The Online Library of Liberty

A project of Liberty Fund, Inc.

• The Liberty Fund Library of the Works of Ludwig Von Mises
• Foreword to the Liberty Fund Edition
• Preface
• Omnipotent Government
• Introduction
• Part I: The Collapse of German Liberalism
• I: German Liberalism
• 1.: The Ancien Régime and Liberalism
• 2.: The Weakness of German Liberalism
• 3.: The Prussian Army
• 4.: The Constitutional Conflict In Prussia
• 5.: The “little German” Program
• 6.: The Lassalle Episode
• II: The Triumph of Militarism
• 1.: The Prussian Army In the New German Empire
• 2.: German Militarism
• 3.: The Liberals and Militarism
• 4.: The Current Explanation of the Success of Militarism
• Part II: Nationalism
• III: Etatism
• 1.: The New Mentality
• 2.: The State
• 3.: The Political and Social Doctrines of Liberalism
• 4.: Socialism
• 5.: Socialism In Russia and In Germany
• 6.: Interventionism
• 7.: Etatism and Protectionism
• 8.: Economic Nationalism and Domestic Monopoly Prices
• 9.: Autarky
• 10.: German Protectionism
• IV: Etatism and Nationalism
• 1.: The Principle of Nationality
• 2.: The Linguistic Group
• 3.: Liberalism and the Principle of Nationality
• 4.: Aggressive Nationalism
• 5.: Colonial Imperialism
• 6.: Foreign Investment and Foreign Loans
• 7.: Total War
• 8.: Socialism and War
• V: Refutation of Some Fallacious Explanations
• 1.: The Shortcomings of Current Explanations
• 2.: The Alleged Irrationality of Nationalism
• 3.: The Aristocratic Doctrine
• 4.: Misapprehended Darwinism
• 5.: The Role of Chauvinism
• 6.: The Role of Myths
• Part III: German Nazism
• VI: The Peculiar Characteristics of German Nationalism
• 1.: The Awakening
• 2.: The Ascendancy of Pan-germanism
• 3.: German Nationalism Within an Etatist World
• 4.: A Critique of German Nationalism
• 5.: Nazism and German Philosophy
• 6.: Polylogism
• 7.: Pan-germanism and Nazism
• VII: The Social Democrats In Imperial Germany
• 1.: The Legend
• 2.: Marxism and the Labor Movement
• 3.: The German Workers and the German State
• 4.: The Social Democrats Within the German Caste System
• 5.: The Social Democrats and War
• VIII: Anti-semitism and Racism
• 1.: The Role of Racism
• 2.: The Struggle Against the Jewish Mind
• 3.: Interventionism and Legal Discrimination Against Jews
• 4.: The “stab In the Back”
• 5.: Anti-semitism As a Factor In International Politics
• IX: The Weimar Republic and Its Collapse
• 1.: The Weimar Constitution
• 2.: The Abortive Socialization
• 3.: The Armed Parties
• 4.: The Treaty of Versailles
• 5.: The Economic Depression
• 6.: Nazism and German Labor
• 7.: The Foreign Critics of Nazism
• X: Nazism As a World Problem
• 1.: The Scope and Limitations of History
• 2.: The Fallacy of the Concept of “national Character”
• 3.: Germany’s Rubicon
• 4.: The Alternative
• Part IV: The Future of Western Civilization
• XI: The Delusions of World Planning
• 1.: The Term “planning”
• 2.: The Dictatorship Complex
• 3.: A World Government
• 4.: Planned Production
• 5.: Foreign Trade Agreements
• 6.: Monet Ary Planning
• 7.: Planning International Capital Transactions
• XII: Peace Schemes
• 1.: Armament Control
• 2.: A Critique of Some Other Schemes Proposed
• 3.: The Union of the Western Democracies
• 4.: Peace In Eastern Europe
• 5.: The Problems of Asia
• 6.: The Role of the League of Nations
• Conclusion

IV

Etatism and Nationalism

1.

The Principle of Nationality

In the early nineteenth century the political vocabulary of the citizens of the United Kingdom of Great Britain and Ireland did not differentiate between the concepts state, people, and nation. The conquests which expanded the realm and brought countries and their inhabitants into subjection did not alter the size of the nation and the state. These annexed areas, as well as the overseas settlements of British subjects, remained outside the state and the nation. They were property of the crown under the control of Parliament. The nation and the people were the citizens of the three kingdoms, England, Scotland, and Ireland. England and Scotland had formed a union in 1707; in 1801 Ireland joined this union. There was no intention of incorporating into this body the citizens settled beyond the sea in North America. Every colony had its own parliament and its own local government. When the Parliament of Westminster attempted to include in its jurisdiction the colonies of New England and those south of New England, it kindled the conflict which resulted in American independence. In the Declaration of Independence the thirteen colonies call themselves a people different from the people represented in the Parliament at Westminster. The individual colonies, having proclaimed their right to independence, formed a political union, and thus gave to the new nation, set up by nature and by history, an adequate political organization.

Even at the time of the American conflict British liberals sympathized with the aims of the colonists. In the course of the nineteenth century Great Britain fully recognized the right of the white settlers in overseas possessions to establish autonomous governments. The citizens of the dominions are not members of the British nation. They form nations of their own with all the rights to which civilized peoples are entitled. There has been no effort to expand the territory from which members are returned to the Parliament of Westminster. If autonomy is granted to a part of the Empire, that part becomes a state with its own constitution. The size of the territory whose citizens are represented in the Parliament at London has not expanded since 1801; it was narrowed by the founding of the Irish Free State.1

For the French Revolutionists the terms state, nation, and people were also identical. France was for them the country within the historical frontiers. Foreign enclaves (like papal Avignon and the possessions of German princes) were according to natural law parts of France, and therefore to be reunited. The victorious wars of the Revolution and of Napoleon I temporarily relegated these notions to oblivion. But after 1815 they were restored to their previous meaning. France is the country within the frontiers fixed by the Congress of Vienna. Napoleon III later incorporated into this realm Savoy and Nice, districts with French-speaking inhabitants for whom there was no longer room left in the new Italian kingdom in which the state of Savoy-Piedmont-Sardinia had been merged. The French were not enthusiastic about this expansion of their country; the new districts were slow to be assimilated to the French commonwealth. The plans of Napoleon III to acquire Belgium, Luxembourg, and the left bank of the Rhine were not popular in France. The French do not consider the Walloons or the French-speaking Swiss or Canadians members of their nation or people. They are in their eyes French-speaking foreigners, good old friends, but not Frenchmen.

It was different with the German and Italian liberals. The states which they wanted to reform were products of dynastic warfare and intermarriage; they could not be considered natural entities. It would have been paradoxical indeed to destroy the despotism of the prince of Reuss Junior Branch in order to establish a democratic government in the scattered territories owned by that potentate. The subjects of such princelings did not consider themselves Reussians of the Junior Branch or Saxe-Weimar-Eisenachians, but Germans. They did not aim at a liberal Schaumburg-Lippe. They wanted a liberal Germany. It was the same in Italy. The Italian liberals did not fight for a free state of Parma or of Tuscany but for a free Italy. As soon as liberalism reached Germany and Italy the problem of the extent of the state and its boundaries was raised. Its solution seemed easy. The nation is the community of all people speaking the same language; the state’s frontiers should coincide with the linguistic demarcations. Germany is the country inhabited by German-speaking people; Italy is the land of the people using the Italian idiom. The old border lines drawn by the intrigues of dynasties were doomed to disappear. Thus the right of self-determination and of government by the people, as expounded by Western liberalism, becomes transformed into the principle of nationality as soon as liberalism becomes a political factor in Central Europe. The political terminology begins to differentiate between state and nation (people). The people (the nation) are all men speaking the same idiom; nationality means community of language.

According to these ideas, every nation should form an independent state, including all members of the nation. When this has one day been achieved there will be no more wars. The princes fight each other because they wish to increase their power and wealth by conquest. No such motives are present with nations. The extent of a nation’s territory is determined by nature. The national boundaries are the linguistic boundaries. No conquest can make a nation bigger, richer, or more powerful. The principle of nationality is the golden rule of international law which will bring undisturbed peace to Europe. While kings were still planning wars and conquests the revolutionary movements of Young Germany and of Young Italy were already coöperating for the realization of this happy constitution of a New Europe. The Poles and Hungarians joined the choir. Their aspirations also met with the sympathies of liberal Germany. German poets glorified the Polish and Hungarian struggles for independence.

