Liberty Matters

The Tempting Certainties Offered by Socialism

It is quite sad that men of learning tend to prefer obscure writers. Works written in a language known only to the initiated enable the educated person to raise a wall between herself and the rest of the world. To feel superior, in a sense. But a convoluted prose is seldom the product of a terse mind.
It takes quite a bit of effort to misinterpret Ludwig von Mises (1881-1973). Socialism (1922) is no exception. This book expands on Mises’s path breaking 1920 essay, “The Economic Calculation in the Socialist Commonwealth,” which opened the so-called “Socialist calculation debate,” one of the great controversies in the social sciences of the 20th century. But the book is, as its subtitle suggests, “an economic and sociological analysis.” The core of Mises’s arguments is still his great discovery of two years before. Storr brilliantly summarizes it:
Absent private ownership of the means of production there can be no rivalry between different producers over inputs. Absent rivalry there will not be meaningful prices, there will not be prices that reflect the relative scarcities of inputs. Absent prices that reflect relative scarcities there can be no profit and loss determinations, there can be no comparisons between the value of all the inputs required to produce a good and the value of the final product that is to be produced. Absent profit and loss determinations there can be no rational economic calculations. The decisions regarding what to produce will not be guided by what is socially beneficial or socially wasteful. 
If you ever happen to have taught Mises to students, you know how counterintuitive this is. It is already a challenge to most people to understand that demand and supply may adapt one to the other. But certainly “spontaneous” market mechanisms are barely apt to deal with short term problems and cannot be trusted with decisions which require a “panoramic” vision of sorts--a genuine understanding of the way in which technology, society, and the planet are heading. Many continue to think that at some point the “socialized organization of production within the factory has developed so far that it has become incompatible with the anarchy of production in society,” to borrow Friedrich Engels’s (1820-1895)’ words.[1] Socialism promises to turn the whole of society into a gigantic factory, consistently and rigidly organized, with no more space for the “anarchy of production.” Because life in the marketplace is uncertain and dependent on the vagaries of the consumer, whereas a business organization promises certainty, plans, and a salary at the end of the month no matter what is happening around you, such a vision was highly successful. But if society is to become a single factory, its owner should be “the people” rather than a private individual. Hence, socialism was breeding the separation of ownership and control: ownership of the means of production belonged to everybody, but it ought to be controlled by a few managers, the best and brightest. They were imagined to have the needed “panoramic” vision to allocate resources in the name of society to its superior needs. Indeed, as Mises points out, “a socialist community can have only one ultimate organ of control which combines all the economic and other governmental functions” (112). But this is what socialists want: Certainty! Order! Anarchy of production no more!
Building on the teachings of his Austrian forebears, Mises put this argument upside down. It is by insulating resources from private property rights that we blind ourselves on how to make the best use of them for society. Capitalism, warts and all, did not promise perfection in allocating resources but allowed for a process of continuing improvement, based upon whatever people felt they needed, not on what others thought they should have.
If Mises champions capitalism so forcefully and cogently it is because of historic evidence. Economic probes coincide with the “extension of the division of labour” which “brings production nearer to its goals - the greatest possible satisfaction of wants” (266). But Mises’ book, and his understanding of society, are anything but mechanistic and materialistic. On the contrary, it is hard to picture a thinker more profoundly convinced of the importance of ideas. 
 The history of mankind is the history of ideas. For it is ideas, theories and cortices that guide human action, determine the ultimate ends men aim at, and the choice of means employed for the attainment of these ends. The sensational events which stir the emotions and catch the interest of superficial observers are merely the consummation of ideological changes. (518, emphasis added) 
As Virgil Storr notes, Mises’s comments in the Epilogue on the unpopularity of free markets could have been written today. The Epilogue was written for the Spanish translation of the book and is known in the English language as Planned Chaos: perhaps the title which best summarizes the Misesian view of socialism. Socialism promises economic order instead of anarchy of production, but ends up in chaos and misery.
One key element of those comments concerns the role of intellectuals. I have mentioned Mises’s prose before. It is brilliant but more than anything else, it is clear. From Socialism, it appears that Mises had a model a contrario for his own - and that was Marx.
As a scientific writer Marx was dry, pedantic, and heavy. The gift of expressing himself intelligibly had been denied him. In his political writings alone does he produce powerful effects, and these only by means of dealing antitheses and of phrases which are easy to remember, sentences which by play of words hide their own vacuity. In his polemics he does not hesitate to distort what his own opponent had said. Instead of refuting, he tends to abuse. (416)
Content and style “constitute yolk and white in a scrambled egg.”[2] Mises obviously aspired to write in almost the opposite way, as he meant not to produce a “powerful effect” but to drive his readers toward a better understanding of economic processes. He did so thinking of laymen as his main audience: not other clerics of the social sciences.
He held these clerics responsible for many a worrisome development. Mises thought that “the masses favor socialism because they trust the socialist propaganda of the intellectuals…. The intellectual leaders of the peoples have produced and propagated the fallacies which are on the point of destroying liberty and Western civilization. The intellectuals alone are responsible for the mass slaughters which are the characteristic mark of our century” (540). These are strong words, but Mises was hardly alone in finding men of words responsible for totalitarianism (either of the socialist or the national socialist kind). 
Even an author who is not very likely to have read Mises, like Eric Hoffer (1902-1983), agrees. He notes that mass movements, some of which end up in promoting mass slaughters, “do not usually rise until the prevailing order has been discredited. The discrediting is not an automatic result of the blunders and abuses of those in power, but the deliberate work of men of words with a grievance.”[3]
Hoffer thought that, even in the United States of his times, an “army of scribes” was “clamoring for a society in which planning, regulation, and supervision are paramount and the prerogative of the educated.”[4] He saw a trend in history: scribes and traders as antithetical figures well before the industrial age. Mises long pondered the source of the anticapitalist mentality and pointed out that it is profoundly rated with a disdain for the ordinary person. 
Do these insights still apply in a world where intellectuals seem to have little or no influence? That is an important question to ask ourselves, thinking of how, as Storr reports, “American attitudes towards socialism have softened in recent years.” Are these simply seeds planted a long time ago, which are now blossoming? Are intellectuals perhaps more influential than the world of Instagram allows us to imagine? Or is socialism simply a dream which, whatever its faults, is better attuned to our fundamental moral intuitions than any other system of ideas, and capitalist prosperity is finally allowing us to go for it?
[1] See Engels (1882), Socialism: Utopian and Scientific (Moscow: Progress Publishers,1970).
[2] McCloskey (2019), Economical Writing. Third Edition (Chicago: University of Chicago Press), 6.
[3] Hoffer (1951), The True Believer: Thoughts on the Nature of Mass Movements (New York: Harper Perennial, 2002), 130.
[4] Hoffer (1963), The Ordeal of Change (Titusville, NJ: Hopewell, 2006), 94.