This entry focuses on the book Money, Method, and the Market Process by Ludwig von Mises, or rather, on its Chapter 32: Capitalist Ethics, of Part IV: Socialism as a Moral Imperative. It opens with the section on Capitalist Ethics and the Impracticability of Socialism. I wonder what "socialism" Mises has in mind here: after all, pure capitalism, in a sense, is also suffering from the same disease: impracticability.
“In the expositions of Ethical Socialism one finds the assertion that it presupposes the moral purification of men. As long as we do not succeed in elevating public morality, we shall be unable to transfer the socialist order of society from the sphere of ideas to that of reality. The difficulties of Socialism lie in men’s moral shortcomings. Some writers doubt that this obstacle would ever be overcome, others say the world will not be able to achieve Socialism for the present or in the immediate future.”
Right here we could stop, realizing that what Mises calls socialism can also be called communism, or even Christian communalism, and the latter’s impracticality in this world has been amply demonstrated. History has taught us, though, that Christian, and all other types of communism can only be implemented through the rule of the totalitarian mentality of a collectivist-minded majority, and either coercion or total suppression of the “selfish” minority.
There would be no point in going any further with this, except that some of the points Mises is trying to make are of general interest in the theoretical tug of war between the promoters and detractors of capitalism as-such.
“Socialist economy is impracticable not because men are morally base, but because the problems socialism would have to solve present insurmountable intellectual difficulties. The impracticability of Socialism is the result of intellectual, not of moral, incapacity. Socialism could not achieve its end, because a socialist economy could not calculate value. Even angels, if they were endowed only with human reason, could not form a socialistic community.”
So, what are these so-called problems, and what does it mean that socialism cannot calculate value?
“It would be no harder to enforce the socialist moral code than it is to enforce the code of capitalist morals, if there were any possibility of making objective computations within socialist society. If the latter could ascertain separately the product of the labor of each single member of the society, his share in the product could be calculated, and his reward fixed in proportion to his contribution. Under such circumstances, the socialist order would have no cause to fear that a comrade would fail to work with the maximum of energy for lack of any incentive to sweeten the toil of labor. Only because this condition is lacking, Socialism will have to construct for its Utopia a type of human being totally different from the race which now walks the earth, one to whom labor is not pain, but joy and pleasure. Because such a calculus is out of the question, the Utopian socialist is obliged to make demands on men which are diametrically opposed to nature. This human inadequacy which would cause the breakdown of Socialism, may appear to be of a moral order; on closer examination it turns out to be a question of intellect."
We can now summarize Mises’s argument as follows: leaving all morality aside, as irrelevant, socialism is doomed to fail because, within the familiar Soviet-style slogan From each according to his ability, to each according to his labor, there is no way socialist economy could ever calculate the comparative worth of an individual’s labor, which, apparently, only the invisible mathematical mind (paraphrasing Adam Smith) of capitalism is able to do.
I find this argument lacking in logic. Mises repudiates socialism by placing it within the capitalist system of values. The ablest creature of the sea is helpless if stranded on land. The king of the beasts is no match for little piranhas, if immersed in their river. The key to repudiating Mises’s argument is in a return to the socialist system of values, for the purpose of calculating labor compensation. Once the minimum standard of living factor has been thrown in, rewards in excess of this minimum are not hard to come up with. One other way of dealing with this problem is through a redistributionist income taxation policy, but in a socialist-type society the issue of salaries and income takes the form of state compensation for one’s labor, thus reducing the issue of taxation to virtual insignificance. There would be other ways to do this too, as long as there is a will. One does not really have to determine the precise ratios of socialist compensation, as long as society is not governed by the proprietary will, but by the collective will, placing a higher value in social welfare than in personal enrichment. Under such provisions, any act of willful underperformance can be easily spotted to incur an immediate public indignation toward the perpetrator… As I said before, the socialist norm of social behavior differs dramatically from the capitalist norm in the distinction between the collectivist spirit and its self-seeking antipode.
The validity of my criticism becomes even more obvious when we look at the system of national subsidies within modern capitalist economies, particularly in the citadel of capitalism, the United States. Tariffs and subsidies undermine the capitalist system of values, introducing certain elements of socialism (or, should I say national-capitalism?) and creating the mixed basket I have been constantly talking about.
…That should have been the end of this entry, but for the sake of completeness, the following postscript is in order. Mises now goes on to a second part of his thesis: The Alleged Defects of Capitalist Ethics, where he arbitrarily jumps to the assumption that the meaning of moral behavior is self-sacrifice, ergo, the critics of capitalism must be offended that capitalism does not have enough of it (meaning the rich and powerful, of course). Here is his particularly brilliant gem of philosophical manipulation:
“Moral behavior is the name we give to the temporary sacrifices made in the interests of social cooperation, which is the chief means by which human wants and human life generally may be supplied. All ethics are social ethics. (?!) To behave morally means to sacrifice the less important to the more important, by making social co-operation possible.”
Having thus created his own facts and definitions, it is awfully easy to end up concluding in the following fashion: “Man is not evil merely because he wants to enjoy pleasure and avoid pain, in other words, to live. Renunciation, abnegation, and self-sacrifice are not good in themselves. To condemn the ethics demanded by social life under capitalism and to set up in their place standards for moral behavior which it is thought might be adopted under Socialism is a purely arbitrary procedure.”
