The Online Library of Liberty

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• 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

3.

The German Workers and the German State

For an understanding of the role played by the Social Democratic labor movement within imperial Germany, a correct conception of the essential features of trade-unionism and its methods is indispensable. The problem is usually dealt with from the viewpoint of the right of workers to associate with one another. But this is not at all the question. No liberal government has ever denied anybody the right to form associations. Furthermore, it does not matter whether the laws grant or do not grant the employees and wage earners the right to break contracts ad libitum. For even if the workers are legally liable to indemnify the employer concerned, practical expediency renders the claims of the employer worthless.

The chief method which trade-unions can and do apply for the attainment of their aims—more favorable terms for labor—is the strike. At this point of our inquiry we do not need to discuss again whether trade-unions can ever succeed in raising wages, lastingly and for all workers, above the rates fixed by the unhampered market; we need merely mention the fact that economic theory—both the old classic theory, including its Marxian wing, and the modern, including its socialist wing—categorically answers this question in the negative.* We are here concerned only with the problem of what kind of weapon trade-unions employ in their dealings with employers. The fact is that all their collective bargaining is conducted under the threat of a suspension of labor. Union spokesmen argue that a yellow or company union is a spurious union, because it objects to recourse to strike. If the labor unions were not to threaten the employer with a strike, their collective bargaining would succeed no better than the individual bargaining of each worker. But a strike may be frustrated by the refusal of some of the workers to join it, or the entrepreneur’s employing strikebreakers. The trade-unions use intimidation and coercion against everyone who tries to oppose the strikers. They resort to acts of violence against the persons and property of both strikebreakers and entrepreneurs or executives who try to employ strikebreakers. In the course of the nineteenth century the workers of all countries achieved this privilege, not so much by explicit legislative sanction as by the accommodating attitudes of the police and the courts. Public opinion has espoused the unions’ cause. It has approved strikes, stigmatized strikebreakers as treacherous scoundrels, approved the punishment inflicted by organized labor on reluctant employers and on strikebreakers, and reacted strongly when the authorities tried to interfere to protect the assaulted. A man who ventures to oppose trade-unions has been practically an outlaw, to whom the protection of the government is denied. A law of custom has been firmly established that entitles trade-unions to resort to coercion and violence.

This resignation on the part of the governments has been less conspicuous in the Anglo-Saxon countries, where custom always allowed a wider field for the individual’s redress of his private grievances, than in Prussia and the rest of Germany, where the police were almighty and accustomed to interfere in every sphere of life. Woe to anybody who in the realm of the Hohenzollerns was found guilty of the slightest in-fraction of one of the innumerable decrees and “verboten”! The police were busy interfering, and the courts pronounced draconic sentences. Only three kinds of infringements were tolerated. Dueling, although prohibited by the penal code, was practically free, within certain limits, to commissioned officers, university students, and men of that social rank. The police also connived when drunken members of smart university students’ clubs kicked up a row, disturbed quiet people, and took their pleasures in other kinds of disorderly conduct. Of incomparably greater importance, however, was the indulgence granted to the excesses usually connected with strikes. Within a certain sphere the violent action of strikers was tolerated.

It is in the nature of every application of violence that it tends toward a transgression of the limit within which it is tolerated and viewed as legitimate. Even the best discipline cannot always prevent police officers from striking harder than circumstances require, or prison wardens from inflicting brutalities on inmates. Only formalists, cut off from reality, fall into the illusion that fighting soldiers can be induced to observe the rules of warfare strictly. Even if the field customarily assigned for the violent action of trade unions had been limited in a more precise manner, transgressions would have occurred. The attempt to put boundaries around this special privilege has led again and again to conflicts between officials and strikers. And because the authorities time and again could not help interfering, sometimes even with the use of weapons, the illusions spread that the government was assisting the employers. For that reason the public’s attention has been diverted from the fact that employers and strikebreakers were within broad limits at the mercy of the strikers. Wherever there was a strike, there was within certain limits no longer any government protection for the opponents of the trade unions. Thus the unions became in effect a public agency entitled to use violence to enforce their ends, as were later the pogrom gangs in Czarist Russia and the Storm Troopers in Nazi Germany.

That the German Government granted these privileges to the trade unions became of the highest importance in the course of German affairs. Thus from the 1870’s on successful strikes became possible. There had been some strikes, it is true, before then in Prussia. But at that time conditions were different. The employers could not find strikebreakers in the neighborhood of plants located in small places; and the backward state of transportation facilities, the laws restricting freedom of migration within the country, and lack of information about labor market conditions in other districts prevented them from hiring workers from distant points. When these circumstances changed, strikes could only be successful when supported by threats, violence, and intimidation.

