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Ludwig von Mises and the demise of the Austrian School


Since Zak Drabczyk has been having a lot of fun stomping on the basic and sacred arguments of the Austrian-school-type regressive anarchist trend centered on the Mises Institute, I thought I would pile on and get in a few punches on my own. So, at the request of an anarchist on twitter, @adamblacksburg, I wrote up this two part critique of Ludwig von Mises’ SOCIALISM. I will post the second part of this critique by Friday.

Part one: “SOCIALISM” OR “CAPITAL”: Why Mises critiqued the first, while Marx critiqued the second

Critical socialism and the socialization of the productive forces

According to Mises, socialism derives its strength from two different sources:

“On the one hand it is an ethical, political, and economico-political challenge. The socialist order of society, fulfilling the claims of higher morality, is to replace the ‘immoral’ capitalist economy; the ‘economic rule’ of the few over the many is to give way to a co-operative order which alone can make true democracy possible; planned economy, the only rational system working according to uniform principles, is to sweep away the irrational private economic order, the anarchical production for profit. Socialism thus appears as a goal towards which we ought to strive because it is morally and rationally desirable. The task therefore of men of good will is to defeat the resistance to it which is inspired by misunderstanding and prejudice. This is the basic idea of that Socialism which Marx and his school call Utopian.

On the other hand, however, Socialism is made to appear as the inevitable goal and end of historical evolution. An obscure force from which we cannot escape leads humanity step by step to higher planes of social and moral being. History is a progressive process of purification, with perfection, in the form of Socialism, at the end. This train of thought does not run counter to the ideas of Utopian Socialism. Rather it includes them, for it presupposes, as obviously self-evident, that the socialist condition would be better, nobler, and more beautiful than the non-socialist. But it goes farther; it sees the change to Socialism—envisioned as progress, an evolution to a higher stage—as something independent of human will. A necessity of Nature, Socialism is the inevitable outcome of the forces underlying social life: this is the fundamental idea of evolutionary socialism, which, in its Marxist form, has taken the proud name of ‘Scientific’ Socialism.”

Mises proceeds to critique the latter argument — that socialism is inevitable — but in doing so, he mistakenly argues socialism is a goal or aim of historical evolution. By “historical evolution” of course, Mises means the blind working out of the laws of the capitalist mode of production. However since these laws are best characterized as a blind process and, therefore, incapable of directing itself toward any aim or goal, describing socialism as the aim or goal of the process is akin to describing the Grand Canyon as the aim or goal of the Colorado River.

The distinction is important to understand: there is the socialism of political parties and critics of capitalist society (we can call this “critical socialism”), and then there is socialism proper, which is the end result of the actual development of the capitalist mode of production, the replacement of individual production with directly social productive forces. Mises argues the latter socialism is made to appear as the inevitable goal of historical evolution and in this I think he is suggesting this is only an appearance. It is the spin on the development of the capitalist mode of production given by the critics of capitalism. I think in this argument he is at least partially correct: the socialization of the mode of production, precisely because it is only the blind working out of laws of capitalist society, has absolutely no goals or aims and should not be confused with the merely political socialism of the critics of capitalism. Socialism proper — i.e., the socialization of the mode of production — is not and cannot be the aim or goal of society since this socialism is only the result of a blind process. If socialism nevertheless appears as the goal or aim of this or that party within society, it would be a mistake to confuse the aim or goal of a party — no matter what it calls itself — with socialism proper. The socialization of the productive forces is not the product of a party program but of the capitalist mode of production itself.

SOCIALISM versus CAPITAL, the book

The oddest thing about this confusion between critical socialism and socialism proper is that it led Mises to write the book, SOCIALISM, while Marx wrote CAPITAL. While Mises preferred to discuss a system of silly ideas held by parties and assorted critics of capitalism, Marx preferred to look at the actual historical process determining the development of capitalism. But this has always been the essential stupidity of the Austrian school: it can get no closer to the actual processes of society than precise textbook definitions of those processes and then ruthlessly engaging in the criticism of sterile definitions. Austrians are so adept at wrestling with textbook definitions they no longer even notice society by and large doesn’t give a fuck about textbooks. When the world doesn’t operate the way their textbooks say it should, the problem is not their definitions, but the world itself, i.e., political interference in the operation of the mode of production.