But the aspirations of the Poles and Magyars differed in a very important way from those of the German and Italian liberals. The former aimed at a reconstruction of Poland and Hungary within their old historical boundaries. They did not look forward to a new liberal Europe but backward to the glorious past of their victorious kings and conquerors, as depicted by their historians and writers. Poland was for the Poles all the countries that their kings and magnates had once subjugated, Hungary was for the Magyars all the countries that had been ruled in the Middle Ages by the successors of Saint Stephen. It did not matter that these realms included many people speaking idioms other than Polish and Hungarian. The Poles and the Magyars paid lip service to the principles of nationality and self-determination; and this attitude made the liberals of the West sympathetic to their programs. Yet what they planned was not the liberation but the oppression of other linguistic groups.

So too with the Czechs. It is true that in earlier days some champions of Czech independence proposed a partition of Bohemia according to linguistic demarcations. But they were very soon silenced by their fellow citizens, for whom Czech self-determination was synonymous with the oppression of millions of non-Czechs.

The principle of nationality was derived from the liberal principle of self-determination. But the Poles, the Czechs, and the Magyars substituted for this democratic principle an aggressive nationalism aiming at the domination of people speaking other languages. Very soon German and Italian nationalists and many other linguistic groups adopted the same attitude.

It would be a mistake to ascribe the ascendancy of modern nationalism to human wickedness. The nationalists are not innately aggressive men; they become aggressive through their conception of nationalism. They are confronted with conditions which were unknown to the champions of the old principle of self-determination. And their etatist prejudices prevent them from finding a solution for the problems they have to face other than that provided by aggressive nationalism.

What the Western liberals have failed to recognize is that there are large territories inhabited by people of different idioms. This important fact could once be neglected in Western Europe but it could not be overlooked in Eastern Europe. The principle of nationality cannot work in a country where linguistic groups are inextricably mixed. Here you cannot draw boundaries which clearly segregate linguistic groups. Every territorial division necessarily leaves minorities under foreign rule.

The problem becomes especially fateful because of the changeability of linguistic structures. Men do not necessarily stay in the place of their birth. They have always migrated from comparatively overpopulated into comparatively underpopulated areas. In our age of rapid economic change brought about by capitalism, the propensity to migrate has increased to an unprecedented extent. Millions move from the agricultural districts into the centers of mining, trade, and industry. Millions move from countries where the soil is poor to those offering more favorable conditions for agriculture. These migrations transform minorities into majorities and vice versa. They bring alien minorities into countries formerly linguistically homogeneous.

The principle of nationality was based on the assumption that every individual clings throughout his life to the language of his parents, which he has learned in early childhood. This too is an error. Men can change their language in the course of their life; they can daily and habitually speak a language other than that of their parents. Linguistic assimilation is not always the spontaneous outcome of the conditions under which the individual lives. It is caused not only by environment and cultural factors; governments can encourage it or even achieve it by compulsion. It is an illusion to believe that language is a non-arbitrary criterion for an impartial delimitation of boundaries. The state can, under certain conditions, influence the linguistic character of its citizens.

The main tool of compulsory denationalization and assimilation is education. Western Europe developed the system of obligatory public education. It came to Eastern Europe as an achievement of Western civilization. But in the linguistically mixed territories it turned into a dreadful weapon in the hands of governments determined to change the linguistic allegiance of their subjects. The philanthropists and pedagogues of England who advocated public education did not foresee what waves of hatred and resentment would rise out of this institution.

But the school is not the only instrument of linguistic oppression and tyranny. Etatism puts a hundred more weapons in the hands of the state. Every act of the government which can and must be done by administrative discretion with regard to the special merits of each case can be used for the achievement of the government’s political aims. The members of the linguistic minority are treated like foes or like outlaws. They apply in vain for licenses, for foreign exchange under a system of foreign exchange control, or for import licenses under a quota system. Their shops and plants, their clubhouses, school buildings, and assembly halls are closed by the police because they allegedly do not comply with the rules of the building code or with the regulations for preventing fires. Their sons somehow fail to pass the examinations for civil service jobs. Protection is denied to their property, persons, and lives when they are attacked by armed gangs of zealous members of the ruling linguistic group. They cannot even undertake to defend themselves: the licenses required for the possession of arms are denied to them. The tax collectors always find that they owe the treasury much more than the amount shown on the returns they have filed.

All this indicates clearly why the attempts of the Covenant of the League of Nations to protect minorities by international law and international tribunals were doomed to failure. A law cannot protect anybody against measures dictated by alleged considerations of economic expediency. All sorts of government interference in business, in the countries inhabited by different linguistic groups, are used for the purpose of injuring the pariahs. Custom tariffs, taxation, foreign exchange regulations, subsidies, labor legislation, and so on may be utilized for discrimination, even though this cannot be proved in court procedure. The government can always explain these measures as being dictated by purely economic considerations. With the aid of such measures life for the undesirables, without formal violation of legal equality, can be made unbearable. In an age of interventionism and socialism there is no legal protection available against an ill-intentioned government. Every government interference with business becomes an act of national warfare against the members of the persecuted linguistic groups. With the progress of etatism the antagonism between the linguistic groups becomes more bitter and more implacable.

Thus the meaning of the concepts of Western political terminology underwent a radical change in Central and Eastern Europe. The people differentiate between the good state and the bad state. They worship the state as do all other etatists. But they mean only the good state—i.e., the state in which their own linguistic group dominates. For them this state is God. The other states in which their own linguistic group does not dominate are, in their opinion, devils. Their concept of fellow citizens includes all people speaking their own language, all Volksgenossen, as the Germans say, without any regard to the country where they live; it does not include citizens of their own state who happen to speak another language. These are foes and barbarians. The Volksgenossen living under a foreign yoke must be freed. They are the Irredenta, the unredeemed people.

And every means is believed right and fair, if it can accelerate the coming of the day of redemption. Fraud, felonious assault, and murder are noble virtues if they serve the cause of Irredentism. The war for the liberation of the Volksgenossen is a just war. The greatness of the linguistic group and the glory of the right and true state are the supreme criteria of morality. There is but one thing that counts—their own linguistic group, the community of men speaking the same language, the Volksgemeinschaft.

2.

The Linguistic Group

Economists, sociologists, and historians have provided us with different definitions of the term nation. But we are not interested here in what meaning social science ought to attach to it. We are inquiring what meaning the European supporters of the principle of nationality attach to the concepts nation and nationality. It is important to establish the way in which these terms are used in the vocabulary of present-day political action and the role they play in actual life and in contemporary conflicts.

The principle of nationality is unknown to American or Australian politics. When the Americans freed themselves from the rule of Great Britain, Spain, and Portugal their aim was self-determination, not the establishment of national states in the sense that the principle of nationality gives to the term nation. Linguistically they resembled the old countries overseas from which their ancestors once came to America. The people who now form the United States of America did not want to annex English-speaking Canada. Nor did the French-speaking Canadians who opposed the British system of administration fight for a French-speaking state. Both linguistic groups coöperate in a more or less peaceful way within the Dominion of Canada; there is no Irredenta. Latin America is also free from linguistic problems. What separates Argentina from Chile or Guatemala from Mexico is not the idiom. There are many racial, social, political, and even religious conflicts in the Western Hemisphere too. But in the past no serious linguistic problem has troubled American political life.

Neither are there any grave linguistic antagonisms in present-day Asia. India is linguistically not homogeneous; but the religious discrepancy between Hinduism and Islam is much more important there than the problem of idioms.

Conditions may perhaps soon change. But at the present moment the principle of nationality is more or less a European concept. It is the main political problem of Europe.

According to the principle of nationality, then, every linguistic group must form an independent state, and this state must embrace all people speaking this language. The prestige of this principle is so great that a group of men who for some reason wish to form a state of their own which would otherwise not conform to the principle of nationality are eager to change their language in order to justify their aspirations in the light of this principle.

The Norwegians now speak and write an idiom that is almost identical with that of Denmark. But they are not prepared to renounce their political independence. To provide linguistic support for their political program, eminent Norwegians have wanted to create a language of their own; to form out of their local dialects a new language, something like a return to the old Norse used up to the fifteenth century. The greatest Norwegian writer, Henrik Ibsen, considered these endeavors lunacy and scorned them as such in Peer Gynt.*

The people of Ireland speak and write English. Some of the foremost writers of the English language are Irishmen. But the Irish want to be politically independent. Therefore, they reason, it is necessary to return to the Gaelic idiom once used in their country. They have excavated this language from old books and manuscripts and try to revive it. To some extent they have even succeeded.