This may not be exactly a tale of sound and fury, but it surely signifies nothing.
“In the expositions of Ethical Socialism one finds the assertion that it presupposes the moral purification of men. As long as we do not succeed in elevating public morality, we shall be unable to transfer the socialist order of society from the sphere of ideas to that of reality. The difficulties of Socialism lie in men’s moral shortcomings. Some writers doubt that this obstacle would ever be overcome, others say the world will not be able to achieve Socialism for the present or in the immediate future.”
Right here we could stop, realizing that what Mises calls socialism can also be called communism, or even Christian communalism, and the latter’s impracticality in this world has been amply demonstrated. History has taught us, though, that Christian, and all other types of communism can only be implemented through the rule of the totalitarian mentality of a collectivist-minded majority, and either coercion or total suppression of the “selfish” minority.
There would be no point in going any further with this, except that some of the points Mises is trying to make are of general interest in the theoretical tug of war between the promoters and detractors of capitalism as-such.
“Socialist economy is impracticable not because men are morally base, but because the problems socialism would have to solve present insurmountable intellectual difficulties. The impracticability of Socialism is the result of intellectual, not of moral, incapacity. Socialism could not achieve its end, because a socialist economy could not calculate value. Even angels, if they were endowed only with human reason, could not form a socialistic community.”
So, what are these so-called problems, and what does it mean that socialism cannot calculate value?
“It would be no harder to enforce the socialist moral code than it is to enforce the code of capitalist morals, if there were any possibility of making objective computations within socialist society. If the latter could ascertain separately the product of the labor of each single member of the society, his share in the product could be calculated, and his reward fixed in proportion to his contribution. Under such circumstances, the socialist order would have no cause to fear that a comrade would fail to work with the maximum of energy for lack of any incentive to sweeten the toil of labor. Only because this condition is lacking, Socialism will have to construct for its Utopia a type of human being totally different from the race which now walks the earth, one to whom labor is not pain, but joy and pleasure. Because such a calculus is out of the question, the Utopian socialist is obliged to make demands on men which are diametrically opposed to nature. This human inadequacy which would cause the breakdown of Socialism, may appear to be of a moral order; on closer examination it turns out to be a question of intellect."
We can now summarize Mises’s argument as follows: leaving all morality aside, as irrelevant, socialism is doomed to fail because, within the familiar Soviet-style slogan From each according to his ability, to each according to his labor, there is no way socialist economy could ever calculate the comparative worth of an individual’s labor, which, apparently, only the invisible mathematical mind (paraphrasing Adam Smith) of capitalism is able to do.
I find this argument lacking in logic. Mises repudiates socialism by placing it within the capitalist system of values. The ablest creature of the sea is helpless if stranded on land. The king of the beasts is no match for little piranhas, if immersed in their river. The key to repudiating Mises’s argument is in a return to the socialist system of values, for the purpose of calculating labor compensation. Once the minimum standard of living factor has been thrown in, rewards in excess of this minimum are not hard to come up with. One other way of dealing with this problem is through a redistributionist income taxation policy, but in a socialist-type society the issue of salaries and income takes the form of state compensation for one’s labor, thus reducing the issue of taxation to virtual insignificance. There would be other ways to do this too, as long as there is a will. One does not really have to determine the precise ratios of socialist compensation, as long as society is not governed by the proprietary will, but by the collective will, placing a higher value in social welfare than in personal enrichment. Under such provisions, any act of willful underperformance can be easily spotted to incur an immediate public indignation toward the perpetrator… As I said before, the socialist norm of social behavior differs dramatically from the capitalist norm in the distinction between the collectivist spirit and its self-seeking antipode.
The validity of my criticism becomes even more obvious when we look at the system of national subsidies within modern capitalist economies, particularly in the citadel of capitalism, the United States. Tariffs and subsidies undermine the capitalist system of values, introducing certain elements of socialism (or, should I say national-capitalism?) and creating the mixed basket I have been constantly talking about.
…That should have been the end of this entry, but for the sake of completeness, the following postscript is in order. Mises now goes on to a second part of his thesis: The Alleged Defects of Capitalist Ethics, where he arbitrarily jumps to the assumption that the meaning of moral behavior is self-sacrifice, ergo, the critics of capitalism must be offended that capitalism does not have enough of it (meaning the rich and powerful, of course). Here is his particularly brilliant gem of philosophical manipulation:
“Moral behavior is the name we give to the temporary sacrifices made in the interests of social cooperation, which is the chief means by which human wants and human life generally may be supplied. All ethics are social ethics. (?!) To behave morally means to sacrifice the less important to the more important, by making social co-operation possible.”
Having thus created his own facts and definitions, it is awfully easy to end up concluding in the following fashion: “Man is not evil merely because he wants to enjoy pleasure and avoid pain, in other words, to live. Renunciation, abnegation, and self-sacrifice are not good in themselves. To condemn the ethics demanded by social life under capitalism and to set up in their place standards for moral behavior which it is thought might be adopted under Socialism is a purely arbitrary procedure.”
This may not be exactly a tale of sound and fury, but it surely signifies nothing.
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