they had welcomed as “the wave of the future” Attila and his Huns, the creed of Mohammed, or the Tartars? They, too, were totalitarian and had military successes to their credit which made the weak hesitate and ready to capitulate. What mankind needs today is liberation from the rule of nonsensical slogans and a return to sound reasoning.

VIII.

Conclusions

This essay does not deal with the question whether socialism—public ownership of the means of production, a planned economy—is in any way a system superior to capitalism or whether socialism represents a feasible workable system of social cooperation at all. It does not discuss the programs of those parties that want to replace capitalism, democracy, and freedom by socialist totalitarianism according to either the Russian or the German pattern. The author has dealt with these questions in another book.1 Nor is this analysis concerned with whether democratic government and civil liberties are good or bad. Or whether or not totalitarian dictatorship is a better form of government.

This analysis is intended merely to explain that the economic policy of interventionism, which is advertised by its advocates as a progressive socioeconomic policy, is based on a fallacy. This book demonstrates that it is not true that interventionism can lead to a lasting system of economic organization. The various measures by which interventionism tries to direct business cannot achieve the aims its honest advocates are seeking by their application. Interventionist measures lead to conditions which, from the standpoint of those who recommend them, are actually less desirable than those they are designed to alleviate. They create unemployment, depression, monopoly, distress. They may make a few people richer, but they make all others poorer and less satisfied. If governments do not give them up and return to the unhampered market economy, if they stubbornly persist in the attempt to compensate by further interventions for the shortcomings of earlier interventions, they will find eventually that they have adopted socialism.

Furthermore, it is a tragic error to believe that democracy and freedom are compatible with interventionism or even with socialism. What people mean by democratic government, civil liberties, and personal freedom can exist only in the market economy. It is not an accident that everywhere, with the progress of interventionism, the democratic institutions have disappeared one after the other and that, in the socialist countries, oriental despotism has been able to stage a successful comeback. It is not mere chance that democracy is attacked everywhere, both by the partisans of Russian Communism and by those of German Socialism. The radicalism of the “right” and the radicalism of the “left” differ in minor unimportant details only; they meet in their wholesale denunciations of both capitalism and democracy.

Mankind has a choice only between the unhampered market economy, democracy, and freedom on the one side, and socialism and dictatorship on the other side. A third alternative, an interventionist compromise, is not feasible.

It may be pointed out that this conclusion is in accord with some of the teachings of Karl Marx and orthodox Marxists. Marx and the Marxists have branded as “petit bourgeois” all those measures which are called interventionism, and they have acknowledged their self-contradictory character. Marx considered it futile for trade unions to try to obtain higher wages for the whole working class in the capitalistic society. And the orthodox Marxists have always protested against proposals to have the state, directly or indirectly, fix minimum-wage rates. Marx developed the doctrine that a “dictatorship of the proletariat” was necessary to prepare the way for socialism, the “higher phase of communist society.” During the transition period of several centuries there would be no room for democracy. Thus, Lenin was quite right when he pointed to Marx to justify his reign of terror. As to what would happen after socialism was attained, Marx merely said that the state would wither away.

The victories which Lenin, Mussolini, and Hitler have won were not defeats of capitalism but the inescapable consequences of interventionist policy. Lenin defeated the interventionism of Kerensky.* Mussolini won his victory over the syndicalism of the Italian trade unions which culminated in the seizure of factories. Hitler triumphed over the interventionism of the Weimar Republic. Franco† won his victory over the syndicalist anarchy in Spain and Catalonia. In France the system of the front populaire collapsed and the dictatorship of Pétain followed. Once interventionism was embarked upon, this was the logical sequence of events. Interventionism will always lead to the same result.

If there is anything history could teach us it would be that no nation has ever created a higher civilization without private ownership of the means of production and that democracy has only been found where private ownership of the means of production has existed.

Should our civilization perish, it will not be because it is doomed, but because people refused to learn from theory or from history. It is not fate that determines the future of human society, but man himself. The decay of Western civilization is not an act of God, something which cannot be averted. If it comes, it will be the result of a policy which still can be abandoned and replaced by a better policy.

READING REFERENCES

In this book, Mises shows how government intervention results in consequences its proponents did not intend. It hampers production, causing artificial scarcities. It creates special interest groups. It leads to inflation, domestic economic conflict, a militant nationalism, international conflict, and even war. The books listed here deal with various aspects of intervention and help to elaborate and expand on Mises’s theme.