The Zionists want to create an independent state composed of those professing the Jewish religion. For them the Jews are a people and a nation. We are not concerned here with whether the historical arguments brought forward for the justification of these claims are correct or not, or whether the plan is politically sound or unsound. But it is a fact that the Jews speak many different languages; from the viewpoint of the principle of nationality the aspirations of Zionism are no less irregular than those of the Irish. Therefore the Zionists try to induce the Jews to speak and write Hebrew. These plans are paradoxical in the face of the fact that in the days of Christ the inhabitants of Palestine did not speak Hebrew; their native tongue was Aramaic. Hebrew was the language of the religious literature only. It was not understood by the people. The second language generally known was Greek.†

These facts demonstrate the meaning and prestige of the principle of nationality. The terms nation and nationality as applied by the advocates of this principle are equivalent to the term “linguistic group.” The terms used in the Habsburg Empire for these conflicts were die nationale Frage (the national question), and synonymously die Sprachenfrage (the linguistic problem), nationale Kämpfe (national struggles), and synonymously Sprachenkämpfe (linguistic struggles). The main subject of conflict has always been which language should be used by the administration, by the tribunals, and by the army, and which language should be taught in the schools?

It is a serious error of English and French books and newspapers to refer to these conflicts as racial. There is no conflict of races in Europe. No distinct bodily features which an anthropologist could establish with the aid of the scientific methods of anatomy separate the people belonging to different groups. If you presented one of them to an anthropologist he would not be able to decide by biological methods whether he was a German, Czech, Pole, or Hungarian.

Neither have the people belonging to any one of these groups a common descent. The right bank of the Elbe River, the whole of northeastern Germany, eight hundred years ago was inhabited only by Slavs and Baltic tribes. It became German-speaking in the course of the processes which the German historians call the colonization of the East. Germans from the west and south migrated into this area; but in the main its present population is descended from the indigenous Slavs and Baltic peoples who, under the influence of church and school, adopted the German language. Prussian chauvinists, of course, assert that the native Slavs and Balts were exterminated and that the whole population today is descended from German colonists. There is not the slightest evidence for this doctrine. The Prussian historians invented it in order to justify in the eyes of German nationalists Prussia’s claim to hegemony in Germany. But even they have never dared to deny that the Slav ancestry of the autochthonous princely dynasties (of Pomerania, Silesia, and Mecklenburg) and of most of the aristocratic families is beyond doubt. Queen Louise of Prussia, whom all German nationalists consider the paragon of German womanhood, was a scion of the ducal house of Mecklenburg, whose originally Slav character has never been contested. Many noble families of the German northeast can be traced back to Slav ancestors. The genealogical trees of the middle classes and the peasantry, of course, cannot be established as far back as those of the nobility; this alone explains why the proof of Slav origin cannot be provided for them. It is indeed paradoxical to assume that the Slavonic princes and knights should have exterminated their Slav serfs in order to settle their villages with imported German serfs.

Shifting from one of these linguistic groups to another occurred not only in earlier days. It happened and happens so frequently that nobody remarks upon it. Many outstanding personalities in the Nazi movement in Germany and Austria and in the Slavonic, Hungarian, and Rumanian districts claimed by Nazism were the sons of parents whose language was not German. Similar conditions prevail all over Europe. In many cases the change of loyalties has been accompanied by a change in family name; more often people have retained their foreign-sounding family names. The Belgian poets Maeterlinck and Verhaeren have written in French; their names suggest a Flemish ancestry. The Hungarian poet Alexander Petöfi, who died for the cause of the Hungarian revolution in the battle of Schässburg (1849), was the son of a Slavonic family named Petrovics. Thousands of such cases are known to everyone familiar with European soil and people. Europe too is a melting pot, or rather a collection of melting pots.

Whenever the question is raised whether a group must be considered a distinct nation and therefore entitled to claim political autonomy, the issue is whether the idiom involved is a distinct language or only a dialect. The Russians maintain that the Ukrainian or Ruthenian idiom is a dialect, like Platt-Deutsch in northern Germany or Proven-çal in southern France. The Czechs use the same argument against the political aspirations of the Slovaks, and the Italians against the Rhaeto-Romanic idiom. Only a few years ago the Swiss Government gave to the Romansh the legal status of a national language. Many Nazis declare that Dutch is not a language but a German dialect—a Platt which has arrogated to itself the status of a language.

The principle of nationality has been late in penetrating into the political thought of Switzerland. There are two reasons why Switzerland has up to now successfully resisted its disintegrating power.

The first factor is the quality of the three main languages of Switzerland: German, French, and Italian. For every inhabitant of continental Europe it is a great advantage to learn one of these languages. If a German-Swiss acquires command of French or Italian he not only becomes better equipped for business life but gains access to one of the great literatures of the world. It is the same for the French-Swiss and for the Italian-Swiss when learning Italian or German. The Swiss, therefore, do not object to a bilingual education. They consider it a great help for their children to know one or both of the two other main languages of the country. But what gain can a French-Belgian derive from a knowledge of Flemish, a Slovak from a knowledge of Hungarian, or a Hungarian from a knowledge of Rumanian? It is almost indispensable for an educated Pole or Czech to know German; but for a German it is a waste of time to learn Czech or Polish. This explains why the educational problem is of minor importance under the linguistic conditions of Switzerland.

The second factor is the political structure. The countries of eastern Europe were never liberal. They jumped from monarchical absolutism directly into etatism. Since the 1850’s they have clung to the policy of interventionism which only in the last decades has overwhelmed the West. Their intransigent economic nationalism is a consequence of their etatism. But on the eve of the first World War Switzerland was still a predominantly liberal country. Since then it has turned more and more to interventionism; and as that spread the linguistic problem has become more serious. There is Italian Irredentism in the Ticino; there is a pro-Nazi party in the German-speaking parts, and there are French nationalists in the southwest. A victory of the allied democracies will doubtless stop these movements; but in that case Switzerland’s integrity will be safeguarded by the same factor to which it owed its origin and its maintenance in the past, namely, the political conditions of its neighbor countries.

There is one instance in continental Europe in which the characteristic feature that separates two nations is not language but religion and the alphabetical types used in writing and printing. The Serbs and the Croats speak the same idiom; but while the Serbs use the Cyrillic alphabet the Croats use the Roman. The Serbs adhere to the orthodox creed of the Oriental Church; the Croats are Roman Catholics.

It must be emphasized again and again that racism and considerations of racial purity and solidarity play no role in these European struggles of linguistic groups. It is true that the nationalists often resort to “race” and “common descent” as catchwords. But that is mere propaganda without any practical effect on policies and political actions. On the contrary, the nationalists consciously and purposely reject racism and racial characteristics of individuals when dealing with political problems and activities. The German racists have provided us with an image of the prototype of the noble German or Aryan hero and with a biologically exact description of his bodily features. Every German is familiar with this archetype and most of them are convinced that this portrait is correct. But no German nationalist has ever ventured to use this pattern to draw the distinction between Germans and non-Germans. The criterion of Germanism is found not in a likeness to this standard but in the German tongue.* Breaking up the German-speaking group according to racial characteristics would result in eliminating at least 80 per cent of the German people from the ranks of the Germans. Neither Hitler nor Goebbels nor most of the other champions of German nationalism fit the Aryan prototype of the racial myth.

The Hungarians are proud to be the descendants of a Mongolian tribe which in the early Middle Ages conquered the country they call Hungary. The Rumanians boast their descent from Roman colonists. The Greeks consider themselves scions of the ancient Greeks. Historians are rather skeptical in regard to these claims. The modern political nationalism of these nations ignores them. It finds the practical criterion of the nation in the language instead of in racial characteristics or in the proof of descent from the alleged ancestry.

3.

Liberalism and the Principle of Nationality

The foes of liberalism have failed in their endeavors to disprove liberalism’s teachings concerning the value of capitalism and democratic government. Have they succeeded better in criticizing the third part of the liberal program—namely, the proposals for peaceful coöperation among different nations and states? In answering this question we must emphasize again that the principle of nationality does not represent the liberal solution of the international problem. The liberals urged self-determination. The principle of nationality is an outcome of the interpretation which people in Central and Eastern Europe, who never fully grasped the meaning of liberal ideas, gave to the principle of self-determination. It is a distortion, not a perfection, of liberal thought.

We have already shown that the Anglo-Saxon and the French fathers of liberal ideas did not recognize the problems involved. When these problems became visible, the old liberalism’s creative period had already been brought to an end. The great champions were gone. Epigones, unable successfully to combat the growing socialist and interventionist tendencies, filled the stage. These men lacked the strength to deal with new problems.

Yet, the Indian summer of the old classical liberalism produced one document worthy of the great tradition of French liberalism. Ernest Renan, it is true, cannot really be considered a liberal. He made concessions to socialism, because his grasp of economic theories was rather poor; he was consequently too accommodating to the antidemocratic prejudices of his age. But his famous lecture, Qu’est-ce qu’une nation?, delivered in the Sorbonne on March 11, 1882, is thoroughly inspired by liberal thought.* It was the last word spoken by the older Western liberalism on the problems of state and nation.