The imperial government never seriously considered altering its pro-union policy. In 1899, seemingly yielding to the demands of the employers and nonunionized workers, it brought up in the Reichstag a bill for the protection of nonstrikers. This was merely a deception. For the lack of protection of those ready to work was not due to the inadequacy or defectiveness of the existing penal code but to the purposeful neglect of the valid laws on the part of the police and other authorities. Neither the laws nor the rulings of the courts played any real role in this matter. As the police did not interfere and the state’s attorneys did not prosecute, the laws were not enforced and the tribunals had no opportunity to pass judgment. Only when the trade unions transgressed the actual limits drawn by the police could a case be brought to the tribunals. The government was firmly resolved not to change this state of affairs. It was not eager to induce Parliament to agree to the proposed bill; and Parliament in fact rejected it. If the government had taken the bill seriously, Parliament would have proceeded quite differently. The German Government knew very well how to make the Reichstag yield to its wishes.

The outstanding fact in modern German history was the imperial government’s entering into a virtual alliance and factual political coöperation with all groups hostile to capitalism, free trade, and an unhampered market economy. Hohenzollern militarism tried to fight “bourgeois” liberalism and “plutocratic” parliamentarism by associating with the pressure groups of labor, farming, and small business. It aimed at substituting, for what it called a system of unfair exploitation, government interference with business and, at a later stage, all-round national planning.

The ideological and speculative foundations of this system were laid down by the socialists of the chair,1 a group of professors monopolizing the departments of the social sciences at the German universities. These men, whose tenets were almost identical with those later held by the British Fabians and the American Institutionalists, acted, as it were, as the brain trust of the government. The system itself was called by its supporters Sozialpolitik, or das soziale Königtum der Hohenzollern. Neither expression lends itself to a literal translation. Perhaps they should be translated as New Deal; for their main features—labor legislation, social security, endeavors to raise the price of agricultural products, encouragement of coöperatives, a sympathetic attitude toward trade-unionism, restrictions imposed on stock exchange transactions, heavy taxation of corporations—corresponded to the American policy inaugurated in 1933.*

The new policy was inaugurated at the end of the ’seventies and was solemnly advertised in an imperial message of November 17, 1881. It was Bismarck’s aim to outdo the Social Democrats in measures beneficial to labor interests. His old-fashioned autocratic inclinations pushed him into a hopeless fight against the Social Democratic leaders. His successors dropped the antisocialist laws but unswervingly continued the Sozialpolitik. It was with regard to British policies that Sidney Webb said, as early as in 1889: “It may now fairly be claimed that the socialist philosophy of today is but the conscious and explicit assertion of principles of social organization which have been already in great part unconsciously adopted. The economic history of the century is an almost continuous record of the progress of socialism.”† However, in those years German Sozialpolitik was far ahead of contemporary British reformism.

The German socialists of the chair gloried in the achievements of their country’s social progress. They prided themselves on the fact that Germany was paramount in pro-labor policies. It escaped their notice that Germany could eclipse Great Britain in matters of social legislation and trade-unionism only because its protective tariff and its cartels raised domestic prices above world market prices, while the English still clung to free trade. German real wages did not rise more than the productivity of labor. Neither the government’s Sozialpolitik nor trade-union activities but the evolution of capitalist enterprise caused the improvement in the general standard of living. It was no merit of the government or of trade unions that the entrepreneurs perfected the methods of production and filled the market with more and better goods. The German worker could consume more goods than his father and grandfather, because, thanks to the new methods of production, his work was more efficient and produced more and better commodities. But in the eyes of the professors the fall of mortality figures and the rise in per capita consumption were a proof of the blessings of the Hohenzollern system. They attributed the increase of exports to the fact that Germany was now one of the most powerful nations, and that the imperial navy and army made other nations tremble before it. Public opinion was fully convinced that but for the government’s interference the workers would be no better off than they had been fifty or a hundred years earlier.

Of course, the workers were prepared to believe that the government was slow to act and that its pro-labor policy could proceed much more quickly. They found in every new measure only an incentive to ask for more. Yet while criticizing the government for its tardiness they did not disapprove of the attitude of the Social Democrat members of the Reichstag who voted against all bills proposed by the government and supported by the “bourgeois” members. The workers agreed both with the Social Democrats, who called every new pro-labor measure an insolent fraud imposed by the bourgeoisie on labor, and with the government-appointed professors, who lauded the same measures as the most beneficial achievements of German Kultur. They were delighted with the steady rise in their standard of living, which they too attributed not to the working of capitalism but to the activities both of trade unions and of the government. They ventured no attempts at upheaval. They liked the revolutionary phraseology of the Social Democrats because it frightened the capitalists. But the glory and the splendor of the Reich fascinated them. They were loyal citizens of the Reich, his Majesty’s loyal opposition.

