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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

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.

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[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]