For a correct understanding of Renan’s ideas it is necessary to remember that for the French—as for the English—the terms nation and state are synonymous. When Renan asks: What is a nation? he means: What should determine the boundaries of the various states? And his answer is: Not the linguistic community, not the racial kinship founded on parentage from common ancestors, not religious congeniality, not the harmony of economic interests, not geographical or strategical considerations, but—the right of the population to determine its own destiny.† The nation is the outcome of the will of human beings to live together in one state.‡ The greater part of the lecture is devoted to showing how this spirit of nationality originates.

The nation is a soul, a moral principle (“une âme, un principe spirituel”).§ A nation, says Renan, daily confirms its existence by manifesting its will to political coöperation within the same state; a daily repeated plebiscite, as it were. A nation, therefore, has no right to say to a province: You belong to me, I want to take you. A province consists of its inhabitants. If anybody has a right to be heard in this case it is these inhabitants. Boundary disputes should be settled by plebiscite.‖

It is important to realize how this interpretation of the right of self-determination differs from the principle of nationality. The right of self-determination which Renan has in mind is not a right of linguistic groups but of individual men. It is derived from the rights of man. “Man belongs neither to his language nor to his race; he belongs to himself.”¶

Seen from the point of view of the principle of nationality the existence of states like Switzerland, composed of people of different languages, is as anomalous as the fact that the Anglo-Saxons and the French are not eager to unite into one state all the people speaking their own language. For Renan there is nothing irregular in these facts.

More noteworthy than what Renan says is what he does not say. Renan sees neither the fact of linguistic minorities nor that of linguistic changes. Consult the people; let them decide. All right. But what if a conspicuous minority dissents from the will of the majority? To that objection Renan does not make a satisfactory answer. He declares—with regard to the scruple that plebiscites could result in the disintegration of old nations and in a system of small states (we say today Balkanization)—that the principle of self-determination should not be abused but only employed in a general way (d’une façon très générale).*

Renan’s brilliant exposition proves that the threatening problems of Eastern Europe were unfamiliar to the West. He prefaced his pamphlet with a prophecy: We are rushing into wars of destruction and extermination, because the world has abandoned the principle of free union and has granted to the nations, as it once did to the dynasties, the right to annex provinces contrary to their desires.† But Renan saw only half the problem involved and therefore his solution could be but a half-way one.

Yet it would be wrong to say that liberalism has failed in this field. Liberalism’s proposals for the coexistence and coöperation of nations and states are only a part of the total liberal program. They can be realized, they can be made to work only within a liberal world. The main excellence of the liberal scheme of social, economic, and political organization is precisely this—that it makes the peaceful coöperation of nations possible. It is not a shortcoming of the liberal program for international peace that it cannot be realized within an antiliberal world and that it must fail in an age of interventionism and socialism.

In order to grasp the meaning of this liberal program we need to imagine a world order in which liberalism is supreme. Either all the states in it are liberal, or enough are so that when united they are able to repulse an attack of militarist aggressors. In this liberal world, or liberal part of the world, there is private property in the means of production. The working of the market is not hampered by government interference. There are no trade barriers; men can live and work where they want. Frontiers are drawn on the maps but they do not hinder the migrations of men and shipping of commodities. Natives do not enjoy rights that are denied to aliens. Governments and their servants restrict their activities to the protection of life, health, and property against fraudulent or violent aggression. They do not discriminate against foreigners. The courts are independent and effectively protect everybody against the encroachments of officialdom. Everyone is permitted to say, to write, and to print what he likes. Education is not subject to government interference. Governments are like night-watchmen whom the citizens have entrusted with the task of handling the police power. The men in office are regarded as mortal men, not as superhuman beings or as paternal authorities who have the right and duty to hold the people in tutelage. Governments do not have the power to dictate to the citizens what language they must use in their daily speech or in what language they must bring up and educate their children. Administrative organs and tribunals are bound to use each man’s language in dealing with him, provided this language is spoken in the district by a reasonable number of residents.

In such a world it makes no difference where the frontiers of a country are drawn. Nobody has a special material interest in enlarging the territory of the state in which he lives; nobody suffers loss if a part of this area is separated from the state. It is also immaterial whether all parts of the state’s territory are in direct geographical connection, or whether they are separated by a piece of land belonging to another state. It is of no economic importance whether the country has a frontage on the ocean or not. In such a world the people of every village or district could decide by plebiscite to which state they wanted to belong. There would be no more wars because there would be no incentive for aggression. War would not pay. Armies and navies would be superfluous. Policemen would suffice for the fight against crime. In such a world the state is not a metaphysical entity but simply the producer of security and peace. It is the night-watchman, as Lassalle contemptuously dubbed it. But it fulfills this task in a satisfactory way. The citizen’s sleep is not disturbed, bombs do not destroy his home, and if somebody knocks at his door late at night it is certainly neither the Gestapo nor the O.G.P.U.

The reality in which we have to live differs very much from this perfect world of ideal liberalism. But this is due only to the fact that men have rejected liberalism for etatism. They have burdened the state, which could be a more or less efficient night-watchman, with a multitude of other duties. Neither nature, nor the working of forces beyond human control, nor inevitable necessity has led to etatism, but the acts of men. Entangled by dialectic fallacies and fantastic illusions, blindly believing in erroneous doctrines, biased by envy and insatiable greed, men have derided capitalism and have substituted for it an order engendering conflicts for which no peaceful solution can be found.

4.

Aggressive Nationalism

Etatism—whether interventionism or socialism—must lead to conflict, war, and totalitarian oppression of large populations. The right and true state, under etatism, is the state in which I or my friends, speaking my language and sharing my opinions, are supreme. All other states are spurious. One cannot deny that they too exist in this imperfect world. But they are enemies of my state, of the only righteous state, even if this state does not yet exist outside of my dreams and wishes. Our German Nazi state, says Steding, is the Reich; the other states are deviations from it.* Politics, says the foremost Nazi jurist, Carl Schmitt, is the discrimination between friend and foe.†

In order to understand these doctrines we must look first at the liberal attitude toward the problem of linguistic antagonisms.

He who lives as a member of a linguistic minority, within a community where another linguistic group forms the majority, is deprived of the means of influencing the country’s politics. (We are not considering the special case in which such a linguistic minority occupies a privileged position and oppresses the majority as, for example, the German-speaking aristocracy in the Baltic duchies in the years preceding the Russianization of these provinces.) Within a democratic community public opinion determines the outcome of elections, and thereby the political decisions. Whoever wants to make his ideas prevalent in political life must try to influence public opinion through speech and writing. If he succeeds in convincing his fellow citizens, his ideas obtain support and persist.

In this struggle of ideas linguistic minorities cannot take part. They are voiceless spectators of the political debates out of which the deciding vote emerges. They cannot participate in the discussions and negotiations. But the result determines their fate too. For them democracy does not mean self-determination; other people control them. They are second-class citizens. This is the reason why men in a democratic world consider it a disadvantage to be members of a linguistic minority. It explains at the same time why there were no linguistic conflicts in earlier ages, where there was no democracy. In this age of democracy people in the main prefer to live in a community where they speak the same language as the majority of their fellow citizens. Therefore in plebiscites concerning the question to which state a province should belong, people as a rule, but not always, vote in favor of the country where they will not be members of a linguistic minority.

But the recognition of this fact by no means leads liberalism to the principle of nationality. Liberalism does not say: Every linguistic group should form one state and one state only, and each single man belonging to this group should, if at all possible, belong to this state. Neither does it say: No state should include people of several linguistic groups. Liberalism postulates self-determination. That men in the exercise of this right allow themselves to be guided by linguistic considerations is for liberalism simply a fact, not a principle or a moral law. If men decide in another way, which was the case, for example, with the German-speaking Alsatians, that is their own concern. Such a decision, too, must be respected.

But it is different in our age of etatism. The etatist state must necessarily extend its territory to the utmost. The benefits it can grant to its citizens increase in proportion to its territory. Everything that the interventionist state can provide can be provided more abundantly by the larger state than by the smaller one. Privileges become more valuable the larger the territory in which they are valid. The essence of etatism is to take from one group in order to give to another. The more it can take the more it can give. It is in the interest of those whom the government wishes to favor that their state become as large as possible. The policy of territorial expansion becomes popular. The people as well as the governments become eager for conquest. Every pretext for aggression is deemed right. Men then recognize but one argument in favor of peace: that the prospective adversary is strong enough to defeat their attack. Woe to the weak!

The domestic policies of a nationalist state are inspired by the aim of improving the conditions of some groups of citizens by inflicting evils on foreigners and those citizens who use a foreign language. In foreign policy economic nationalism means discrimination against foreigners. In domestic policy it means discrimination against citizens speaking a language which is not that of the ruling group. These pariahs are not always minority groups in a technical sense. The German-speaking people of Meran, Bozen, and Brixen are majorities in their districts; they are minorities only because their country has been annexed by Italy. The same is true for the Germans of the Egerland, for the Ukrainians in Poland, the Magyars of the Szekler district in Transylvania, the Slovenes in Italian-occupied Carniola. He who speaks a foreign mother tongue in a state where another language predominates is an outcast to whom the rights of citizens are virtually denied.