In any case, the first task Mises must perform is to mystify Marx’s theory — to remove it from its context as a historical analysis of a specific mode of production: capitalism. This Mises thinks he has accomplished by linking the socialization of the productive forces to the religious dogmas of the Bible. The amateurish attempt falls flat immediately, since Marx himself in his theory begins with the premise that communism, far from being an earthly paradise, is merely a rather mundane economic mechanism — essentially no different than the logistical operations of a WalMart or Best Buy, and hardly the Second Coming:

“Its organisation is, therefore, essentially economic, the material production of the conditions of this unity; it turns existing conditions into conditions of unity.”

Notice in this passage, taken from the German Ideology, Marx makes no assertion that communism embodies a higher moral state, or anything approaching some Kingdom of God on Earth of the ancient Jews. Communism is a economic mechanism, nothing more — a point Marx had already argued earlier in his career when he stated,

“Communism is the necessary form and the dynamic principle of the immediate future, but communism as such is not the goal of human development, the form of human society.”

Moreover  this socialization of the mode of production could not entail a higher moral order, since, in Marx’s theory, morality is only an expression of existing relations of production — what appears as moral at any stage of society is only an expression of the dominant economic relations. By definition, for members of capitalist society the economic relations of this society must appear morally consistent in every regard with those economic relations.

So, in contrast to Mises’ attempt to decontextualize Marx and convert his argument into some religious dogma, Marx really did not care much about communism, except that he saw it as a necessary basis for the organization of society given the actual socialization of the productive forces produced by the capitalist mode of production. Even in his mature theory, Marx was very clear that it is capitalism — not politics or the state — that gives birth to communism. Capitalism, he stated, “unconsciously creates the material requirements of a higher mode of production.” The socialization of the productive forces, therefore, appears first as a blind process of capitalism’s own development; unconscious, and, therefore, not the aim of society. When the new socialized production relations eventually emerge, they emerge from the womb of capitalism, its progenitor:

“What we have to deal with here is a communist society, not as it has developed on its own foundations, but, on the contrary, just as it emerges from capitalist society; which is thus in every respect, economically, morally, and intellectually, still stamped with the birthmarks of the old society from whose womb it emerges.”

You can, of course, disagree with this argument — and Mises does — but you cannot say Marx believed something else.

Society as the division of labor

Next Mises turns to the nature of society: “What society is, how it originates, how it changes — these alone can be the problems which scientific sociology sets itself.” Society, says Mises, is division of labor, and our idea of this division of labor must “take into account all the aims which men set themselves and the means by which these are to be attained.” The division of labor results from two facts, says Mises:

“Historically division of labour originates in two facts of nature: the inequality of human abilities and the variety of the external conditions of human life on the earth. These two facts are really one: the diversity of Nature, which does not repeat itself but creates the universe in infinite, inexhaustible variety. The special nature of our inquiry, however, which is directed towards sociological knowledge, justifies us in treating these two aspects separately.

It is obvious that as soon as human action becomes conscious and logical it must be influenced by these two conditions. They are indeed such as almost to force the division of labour on mankind. Old and young, men and women co-operate by making appropriate use of their various abilities. Here also is the germ of the geographical division of labour; man goes to the hunt and woman to the spring to fetch water. Had the strength and abilities of all individuals and the external conditions of production been everywhere equal the idea of division of labour could never have arisen. Man would never of himself have hit upon the idea of making the struggle for existence easier by co-operation in the division of labour. No social life could have arisen among men of equal natural capacity in a world which was geographically uniform. Perhaps men would have joined together to cope with tasks which were beyond the strength of individuals, but such alliances do not make a society. The relations they create are transient, and endure only for the occasion that brings them about. Their only importance in the origin of social life is that they create a rapprochement between men which brings with it mutual recognition of the difference in the natural capacities of individuals and thus in turn gives rise to the division of labour.”

Okay, fine. Mises is essentially arguing here that society itself only exists because we are unequal in talents and abilities. If we were equal, we would never have formed a society. The argument here is not that we are social beings and also that we are unequal in talents and abilities, but that we are social because we are unequal. In this argument Mises is importing the concept of inequality between as a necessary feature of society — society itself is impossible without it. Which explains why he is so disturbed by the fact that clearly inferior “races” like Eskimos and Aborigines have long heads.

“More recent measurements have shown that long-headed men are not always blond, good, noble, and cultured, and that the short-headed are not always black, evil, common and uncultured. Amongst the most long-headed races are the Australian aborigines, the Eskimos, and the Kaffirs. Many of the greatest geniuses were round-heads.”