• Bastiat, Frederic. Economic Sophisms (French original, 1845, 1848; translated by Arthur Goddard, Van Nostrand, 1964). Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1991.
• Carson, Clarence B. Flight from Reality. Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1969.
• ———. The World in the Grip of an Idea. New Rochelle, N.Y.: Arlington House, 1980.
• Friedman, Milton, with the assistance of Rose D. Friedman. Capitalism and Freedom (1962). New preface by the author. Chicago: University of Chicago Press, 1982.
• Greaves, Percy L., Jr. Understanding the Dollar Crisis (1973). Dobbs Ferry, N.Y.: Free Market Books, 1984.
• Hayek, F. A. The Road to Serfdom (1944). 50th anniversary edition with a new introduction by Milton Friedman. Chicago: University of Chicago Press, 1994.
• Hazlitt, Henry. Economics in One Lesson (1946; many reprints). 50th anniversary edition. Foreword by Steve Forbes. San Francisco: Laissez Faire Books, 1996.
• Higgs, Robert. Crisis and Leviathan: Critical Episodes in the Growth of American Government. New York: Oxford University Press, 1987.
• Mises, Ludwig von. Bureaucracy (1944; reprinted 1969). Spring Mills, Pa.: Libertarian Press, 1983.
• ———. Economic Policy: Thoughts for Today and Tomorrow (1979). Irvington-on-Hudson, N.Y.: Free Market Books, 1995.
• ———. Liberalism: The Classical Tradition (German original, 1927; translated by Ralph Raico; 1st English-language edition titled The Free and Prosperous Commonwealth, 1962). Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1985, 1996.
• ———. Nation, State and Economy: Contributions to the Politics and History of Our Time (German original, 1919; translated by Leland B. Yeager). New York: New York University Press, 1983.
• ———. Omnipotent Government: The Rise of the Total State and Total War (1944; 1969). Spring Mills, Pa.: Libertarian Press, 1985.
• ———. Planned Chaos. Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1947. Many printings. Included as the “Epilogue” in 1951 and later editions of Mises’s Socialism (Yale, 1951; Jonathan Cape, 1969; and Liberty Fund, 1981).
• Opitz, Edmund A., ed. Leviathan at War. Irvington-on-Hudson, N.Y.: Foundation for Economic Education, Inc., 1995.
• Ortega y Gasset, José. The Revolt of the Masses (Spanish original, 1930; authorized English translation, 1932). New York: W. W. Norton, 1993.
• Röpke, Wilhelm. The Social Crisis of Our Time (German original, 1942; English translation, 1950). Introduction by William F. Campbell, foreword by Russell Kirk. New Brunswick, N.J.: Transaction Books, 1992.
• ———. Welfare, Freedom and Inflation. Foreword by Roger A. Freeman, introduction by Graham Hutton. University, Ala.: University of Alabama Press, 1964.
• Rothbard, Murray N. What Has Government Done to Our Money? (1964, 1974). Auburn, Ala.: Ludwig von Mises Institute/Auburn University, 1990.
• Rummel, R. J. Death by Government. Foreword by Irving Louis Horowitz. New Brunswick, N.J.: Transaction Publishers, 1994.
• ———. Power Kills: Democracy as a Method of Nonviolence. New Brunswick, N.J.: Transaction Publishers, 1997.
• Sennholz, Hans F. Age of Inflation. Belmont, Mass.: Western Islands, 1979.
• ———. Money and Freedom. Spring Mills, Pa.: Libertarian Press, 1985.
• Sowell, Thomas. Knowledge and Decisions. New York: Basic Books, 1980.
• Stolper, Gustav. German Economy: 1870–1940. Issues and Trends. New York: Reynal Hitchcock, 1940.
• Sulzbach, Walter. National Consciousness. Introduction by Hans Kohn. Washington, D.C.: American Council on Public Affairs, 1943.
• Taylor, Joan Kennedy, ed. Free Trade: The Necessary Foundation of World Peace (1986). Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1996.

The typeface used in setting this book is Electra, designed in 1935 by the great American typographer William Addison Dwiggins. Dwiggins was a student and associate of Frederic Goudy and served for a time as acting director of Harvard University Press. In his illustrious career as typographer and book designer (he coined the term “graphic designer”), Dwiggins created a number of typefaces, including Metro and Caledonia, and designed as well many of the typographic ornaments or “dingbats” familiar to readers.

Electra is a crisp, elegant, and readable typeface, strongly suggestive of calligraphy. The contrast between its strokes is relatively muted, and it produces an even but still “active” impression in text. Interestingly, the design of the italic form—called “cursive” in this typeface—is less calligraphic than the italic form of many faces, and more closely resembles the roman.

This book is printed on paper that is acid-free and meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials, z39.48–1992.(archival)

Book design adapted by Erin Kirk New, Watkinsville, Georgia, after a design by Martin Lubin Graphic Design, Jackson Heights, New York

Typography by G&S Typesetters, Inc., Austin, Texas

Printed and bound by Malloy Incorporated, Ann Arbor, Michigan

[* ][Neville Chamberlain (1869–1940) was British prime minister from 1937 to May 1940.—Editor]

[† ][Remember that when Mises wrote this in 1940, Hitler and Stalin were allies under the terms of their August 1939 mutual nonaggression treaty.—Editor]

[1. ]Socialism, English translation, 1936 [Yale, 1951; Jonathan Cape, 1969; Liberty Fund, 1981].

[* ][Aleksandr Kerensky (1881–1970), Russian politician, was the leader of the Russian government after the March 1917 Revolution, which deposed the czar. He fled Russia when his faction was defeated by the Bolsheviks during the October 1917 Revolution.—Editor]

[† ][Francisco Franco (1892–1975), Spanish general and dictator who assumed power in 1939 at the conclusion of the Spanish Civil War.—Editor]