The best example of the political consequences of this aggressive nationalism is provided by conditions in Eastern Europe. If you ask representatives of the linguistic groups of Eastern Europe what they consider would be a fair determination of their national states, and if you mark these boundaries on a map, you will discover that the greater part of this territory is claimed by at least two nations, and not a negligible part by three or even more.* Every linguistic group defends its claims with linguistic, racial, historical, geographical, strategic, economic, social, and religious arguments. No nation is prepared sincerely to renounce the least of its claims for reasons of expediency. Every nation is ready to resort to arms to satisfy its pretensions. Every linguistic group therefore considers its immediate neighbors mortal enemies and relies on its neighbor’s neighbors for armed support of its own territorial claims against the common foe. Every group tries to profit from every opportunity to satisfy its claims at the expense of its neighbors. The history of the last decades proves the correctness of this melancholy description.

Take, for example, the case of the Ukrainians. For hundreds of years they were under the yoke of the Russians and the Poles. There has been no Ukrainian national state in our day. One might assume that the spokesmen of a people which has so fully experienced the hardships of ruthless foreign oppression would be prudent in their pretensions. But nationalists simply cannot renounce. Thus the Ukrainians claim an area of more than 360,000 square miles with a total population of some sixty millions, of whom, according even to their own declaration, only “more than forty millions” are Ukrainians.* These oppressed Ukrainians would not be content with their own liberation; they strive at the oppression of twenty or more millions of non-Ukrainians.

In 1918 the Czechs were not satisfied with the establishment of an independent state of their own. They incorporated into their state millions of German-speaking people, all the Slovaks, tens of thousands of Hungarians, the Ukrainians of Carpatho-Russia and—for considerations of railroad management—some districts of Lower Austria. And what a spectacle was the Polish Republic, which in the twenty-one years of its independence tried to rob violently three of its neighbors—Russia, Lithuania, and Czechoslovakia—of a part of their territories!

These conditions were correctly described by August Strindberg in his trilogy To Damascus:†

father melcher: At the Amsteg station, on the Gotthard line, you have probably seen a tower called the castle of Zwing-Uri; it is celebrated by Schiller in Wilhelm Tell. It stands there as a monument to the inhuman oppression which the inhabitants of Uri suffered at the hands of the German Kaiser! Lovely! On the Italian side of the Saint Gotthard lies the station of Bellinzona, as you know. There are many towers there, but the most remarkable is the Castel d’Uri. It is a monument to the inhuman oppression, which the Italian canton suffered at the hands of the inhabitants of Uri. Do you understand?

the stranger: “Liberty! Liberty, give us, in order that we may suppress.”

However, Strindberg did not add that the three cantons Uri, Schwyz, and Unterwalden under nineteenth-century liberalism peacefully coöperated with the Ticino whose people they had oppressed for almost three hundred years.

5.

Colonial Imperialism

In the fifteenth century the Western nations began to occupy territories in non-European countries peopled by non-Christian populations. They were eager to obtain precious metals and raw materials that could not be produced in Europe. To explain this colonial expansion as a search for markets is to misrepresent the facts. These traders wanted to get colonial products. They had to pay for them; but the profit they sought was the acquisition of commodities that could not be bought elsewhere. As businessmen they were not so foolish as to believe in the absurd teaching of Mercantilism—old and new—that the advantage derived from foreign trade lies in exporting and not in importing. They were so little concerned about exporting that they were glad when they could obtain the goods they wanted without any payment at all. They were often more pirates and slavers than merchants. They had no moral inhibitions in their dealings with the heathen.

It was not in the plans of the kings and royal merchants who inaugurated European overseas expansion to settle European farmers in the occupied territories. They misprized the vast forests and prairies of North America from which they expected neither precious metals nor spices. The rulers of Great Britain were much less enthusiastic about founding settlements in continental America than about their enterprises in the Caribbean, in Africa, and the East Indies, and their participation in the slave trade. The colonists, not the British Government, built up the English-speaking communities in America, and later in Canada, in Australia, New Zealand, and South Africa.

The colonial expansion of the nineteenth century was very different from that of the preceding centuries. It was motivated solely by considerations of national glory and pride. The French officers, poets, and after-dinner speakers—not the rest of the nation—suffered deeply from the inferiority complex which the battles of Leipzig and Waterloo, and later those of Metz and Sedan, left with them. They thirsted for glory and fame; and they could quench their thirst neither in liberal Europe nor in an America sheltered by the Monroe Doctrine. It was the great comfort of Louis Philippe that his sons and his generals could reap laurels in Algeria. The Third Republic conquered Tunis, Morocco, Madagascar, and Tonking in order to reëstablish the moral equilibrium of its army and navy. The inferiority complex of Custozza and Lissa drove Italy to Abyssinia, and the inferiority complex of Aduwa to Tripoli. One of the important motives that made Germany embark on colonial conquests was the turbulent ambition of shabby adventurers like Dr. Karl Peters.

There were other cases too. King Leopold II of Belgium and Cecil Rhodes were belated conquistadors. But the main incentive of modern colonial conquest was the desire for military glory. The defenselessness of the poor aborigines, whose main weapons were the dreariness and impassableness of their countries, was too tempting. It was easy and not dangerous to defeat them and to return home a hero.

The modern world’s paramount colonial power was Great Britain. Its East Indian Empire surpassed by far the colonial possessions of all other European nations. In the 1820’s it was virtually the only colonial power. Spain and Portugal had lost almost their entire overseas territories. The French and the Dutch retained at the end of the Napoleonic Wars as much as the British were willing to leave them; their colonial rule was at the mercy of the British Navy. But British liberalism has fundamentally reformed the meaning of colonial imperialism. It granted autonomy—dominion status—to the British settlers, and ran the East Indies and the remaining Crown colonies on free-trade principles. Long before the Covenant of the League of Nations created the concept of mandates, Great Britain acted virtually as mandatory of European civilization in countries whose population was, as the Britons believed, not qualified for independence. The main blame which can be laid on British East Indian policies is that they respected too much some native customs—that, for example, they were slow to improve the lot of the untouchables. But for the English there would be no India today, only a conglomeration of tyrannically misruled petty principalities fighting each other on various pretexts; there would be anarchy, famines, epidemics.2

The men who represented Europe in the colonies were seldom proof against the specific moral dangers of the exalted positions they occupied among backward populations. Their snobbishness poisoned their personal contact with the natives. The marvelous achievements of the British administration in India were overshadowed by the vain arrogance and stupid race pride of the white man. Asia is in open revolt against the gentlemen for whom socially there was but little difference between a dog and a native. India is, for the first time in its history, unanimous on one issue—its hatred for the British. This resentment is so strong that it has blinded for some time even those parts of the population who know very well that Indian independence will bring them disaster and oppression: the 80 millions of Moslems, the 40 millions of untouchables, the many millions of Sikhs, Buddhists, and Indian Christians. It is a tragic situation and a menace to the cause of the United Nations. But it is at the same time the manifest failure of the greatest experiment in benevolent absolutism ever put to work.

Great Britain did not in the last decades seriously oppose the step-by-step liberation of India. It did not hinder the establishment of an Indian protectionist system whose foremost aim is to lock out British manufactures. It connived at the development of an Indian monetary and fiscal system which soon or late will result in a virtual annulment of British investments and other claims. The only task of the British administration in India in these last years has been to prevent the various political parties, religious groups, races, linguistic groups, and castes from fighting one another. But the Hindus do not long for British benefits.

