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‘Trends Can Change’: Ludwig von Mises (1951) Speaks to Us Today

“[T]rends of evolution can change, and hitherto they almost always have changed. But they changed only because they met firm opposition. The prevailing trend toward … the servile state will certainly not be reversed if nobody has the courage to attack its underlying dogmas.”

- Ludwig von Mises (see below)

Statism won at the top of the ticket earlier this week–and many places beneath. Limited-government advocates are feeling low and wondering if the dependency vote can be overcome in future elections to turn fiscal crises into new opportunities for economic freedom.

Small consolation: the Libertarian Party’s Gary Johnson beat the Green Party’s Jill Stein by a landslide. But the small parties combined received less than two million votes. Johnson’s 1.2 million votes–about 1.2 percent in the 48 states where he was on the ballot–compared to 400,000 for Stein. [1]

But think back to most of the last century where central economic planning was the orthodoxy. If you were not a socialist, you were a Keynesian. It was hard for even the greatest of the great free-market economists, including the author of the excerpt below, to get university appointments.

And don’t forget how a Cornell economist got in trouble with his department over his assigned reading of F. A. Hayek’s The Road to Serfdom in 1946.   F. A. “Baldy” Harper went on to help found the Foundation for Economic Education in that year and went on to found the Institute for Humane Studies, now at George Mason University.

Feeling low the day after the election, I left the public policy world and began reading a book on the legendary football coach at the University of Texas, Darrell K. Royal. He had many memorable quotations, and one struck me as pertinent given another four years of Obama. Royal said back in 1966:

“Defeat comes from within. There is no such thing as defeat, except in no longer trying …. It is when an individual admits down deep in his heart that he has had all he wants that he becomes defeated. As long as he still fights and has not given up, there is still a chance.”

Just hours later I heard that Coach Royal died at age 88 in Austin, Texas (New York Times obit here).

Trends Can Change!

Now to the wisdom of Ludwig von Mises that he penned more than sixty years ago against the Marxian doctrine of historical determinism against capitalism.

One of the cherished dogmas implied in contemporary fashionable doctrines is the belief that tendencies of social evolution, as manifested in the recent past, will prevail in the future too. Study of the past, it is assumed, discloses the shape of things to come. Any attempt to reverse or even to stop a trend is doomed to failure. Man must submit to the irresistible power of historical destiny….

In the last decades there prevailed a trend toward more and more government interference with business. The sphere of the private citizen’s initiative was narrowed down. Laws and administrative decrees restricted the field in which entrepreneurs and capitalists were free to conduct their activities in compliance with the wishes of the consumers as manifested in the structure of the market. From year to year an ever-increasing portion of profits and interest on capital invested was confiscated by taxation of corporation earnings and individual incomes and estates.

“Social” control, i.e., government control, of business is step by step substituted for private control. The “progressives” are certain that this trend toward wresting “economic” power from the parasitic “leisure class” and its transfer to “the people” will go on until the “welfare state” will have supplanted the nefarious capitalistic system which history has doomed forever. Notwithstanding sinister machinations on the part of “the interests,” mankind — led by government economists and other bureaucrats, politicians, and union bosses — marches steadily toward the bliss of an earthly paradise.

The prestige of this myth is so enormous that it quells any opposition. It spreads defeatism among those who do not share the opinion that everything which comes later is better than what preceded, and are fully aware of the disastrous effects of all-around planning, i.e., totalitarian socialism. They, too, meekly submit to what, the pseudo-scholars tell them, is inevitable. It is this mentality of passively accepting defeat that has made socialism triumph in many European countries and may very soon make it conquer in this country too….

‘Inevitability’ of Statism

The Marxian dogma of the inevitability of socialism was based on the thesis that capitalism necessarily results in progressive impoverishment of the immense majority of people. All the advantages of technological progress benefit exclusively the small minority of exploiters. The masses are condemned to increasing “misery, oppression, slavery, degradation, exploitation.” No action on the part of governments or labor unions can succeed in stopping this evolution. Only socialism, which is bound to come “with the inexorability of a law of nature,” will bring salvation by “the expropriation of the few usurpers by the mass of people.”