This allegiance was so firm and unshakable that it stood the test of the laws against the Social Democrats. These laws were but one link in the long series of blunders committed by Bismarck in his domestic policies. Like Metternich, Bismarck was fully convinced that ideas could be successfully defeated by policemen. But the results obtained were contrary to his intentions. The Social Democrats emerged from the trial of these years no less invigorated than in the ’seventies the Center party and the Catholic Church had emerged from the Kulturkampf, the great anti-Catholic campaign. In the twelve years the antisocialist laws were in force (1878–90) the socialist votes increased considerably. The laws touched only those socialists who took an active part in politics. They did not seriously discommode the trade unions and the masses voting for the socialists. Precisely in those years the government’s pro-labor policy made its greatest steps forward; the government wanted to surpass the socialists. The workers realized that the state was becoming more and more their own state and that it was increasingly backing their fight against the employers; the government-appointed factory inspectors were the living personification of this coöperation. The workers had no reason to be hostile to this state merely because it annoyed the party leaders.* The individual party member in the years of the antisocialist laws punctually and regularly received newspapers and pamphlets smuggled in from Switzerland, and read the Reichstag speeches of the socialist deputies. He was a loyal “revolutionary” and a—somewhat critical and sophisticated—monarchist. Marx and the Kaiser both were mistaken in their belief that these quiet fellows thirsted for the princes’ blood. But Lassalle had been right when he delineated the future coöperation of the Hohenzollern state and the socialist proletarians.

The unconditional loyalty of the proletarians made the army an accommodating tool in the hands of its commanders. Liberalism had shaken the foundations of Prussian absolutism. In the days of its supremacy the king and his aides no longer trusted the bulk of their army; they knew that this army could not be used against the domestic foe or for wars of undisguised aggression. Socialism and interventionism, the Kaiser’s New Deal, had restored the loyalty of the armed forces; now they could be used for any purpose. The men responsible for the new trend in politics, the statesmen and professors, were fully aware of this. It was just because they strove toward this end that they supported the inauguration of the Sozialpolitik and asked for its intensification. The officers of the army were convinced that the Social Democratic soldiers were completely reliable men. The officers disapproved, therefore, of the Kaiser’s contemptuous disparagement of the Social Democrats just as in earlier years they had disapproved of Bismarck’s measures against them (as well as of his anti-Catholic policy). They detested the defiant speeches of the socialist deputies but trusted the Social Democratic soldier. They themselves hated the wealthy entrepreneurs no less than the workers did. In the days of the antisocialist campaign, in 1889, their lyrical spokesman, Detlev von Liliencron, admitted it frankly.* Junkers and officers were firmly welded into a virtual coalition with labor by the instrument that forges the most solid unions, deadly hatred. When the Social Democrats paraded in the streets, the officers—in plain clothes—looked upon the marching columns and smilingly commented: “We ourselves have taught these boys how to march properly; they will do a very good job under our orders when Mobilization day comes.” Later events proved the correctness of these expectations.

On August 3, 1914, Reich’s Chancellor Bethmann-Hollweg received the chairmen of all parliamentary party groups at a conference. Comrade Scheidemann reports: “The Chancellor shook hands with each of us. It seemed to me that he shook my hand in a surprising way, firmly and long, and when he then said, How do you do, Mr. Scheidemann, I felt as if he were giving me to understand: Well, now I hope our traditional squabble is finished for some time.”† Such were the views of the party’s great popular leader on the fifty years of antagonism. Not a historical struggle of the class-conscious proletariat against exploiters and imperialistic warmongers, as the official speakers at party meetings used to declare, but merely a squabble that could be ended by a handshake.

[* ]See above, pp. 74–75.

[1. ][See the note on p. 149.—Ed.]

[* ]Elmer Roberts used the term “monarchical socialism.” See his book Monarchical Socialism in Germany (New York, 1913).

[† ]Sidney Webb in Fabian Essays in Socialism (American ed. New York, 1891), p. 4.

[* ]In those days in the happy 1880’s people used to speak of “persecutions.” But compared with what the Bolsheviks and the Nazis have since done to their opponents, these persecutions were little more than a nuisance.

[* ]See his letter of September 17, 1889, published in Deutsche Rundschau, XXI (Berlin, 1910), p. 663.

[† ]Scheidemann, Der Zusammenbruch (Berlin, 1921), p. 9.