British colonial expansion did not stop in the last sixty years. But it was an expansion forced upon Great Britain by other nations’ lust of conquest. Every annexation of a piece of land by France, Germany, or Italy curtailed the market for the products of all other nations. The British were committed to the principles of free trade and had no desire to exclude other people. But they had to take over large blocks of territory if only to prevent them from falling into the hands of exclusive rivals. It was not their fault that under the conditions brought about by French, German, Italian, and Russian colonial methods only political control could adequately safeguard trade.*

It is a Marxian invention that the nineteenth-century colonial expansion of the European powers was engendered by the economic interests of the pressure groups of finance and business. There have been some cases where governments acted on behalf of their citizens who had made foreign investments; the purpose was to protect them against expropriation or default. But historical research has brought evidence that the initiative for the great colonial projects came not from finance and business but from the governments. The alleged economic interest was a mere blind. The root cause of the Russo-Japanese War of 1904 was not the desire of the Russian Government to safeguard the interests of a group of investors who wanted to exploit the Yalu timber estates. On the contrary, because the government needed a pretext for intervention, it deployed “a fighting vanguard disguised as lumbermen.” The Italian Government did not conquer Tripoli on behalf of the Banco di Roma. The bank went to Tripoli because the government wanted it to pave the way for conquest. The bank’s decision to invest in Tripoli was the result of an incentive offered by the Italian Government—the privilege of rediscount facilities at the Bank of Italy, and further compensation in the form of a subsidy to its navigation service. The Banco di Roma did not like the risky investment from which at best but very poor returns could be expected. The German Reich did not care a whit for the interests of the Mannesmanns in Morocco. It used the case of this unimportant German firm as a lame excuse for its aspirations. German big business and finance were not at all interested. The Foreign Office tried in vain to induce them to invest in Morocco. “As soon as you mention Morocco,” said the German Secretary for Foreign Affairs, Herr von Richthofen, “the banks all go on strike, every last one of them.”*

At the outbreak of the first World War a total of less than 25,000 Germans, most of them soldiers and civil servants and their families, lived in the German colonies. The trade of the mother country with its colonies was negligible; it was less than .5 per cent of Germany’s total foreign trade. Italy, the most aggressive colonial power, lacked the capital to develop its domestic resources; its investments in Tripoli and in Ethiopia perceptibly increased the capital shortage at home.

The most modern pretense for colonial conquest is condensed in the slogan “raw materials.” Hitler and Mussolini tried to justify their plans by pointing out that the natural resources of the earth were not fairly distributed. As have-nots they were eager to get their fair share from those nations which had more than they should have had. How could they be branded aggressors when they wanted nothing but what was—in virtue of natural and divine right—their own?

In the world of capitalism raw materials can be bought and sold like all other commodities. It does not matter whether they have to be imported from abroad or bought at home. It is of no advantage for an English buyer of Australian wool that Australia is a part of the British Empire; he must pay the same price that his Italian or German competitor pays.

The countries producing the raw materials that cannot be produced in Germany or in Italy are not empty. There are people living in them; and these inhabitants are not ready to become subjects of the European dictators. The citizens of Texas and Louisiana are eager to sell their cotton crops to anyone who wants to pay for them; but they do not long for German or Italian domination. It is the same with other countries and other raw materials. The Brazilians do not consider themselves an appurtenance of their coffee plantations. The Swedes do not believe that their supply of iron ore justifies Germany’s aspirations. The Italians would themselves consider the Danes lunatics if they were to ask for an Italian province in order to get their fair share of citrus fruits, red wine, and olive oil.

It would be reasonable if Germany and Italy were to ask for a general return to free trade and laissez passer and for an abandonment of the—up to now unsuccessful—endeavors of many governments to raise the price of raw materials by a compulsory restriction of output. But such ideas are strange to the dictators, who do not want freedom but Zwangswirtschaft and self-sufficiency.

Modern colonial imperialism is a phenomenon by itself. It should not be confused with European nationalism. The great wars of our age did not originate from colonial conflicts but from nationalist aspirations in Europe. Colonial antagonisms kindled colonial campaigns without disturbing the peace between the Western nations. For all the saber rattling, neither Fashoda nor Morocco nor Ethiopia resulted in European war. In the complex of German, Italian, and French foreign affairs, colonial plans were mere byplay. Colonial aspirations were not much more than a peacetime outdoor sport, the colonies a tilting ground for ambitious young officers.

6.

Foreign Investment and Foreign Loans

The main requisite of the industrial changes which transformed the world of handicraftsmen and artisans, of horses, sailing ships, and windmills into the world of steam power, electricity, and mass production was the accumulation of capital. The nations of Western Europe brought forth the political and institutional conditions for safeguarding saving and investment on a broader scale, and thus provided the entrepreneurs with the capital needed. On the eve of the industrial revolution the technological and economic structure of Western economy did not differ essentially from conditions in the other parts of the inhabited surface of the earth. By the second quarter of the nineteenth century a broad gulf separated the advanced countries of the West from the backward countries of the East. While the West was on the road of quick progress, in the East there was stagnation.

Mere acquaintance with Western methods of production, transportation, and marketing would have proved useless for the backward nations. They did not have the capital for the adoption of the new processes. It was not difficult to imitate the technique of the West. But it was almost impossible to transplant the mentalities and ideologies which had created the social, legal, constitutional, and political milieu from which these modern technological improvements had sprung. An environment which could make for domestic capital accumulation was not so easy to produce as a modern factory. The new industrial system was but the effect of the new spirit of liberalism and capitalism. It was the outcome of a mentality which cared more about serving the consumer than about wars, conquest, and the preservation of old customs. The essential feature of the advanced West was not its technique but its moral atmosphere which encouraged saving, capital formation, entrepreneurship, business, and peaceful competition.

The backward nations perhaps might have come to understand this basic problem and might have started to transform their social structures in such a way that autochthonous capital accumulation would have resulted. Even then it would have been a slow and troublesome process. It would have required a long time. The gulf between West and East, between advanced nations and backward nations, would have broadened more and more. It would have been hopeless for the East to overtake the head start gained by the West.

But history took another course. A new phenomenon appeared—the internationalization of the capital market. The advanced West provided all parts of the world with the capital needed for the new investments. Loans and direct investments made it possible to outfit all countries with the paraphernalia of modern civilization. Mahatma Gandhi expresses a loathing for the devices of the petty West and of devilish capitalism. But he travels by railroad or by motor car and, when ill, goes for treatment to a hospital equipped with the most refined instruments of Western surgery. It does not seem to occur to him that Western capital alone made it possible for the Hindus to enjoy these facilities.

The enormous transfer of capital from Western Europe to the rest of the world was one of the outstanding events of the age of capitalism. It has developed natural resources in the remotest areas. It has raised the standard of living of peoples who from time immemorial had not achieved any improvement in their material conditions. It was, of course, not charity but self-interest which pushed the advanced nations to the export of capital. But the profit was not unilateral; it was mutual. The once backward nations have no sound reason to complain because foreign capitalists provided them with machinery and transportation facilities.

Yet in this age of anticapitalism hostility to foreign capital has become general. All debtor nations are eager to expropriate the foreign capitalist. Loans are repudiated, either openly or by the more tricky means of foreign exchange control. Foreign property is liable to discriminatory taxation which reaches the level of confiscation. Even un-disguised expropriation without any indemnification is practiced.

There has been much talk about the alleged exploitation of the debtor nations by the creditor nations. But if the concept of exploitation is to be applied to these relations, it is rather an exploitation of the investing by the receiving nations. These loans and investments were not intended as gifts. The loans were made upon solemn stipulation of payment of principal and interest. The investments were made in the expectation that property rights would be respected. With the exception of the bulk of the investments made in the United States, in some of the British dominions, and in some smaller countries, these expectations have been disappointed. Bonds have been defaulted or will be in the next few years. Direct investments have been confiscated or soon will be. The capital-exporting countries can do nothing but wipe off their balances.

Let us look at the problem from the point of view of the predominantly industrial countries of Europe. These comparatively overpopulated countries are poorly endowed by nature. In order to pay for badly needed foodstuffs and raw materials they must export manufactures. The economic nationalism of the nations which are in a position to sell them these foodstuffs and raw materials shuts the doors in their face. For Europe the restriction of exports means misery and starvation. Yet there was one safety valve left, as long as the foreign investments could be relied upon. The debtor nations were obliged to export some quantities of their products as payment of interest and dividends. Even if the goal of present-day foreign-trade policies, the complete prevention of any import of manufactures, were to be attained, the debtor nations would still have to provide the creditor nations with the means to pay for a part of the formers’ excess production of food and raw materials. The consumers of the creditor nations would be in a position to buy these goods on the sheltered home market, as it were, from the hands of those receiving the payments from abroad. These foreign investments represented in a certain manner the share of the creditor nations in the rich resources of the debtor nations. The existence of these investments softened to some extent the inequality between the haves and the have-nots.

In what sense was prewar Great Britain a have nation? Surely not in the sense that it “owned” the Empire. But the British capitalists owned a considerable amount of foreign investments, whose yield made it possible for the country to buy a corresponding quantity of foreign products in excess of that quantity which was the equivalent of current British exports. The difference in the economic structures of prewar Great Britain and Austria was precisely that Austria did not own such foreign assets. The British worker could provide for a considerable quantity of foreign food and raw materials by working in factories which sold their products on the sheltered British market to those people who received these payments from abroad. It was as if these foreign wheat fields, cotton and rubber plantations, oil wells and mines had been situated within Great Britain.