Facts have belied this prognosis no less than all other Marxian forecasts. In the capitalist countries, the common man’s standard of living is today incomparably higher than it was in the days of Marx. It is simply not true that the fruits of technological improvement are enjoyed exclusively by the capitalists while the laborer, as the Communist Manifesto says, “instead of rising with the progress of industry, sinks deeper and deeper.”

Not a minority of “rugged individualists,” but the masses, are the main consumers of the products turned out by large-scale production. Only morons can still cling to the fable that capitalism “is incompetent to assure an existence to its slave within his slavery.”

Today the doctrine of the irreversibility of prevailing trends has supplanted the Marxian doctrine concerning the inevitability of progressive impoverishment…. But even if it were true that a historical trend must go on forever, and that therefore the coming of socialism is inevitable, it would still not be permissible to infer that socialism will be a better — or even more than that, the most perfect — state of society’s economic organization. There is nothing to support such a conclusion other than the arbitrary pseudo-theological surmises of Hegel, Comte, and Marx, according to which every later stage of the historical process must necessarily be a better state….

Now trends of evolution can change, and hitherto they almost always have changed. But they changed only because they met firm opposition. The prevailing trend toward what Hilaire Belloc called the servile state will certainly not be reversed if nobody has the courage to attack its underlying dogmas.

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This article, originally published in The Freeman (February 12, 1951), is excerpted from Ludwig von Mises, Planning for Freedom (1952). Mises (1881–1973) is considered the dean of modern Austrian-School Economics.

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[1] Among third-party Presidential candidates, Libertarian Gary Johnson received approximately 1.1 million votes, great than all other third-party candidates combined. Green Party candidate Jill Stein received around 400,000 votes. For more information, see here.

5 comments

1 Richard Ebeling { 11.09.12 at 11:14 am }

Yes, Ludwig von Mises was right. Trends can change, if enough people have the courage, determination, and understanding to help make it happen. This will be my post at MasterResource on Monday.

Richard Ebeling

2 rbradley { 11.09.12 at 2:23 pm }
3 vginn { 11.09.12 at 2:37 pm }

Excellent points!

4 Rolf Westgard { 11.10.12 at 3:15 am }

One of the most important issues in the recent election was job creation and the relative roles of business and government in creating jobs.
During the second presidential debate, Governor Romney interrupted the President to say, “Government does not create jobs.”
One response from Obama could have been, “But it does, governor, millions of them, including the one you recently held in Massachusetts.”
Almost everyone knows, or is even related to at least one of the more than 20 million Americans employed in public education, state and local government, or federal agencies. The multiplier effect as those employees buy things creates more private sector jobs. In addition, the government gets its supplies from private-sector companies, which is why Republican senators like John McCain have been warning about the dire effects on job creation in the private sector if Congress moves ahead with planned military spending cuts.
But perhaps more important than direct government employment and spending is the role that government funded research has played in supporting the growth of many of our major industries, including computers, aircraft, the internet, nuclear power, nanotechnology, renewable energy, pharmaceuticals, etc. It was the Defense Advanced Research Projects Agency(DARPA), not Al Gore, that spawned the internet.
Google was started by two graduate students working on a project supported by the taxpayer funded National Science Foundation. Today Google employs more than 50,000 people.
Much taxpayer funded research occurs at universities, such as the
University of Minnesota, where $51.3 million in state bonding funds are building a new physics and nanotechnology building. This will support $30 million annually that the university receives in federal research grants which have the potential to create new businesses and jobs.
Rice University professor, Neal Lane, points out that President Obama’s requests for increased research spending at key science agencies have been frustrated by “a polarized Congress.”
Government is not the problem that one former president suggested. It is an important partner to American industry as we compete in an increasingly high technology world.

5 rbradley { 11.10.12 at 8:56 pm }

Rolf:

Thanks for the comment.

Wow–Romney may not have had the right comback for that unless he really understood the concept of ‘opportunity cost.’

Two points. One, government has to get resources to create government jobs–that is the seen. The unseen job loss is from the private sector that does not have resources that it otherwise would have had.

Second, can the government pick winners that the private sector would have missed? Sure it can, but on average I do not think this claim can be made at all. The green jobs both lost and in peril, the subject of prior posts at MasterResource, document the resource misallocation.

In a free society, entrepreneurs have more resources to discover and create. Also, civil society is enriched to do good things that for-profits might not do or miss. Political society does lots of things, many not so good, with its scarce resources.

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