(Kaffir, by the way, means nigger — in case my Austrian friends didn’t realize this. Mises could have just said African or negroes, or even “the coloreds” — but he chose to use the term Kaffir in his scholarly work. This argument by Mises might explain why the Mises Institute is located in Alabama and has a large following among folks who think the wrong side won the Civil war.)

Of course, Mises is entirely correct that natural abilities and talents vary within society — but not only these: also wants and needs as well interests, etc. However, what he needs to show is why these differences become the motive force of social development, without violating the so-called Austrian Non-aggression Principle. In any case, we now have two views of social development: that of Mises and that of Marx. Mises thinks the motive force of human history is inequality, while Marx thinks the motive force is material development. This does not mean each does not recognize the assumption of the other: Marx recognizes inequality and Mises recognizes material production. However, having stated inequality is fundamental to the division of labor Mises had a problem: how does this fit with race theory? This is the context in which he rejects crude and disproven racial theories, but states:

“It may be assumed that races do differ in intelligence and will power, and that, this being so, they are very unequal in their ability to form society, and further that the better races distinguish themselves precisely by their special aptitude for strengthening social co-operation.”

Mises’ argument on natural inequality is critical to understanding his critique of Marx, because Mises sees in socialism an attempt to artificially overcome this natural inequality — to forcibly level society — an impulse that must lead to the destruction of the productive forces of society:

“The owner takes nothing away from anyone. No one can say that he goes short because of another’s abundance. It is flattering the envious instincts of the masses to give them a calculation of how much more the poor man would have to dispose of, if property were equally distributed. What is overlooked is the fact that the volume of production and of the social income are not fixed and unchangeable but depend essentially upon the distribution of property. If this is interfered with, there is danger that property may fall into the hands of those not so competent to maintain it, those whose foresight is less, whose disposal of their means is less productive; this would necessarily reduce the amount produced. The ideas of distributive Communism are atavistic, harking back to the times before social relations existed or reached their present stage of development, when the yield of production was correspondingly much lower. The landless man of an economic order based on production without exchange is quite logical in making the redistribution of fields the goal of his ambition. But the modern proletarian misunderstands the nature of social production when he hankers after a similar redistribution.”

The attempt to socialize the means of labor is for Mises a foolhardy objective and can only lead to a catastrophe. The division of labor founded on natural inequality between individuals leads to the unequal distribution of property that adds to the yield of production. In no case can the working class be handed these means, which are product of their own labor, and the capitalist expropriated, without reducing the product of this labor. Once this is understood, the logic of existing society can be grasped:

“Once it has been perceived that the division of labour is the essence of society, nothing remains of the antithesis between individual and society. The contradiction between individual principle and social principle disappears.”

In the deep South at the time Mises wrote this statement, this principle was enshrined in the aphorism that social peace could be maintained only if black people knew their place in society. Thus we find this argument in the statement of a certain citizen of Mississippi in the aftermath of the murder of Emmett Till:

Well, what else could we do? He was hopeless. I’m no bully; I never hurt a nigger in my life. I like niggers—in their place—I know how to work ’em. But I just decided it was time a few people got put on notice. As long as I live and can do anything about it, niggers are gonna stay in their place. Niggers ain’t gonna vote where I live. If they did, they’d control the government. They ain’t gonna go to school with my kids. And when a nigger gets close to mentioning sex with a white woman, he’s tired o’ livin’. I’m likely to kill him. Me and my folks fought for this country, and we got some rights. I stood there in that shed and listened to that nigger throw that poison at me, and I just made up my mind. ‘Chicago boy,’ I said, ‘I’m tired of ’em sending your kind down here to stir up trouble. Goddam you, I’m going to make an example of you—just so everybody can know how me and my folks stand.’ — J. W. Milam, Look magazine, 1956

However, interestingly enough, Marx also sees a leveling tendency at work within society, but from a decidedly different social process than the one insisted upon by Emmett Till and black people in general against the segregationist state then dominating southern society. In 1851, Marx wrote:

“Money, which is the supreme expression of class contradiction, therefore also obscures religious, social, intellectual and individual differences. When confronting the bourgeoisie, the feudal barons for example made futile attempts, by means of luxury laws, politically to check or break this universal leveling power of money.”

The differences between Mises’s argument and Marx’s, therefore, is that for Mises the state was the futile means of overcoming natural inequalities and the proper distribution of resources, while for Marx the state was the means of enforcing social inequality — the development of the productive forces itself led to the leveling of society. For Mises the threat to natural inequality result from political causes, while Marx held the development of the productive forces had already rendered such natural differences negligible.

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