After the present war, with their foreign assets gone either through the methods applied in financing the war expenditure or by default and confiscation on the part of the governments of the debtor nations, Great Britain and some other countries of Western Europe will be reduced to the status of comparatively poor nations. This change will affect very seriously the conditions of British labor. Those quantities of foreign food and raw materials which the country could previously procure by means of the interest and dividend payments received from abroad will in the future be sought by desperate attempts to sell manufactures to which every country wants to bar access.

7.

Total War

The princes of the ancien régime were eager for aggrandizement. They seized every opportunity to wage war and to conquer. They organized—comparatively small—armies. These armies fought their battles. The citizens detested the wars, which brought mischief to them and burdened them with taxes. But they were not interested in the outcome of the campaigns. It was more or less immaterial to them whether they were ruled by a Habsburg or by a Bourbon. In those days Voltaire declared: “The peoples are indifferent to their rulers’ wars.”*

Modern war is not a war of royal armies. It is a war of the peoples, a total war. It is a war of states which do not leave to their subjects any private sphere; they consider the whole population a part of the armed forces. Whoever does not fight must work for the support and equipment of the army. Army and people are one and the same. The citizens passionately participate in the war. For it is their state, their God, who fights.

Wars of aggression are popular nowadays with those nations which are convinced that only victory and conquest could improve their material well-being. On the other hand the citizens of the nations assaulted know very well that they must fight for their own survival. Thus every individual in both camps has a burning interest in the outcome of the battles.

The annexation of Alsace-Lorraine by Germany in 1871 did not bring about any change in the wealth or income of the average German citizen. The inhabitants of the annexed province retained their property rights. They became citizens of the Reich, and returned deputies to the Reichstag. The German Treasury collected taxes in the newly acquired territory. But it was, on the other hand, burdened with the expense of its administration. This was in the days of laissez faire.

The old liberals were right in asserting that no citizen of a liberal and democratic nation profits from a victorious war. But it is different in this age of migration and trade barriers. Every wage earner and every peasant is hurt by the policy of a foreign government, barring his access to countries in which natural conditions of production are more favorable than in his native country. Every toiler is hurt by a foreign country’s import duties penalizing the sale of the products of his work. If a victorious war destroys such trade and migration walls, the material well-being of the masses concerned is favored. Pressure on the domestic labor market can be relieved by the emigration of a part of the workers. The emigrants earn more in their new country, and the restriction of the supply on the domestic labor market tends to raise wage rates at home too. The abolition of foreign tariffs increases exports and thereby the demand on the domestic labor market. Production on the least fertile soil is discontinued at home, and the farmers go to countries in which better soil is still available. The average productivity of labor all over the world increases because production under the least favorable conditions is curtailed in the emigration countries and replaced by an expansion of production in the immigration countries offering more favorable physical opportunities.

But, on the other hand, the interests of the workers and farmers in the comparatively underpopulated countries are injured. For them the tendency toward an equalization of wage rates and farm yields (per capita of the men tilling a unit of land), inherent in a world of free mobility of labor, results, for the immediate future, in a drop of income, no matter how beneficial the later consequences of this free mobility may be.

It would be futile to object that there is unemployment in the comparatively underpopulated countries, foremost among them Australia and America, and that immigration would only result in an increase of unemployment figures, not in an improvement of the conditions of the immigrants. Unemployment as a mass phenomenon is always due to the enforcement of minimum wages higher than the potential wages which the unhampered labor market would have fixed. If the labor unions did not persistently try to raise wage rates above the potential market rates there would be no lasting unemployment of many workers. The problem is not the differences in union minimum rates in different countries, but those in potential market wage rates. If there were no trade-union manipulation of wages, Australia and America could absorb many millions of immigrant workers until an equalization of wages was reached. The market wage rates both in manufacturing and in agriculture are many times higher in Australia, in New Zealand, and in northern America than in continental Europe. This is due to the fact that in Europe poor mines are still exploited while much richer mining facilities remain unused in overseas countries. The farmers of Europe are tilling the rocky and barren soil in the Alps, the Carpathians, the Apennines, and the Balkan Mountains, and the sandy soil of the plains of northeastern Germany, while millions of acres of more fertile soil lie untouched in America and Australia. All these peoples are prevented from moving to places where their toil and trouble would be much more productive and where they could render better services to the consumers.

We can now realize why etatism must result in war whenever the underprivileged believe that they will be victorious. As things are in this age of etatism the Germans, the Italians, and the Japanese could possibly derive profit from a victorious war. It is not a warrior caste which drives Japan into ruthless aggression but considerations of wage policies which do not differ from those of the trade unions. The Australian trade unions wish to close their ports to immigration in order to raise wage rates in Australia. The Japanese workers wish to open the Australian ports in order to raise wage rates for the workers of their own race.

Pacifism is doomed in an age of etatism. In the old days of royal absolutism philanthropists thus addressed the kings: “Take pity on suffering mankind; be generous and merciful! You, of course, may profit from victory and conquest. But think of the grief of the widows and orphans, the desolation of those maimed, mutilated and crippled, the misery of those whose homes have been destroyed! Remember the commandment: Thou shalt not kill! Renounce glory and aggrandizement! Keep peace!” They preached to deaf ears. Then came liberalism. It did not declaim against war; it sought to establish conditions, in which war would not pay, to abolish war by doing away with the causes. It did not succeed because along came etatism. When the pacifists of our day tell the peoples that war cannot improve their well-being, they are mistaken. The aggressor nations remain convinced that a victorious war could improve the fate of their citizens.

These considerations are not a plea for opening America and the British Dominions to German, Italian, and Japanese immigrants. Under present conditions America and Australia would simply commit suicide by admitting Nazis, Fascists, and Japanese. They could as well directly surrender to the Führer and to the Mikado. Immigrants from the totalitarian countries are today the vanguard of their armies, a fifth column whose invasion would render all measures of defense useless. America and Australia can preserve their freedom, their civilizations, and their economic institutions only by rigidly barring access to the subjects of the dictators. But these conditions are the outcome of etatism. In the liberal past the immigrants came not as pacemakers of conquest but as loyal citizens of their new country.

However, it would be a serious omission not to mention the fact that immigration barriers are recommended by many contemporaries without any reference to the problem of wage rates and farm yields. Their aim is the preservation of the existing geographical segregation of various races. They argue this: Western civilization is an achievement of the Caucasian races of Western and Central Europe and their descendants in overseas countries. It would perish if the countries peopled by these Westerners were to be overflowed by the natives of Asia and Africa. Such an invasion would harm both the Westerners and the Asiatics and Africans. The segregation of various races is beneficial to all mankind because it prevents a disintegration of Western civilization. If the Asiatics and Africans remain in that part of the earth in which they have been living for many thousands of years, they will be benefited by the further progress of the white man’s civilization. They will always have a model before their eyes to imitate and to adapt to their own conditions. Perhaps in a distant future they themselves will contribute their share to the further advancement of culture. Perhaps at that time it will be feasible to remove the barriers of segregation. In our day—they say—such plans are out of the question.

We must not close our eyes to the fact that such views meet with the consent of the vast majority. It would be useless to deny that there exists a repugnance to abandoning the geographical segregation of various races. Even men who are fair in their appraisal of the qualities and cultural achievements of the colored races and severely object to any discrimination against those members of these races who are already living in the midst of white populations are opposed to a mass immigration of colored people. There are few white men who would not shudder at the picture of many millions of black or yellow people living in their own countries.

The elaboration of a system making for harmonious coexistence and peaceful economic and political coöperation among the various races is a task to be accomplished by coming generations. But mankind will certainly fail to solve this problem if it does not entirely discard etatism. Let us not forget that the actual menace to our civilization does not originate from a conflict between the white and colored races but from conflicts among the various peoples of Europe and of European ancestry. Some writers have prophesied the coming of a decisive struggle between the white race and the colored races. The reality of our time, however, is war between groups of white nations and between the Japanese and the Chinese who are both Mongolians. These wars are the outcome of etatism.

8.

Socialism and War

The socialists insist that war is but one of the many mischiefs of capitalism. In the coming paradise of socialism, they hold, there will no longer be any wars. Of course, between us and this peaceful utopia there are still some bloody civil wars to be fought. But with the inevitable triumph of communism all conflicts will disappear.

It is obvious enough that with the conquest of the whole surface of the earth by a single ruler all struggles between states and nations would disappear. If a socialist dictator should succeed in conquering every country there would no longer be external wars, provided that the O.G.P.U. were strong enough to hinder the disintegration of this World State. But the same holds true for any other conqueror. If the Mongol Great Khans had accomplished their ends, they too would have made the world safe for eternal peace. It is too bad that Christian Europe was so obstinate as not to surrender voluntarily to their claims of world supremacy.*

However, we are not considering projects for world pacification through universal conquest and enslavement, but how to achieve a world where there are no longer any causes of conflict. Such a possibility was implied in liberalism’s project for the smooth coöperation of democratic nations under capitalism. It failed because the world abandoned both liberalism and capitalism.

There are two possibilities for world-embracing socialism: the coexistence of independent socialist states on the one hand, or the establishment of a unitary world-embracing socialist government on the other.

The first system would stabilize existing inequalities. There would be richer nations and poorer ones, countries both underpopulated and overpopulated. If mankind had introduced this system a hundred years ago, it would have been impossible to exploit the oil fields of Mexico or Venezuela, to establish the rubber plantations in Malaya, or to develop the banana production of Central America. The nations concerned lacked both the capital and trained men to utilize their own natural resources. A socialist scheme is not compatible with foreign investment, international loans, payments of dividends and interest, and all such capitalist institutions.

Let us consider what some of the conditions would be in such a world of coördinate socialist nations. There are some overcrowded countries peopled by white workers. They labor to improve their standard of living, but their endeavors are handicapped by inadequate natural resources. They badly need raw materials and foodstuffs that could be produced in other, better endowed countries. But these countries which nature has favored are thinly populated and lack the capital required to develop their resources. Their inhabitants are neither industrious nor skillful enough to profit from the riches which nature has lavished upon them. They are without initiative; they cling to old-fashioned methods of production; they are not interested in improvement. They are not eager to produce more rubber, tin, copra, and jute and to exchange these products for goods manufactured abroad. By this attitude they affect the standard of living of those peoples whose chief asset is their skill and diligence. Will these peoples of countries neglected by nature be prepared to endure such a state of things? Will they be willing to work harder and to produce less because the favored children of nature stubbornly abstain from exploiting their treasures in a more efficient way?

Inevitably war and conquest result. The workers of the comparatively overpopulated areas invade the comparatively underpopulated areas, conquer these countries, and annex them. And then follow wars between the conquerors for the distribution of the booty. Every nation is prepared to believe that it has not obtained its fair share, that other nations have got too much and should be forced to abandon a part of their plunder. Socialism in independent nations would result in endless wars.

These considerations prepare for a disclosure of the nonsensical Marxian theories of imperialism. All these theories, however much they conflict with each other, have one feature in common: they all maintain that the capitalists are eager for foreign investment because production at home tends, with the progress of capitalism, to a reduction in the rate of profit, and because the home market under capitalism is too narrow to absorb the whole volume of production. This desire of capitalists for exports and for foreign investment, it is held, is detrimental to the class interests of the proletarians. Besides, it leads to international conflict and war.

Yet the capitalists did not invest abroad in order to withhold goods from home consumption. On the contrary, they did so in order to supply the home market with raw materials and foodstuffs which could otherwise not be obtained at all, or only in insufficient quantities or at higher costs. Without export trade and foreign investment European and American consumers would never have enjoyed the high standard of living that capitalism gave them. It was the wants of the domestic consumers that pushed the capitalists and entrepreneurs toward foreign markets and foreign investment. If the consumers had been more eager for the acquisition of a greater quantity of goods that could be produced at home without the aid of foreign raw materials than for imported food and raw materials, it would have been more profitable to expand home production further than to invest abroad.

The Marxian doctrinaires shut their eyes purposely to the inequality of natural resources in different parts of the world. And yet these inequalities are the essential problem of international relations.* But for them the Teutonic tribes and later the Mongols would not have invaded Europe. They would have turned toward the vast empty areas of the Tundra or of northern Scandinavia. If we do not take into account these inequalities of natural resources and climates we can discover no motive for war but some devilish spell, for example—as the Marxians say—the sinister machinations of capitalists, or—as the Nazis say—the intrigues of world Jewry.

These inequalities are natural and can never disappear. They would present an insoluble problem for a unitary world socialism also. A socialist world-embracing management could, of course, consider a policy under which all human beings are treated alike; it could try to ship workers and capital from one area to another, without considering the vested interests of the labor groups of different countries or of different linguistic groups. But nothing can justify the illusion that these labor groups, whose per capita income and standard of living would be reduced by such a policy, would be prepared to tolerate it. No socialist of the Western nations considers socialism to be a scheme which (even if we were to grant the fallacious expectations that socialist production would increase the productivity of labor) must result in lowering living standards in those nations. The workers of the West are not striving for equalization of their earnings with those of the more than 1,000 million extremely poor peasants and workers of Asia and Africa. For the same reason that they oppose immigration under capitalism, these workers would oppose such a policy of labor transfer on the part of a socialist world management. They would rather fight than agree to abolition of the existing discriminations between the lucky inhabitants of comparatively underpopulated areas and the unfortunate inhabitants of the overpopulated areas. Whether we call such struggles civil wars or foreign wars is immaterial.

The workers of the West favor socialism because they hope to improve their condition by the abolition of what they describe as unearned incomes. We are not concerned with the fallacies of these expectations. We have only to emphasize that these Western socialists do not want to share their incomes with the underprivileged masses of the East. They are not prepared to renounce the most valuable privilege which they enjoy under etatism and economic nationalism—the exclusion of foreign labor. The American workers are for the maintenance of what they call “the American way of life,” not for a world socialist way of life, which would lie somewhere between the present American and the coolie level, probably much nearer to the latter than to the former. This is stark reality that no socialist rhetoric can conjure away.

The same selfish group interests which through migration barriers have frustrated the liberal plans for world-wide peaceful cooperation of nations, states, and individuals would destroy the internal peace within a socialist world state. The peace argument is just as baseless and erroneous as all the other arguments brought forward to demonstrate the practicability and expediency of socialism.

[1. ][Established December 6, 1922.—Ed.]

[* ]Act IV, scene in the lunatic asylum.

[† ]Kenyon, “The Bible as Christ Knew It,” The History of Christianity in the Light of Modern Knowledge (London, 1929), p. 172. Some Zionists advocated Yiddish as the national language; but they did not succeed in establishing it. Yiddish is a German dialect with some words borrowed from Hebrew and more from the Slavonic languages. It is the dialect spoken by the Jews of German origin in northeastern Europe. The newspapers in Hebrew type printed and distributed in America are not written in Hebrew but in Yiddish.

[* ]We shall consider in chapter VIII the alleged racial factors in nationalist Jew baiting.

[* ]Renan, Qu’est-ce qu’une nation? (ed. Paris, 1934).

[† ]Ibid., p. xi.

[‡ ]Ibid., pp. 84, 88.

[§ ]Ibid., p. 83.

[‖ ]Ibid., pp. viii ff., 89–90, 95 ff.

[¶ ]“L’homme n’appartient ni à sa langue, ni à sa race; il n’appartient qu’à lui-même.” Ibid., p. ix.

[* ]Ibid., p. 91.

[† ]Ibid., p. viii.

[* ]Steding, Das Reich und die Krankheit der Kultur (Hamburg, 1938).

[† ]Carl Schmitt-Dorotić, Der Begriff des Politischen (Munich, 1932).

[* ]E.g., the city of Fiume is claimed by the Hungarians, Croats, Yugoslavs, and Italians.

[* ]Hrushevsky, A History of the Ukraine (published for the Ukrainian National Association by Yale University Press, New Haven, 1941), p. 574.

[† ]Part III, act IV, scene ii. Authorized translation by Sam E. Davidson, Poet Lore, XLII, No. 3 (Boston, Bruce Humphries, Inc., 1935), p. 259.

[2. ][The truth of Mises’s remark that it was the British who held India together was borne out after World War II. India and Pakistan were declared to be separate sovereign states in 1947, and Bangladesh seceded from Pakistan in 1971.—Ed.]

[* ]W. L. Langer, The Diplomacy of Imperialism (New York, 1935), I, pp. 75, 95; L. Robbins, The Economic Causes of War (London, 1939), pp. 81, 82.

[* ]Staley, War and the Private Investor (New York, 1935); Robbins, op. cit.; Sulzbach, “Capitalist Warmongers,” A Modern Superstition (Chicago, 1942). Charles Beard (A Foreign Policy for America, New York, 1930, p. 72) says with regard to America: “Loyalty to the facts of historical record must ascribe the idea of imperialist expansion mainly to naval officers and politicians rather than to business men.” That is valid for all other nations too.

[* ]Benda, La Trahison des clercs (Paris, 1927), p. 253.

[* ]Voegelin, “The Mongol Orders of Submission to the European Powers 1245–1255,” Byzantion, XV, pp. 378–413.

[* ]We have dealt only with those types of foreign investment that were intended to develop the natural resources of the backward countries, i.e., investment in mining and agriculture and their auxiliaries such as transportation facilities, public utilities, and so on. The investment in foreign manufacturing was to a great extent due to the influence of economic nationalism; it would not have happened within a world of free trade. It was protectionism that forced the American motor-car producers and the German electrical plants to establish branch factories abroad.