The Anti-Capitalistic Mentality: Roots and Fruits

 

Now is the right time for me to review "The Anti-Capitalistic Mentality." After writing seven articles based on five chapters of the book, I can now judiciously assess the book.

The main objective of Mises in writing the book is to analyze the roots and fruits of ideas that hate the free enterprise. To accomplish this, he divided the book into five chapters: 

·         Chapter 1 - The Social Characteristics of Capitalism and the Psychological Causes of its Vilification 

·         Chapter 2 - The Ordinary Man's Social Philosophy

·         Chapter 3 - Literature Under Capitalism

·         Chapter 4 - The Noneconomic Objections to Capitalism

·         Chapter 5 - "Anticommunism' Versus Capitalism

Distinguishing Features of a Capitalist Society

The advent of the free market has resulted to population growth and has increased the average standard of living. The reduction in the standard of living is not the result of free enterprise, but due to anti-capitalistic ideas and policies advanced by the state. Majority of people are unaware about the economic condition prior to the appearance of the free market. To believe intellectuals that life before the Industrial Revolution was happy and prosperous, and that capitalism brought nothing but misery is a proof that most people these days do not know the past. 

The message that capitalists do nothing but exploit workers in the name of profit is popular in our time. Everything hateful has its origin in capitalism from products that poison the body to lascivious books and films that corrupt the mind and soul. This type of messages did not just arise in a vacuum. Mises' task in his book, "The Anti-Capitalistic Mentality" is to analyze the roots and results of ideas that hate the free enterprise. But before we present Mises' analysis, let us first set forth the basic social features of a capitalist society. 

The first three sections of the book under chapter 1 show us the distinguishing features of capitalism. They include mass production, mass consumption, consumer sovereignty, freedom, economic democracy, and social mobility. 

The outcome of mass production aimed at mass consumption is the "improvement in the average standard of living" (p. 1) of the majority. Contrary to Marxist analysis, "Capitalism de-proletarianizes the 'common man' and elevates him to the rank of a 'bourgeois' " (ibid.). Through this process, an enterprise will have a chance to "attain the size of big business" (p. 2). 

The way to achieve prosperity is open in a capitalist society. It is acquired by those who satisfy the masses by providing products that are either cheaper or better. It is in this context that we must understand the concept of "consumer sovereignty." Mises compared it to a "daily plebiscite in which every penny gives a right to vote" (p. 2). 

Freedom is closely associated to consumer sovereignty where every man is free to choose the life that he wants and not "according to the plan of a planning authority enforcing its unique plan" (p. 3) on the people. 

Another idea correlated to consumer sovereignty is economic democracy where a person's prosperity is determined by the "evaluation on the part of his fellow men who exclusively apply the yardstick of their own personal wants, desires and ends" (p. 9). In other words, those who serve the majority will receive greater income or greater profit than those who satisfy the wants of the minority. It is in this situation that a movie actor surpasses the income of a philosopher or a composer of symphonies (p. 10). 

Finally, about social mobility. This is best appreciated if we compare the condition of society between capitalism and the period prior to its advent. For Mises, comparing the aristocrats to both entrepreneurs and capitalists fails to see the primary distinction between the sources of wealth of the two classes. In the case of the aristocrats, the public did not have a role in the accumulation of their wealth. Their wealth did not originate from the market, but from war or gifts from a conqueror. As such, the decision of the public could not shrink their wealth; it may be lost "through revocation on the part of the donor or through violent eviction on the part of another conqueror or it may be dissipated by extravagance" (p. 6). In such a society, the economic situation of common man is fixed. It cannot be changed except through extra-ordinary situations, but as a general condition, nothing will change unless the entire social class is also changed. 

This is the major difference under capitalism. An individual can change his status even without a change in the entire class where he belongs to. As to the source of wealth, ordinary people play a significant role in the increase of wealth of the entrepreneurs and the capitalists; their wealth is a market phenomenon. Likewise, the decision of ordinary people can also reduce the wealth of businessmen once they fail to serve the interest of the consumers. 

Based on the foregoing observation, if ever at present the decision of the consumers no longer affect the wealth of those at the top of the social ladder, it only shows that something strange is happening to the market. Moreover, if a common man finds it difficult to change his social status despite possessing all the necessary qualities to economically succeed, this proves further that something abnormal is introduced into the market. Furthermore, if we find the situation today closer to the society of aristocracy than the free society described by Mises, it is proper to inquire what brought us into this kind of situation? 

Mises himself gave us a hint about what's wrong in our time. He said that to desire for the advancement of economic well-being is normal and appropriate. What is inappropriate is the means used to acquire this, and this is due to "spurious ideologies" (pp. 4-5). There are people who "favor policies which are contrary to their own rightly understood vital interests" (p. 5). This reminds me of Henry Hazlitt's book, "Economics in One Lesson," where he summarized economics in one sentence: the test of the soundness of economic policy is not just to see its short-term result for merely one group in the society, but its long-term consequences to the entire society. Mises explained the slowness of the people to understand the difference between their desired end and their chosen means: 

"What is wrong with most of our contemporaries is not that they are passionately longing for a richer supply of various goods, but that they choose inappropriate means for the attainment of this end. They are misled by spurious ideologies. They favor policies which are contrary to their own rightly understood vital interests. Too dull to see the inevitable long-run consequences of their conduct, they find delight in its passing short-run effects. They advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor and in a return to barbarism" (pp. 4-5). 

The closeness of similarity between most nations' societies to aristocrat society is an outcome of anti-capitalistic mentality. It is exactly this kind of mindset that prevents the realization of the basic features, which characterized a free society. Most states and political parties, which include both conservative and "progressive" foes of capitalism are determined to destroy this economic system. After explaining the only way to improve the economic condition of humanity, Mises precisely identified the goal of most states and political parties:

"There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and political parties are eager to destroy this system" (p. 5). 

Psychological Roots for the Denigration of Capitalism

We just finished exploring the distinguishing features of a capitalist society. This time we will explore the psychological roots for the denigration of capitalism. The material in this article is taken from Ludwig von Mises' "The Anti-Capitalistic Mentality" chapter 1 numbers 4 to 9.

Mises identified six psychological roots. Among these six, he described four of them as "resentment": of frustrated ambition, of the intellectuals, of the white-collar workers, and of the "cousins". I want to re-describe these six roots as I understand them. 

1.      Search for Scapegoat

The first psychological root is the natural inclination of man to find a scapegoat for his own failure. Mises described this as "the resentment of frustrated ambition" (p. 11).  

Under an aristocratic society, people could place the blame on social situation beyond their control. If they remain poor, they could simply excuse themselves and point fingers to a society without social mobility.

On the other hand, under a capitalist society, a man can blame no one for his failure except himself. Perhaps, he is thinking that he is virtuous enough and he possesses the qualities to be successful. However, his personal assessment will be counter-checked by the assessment of the market, and if it finds him wanting, such deficiency will also be reflected in his income. 

Reading this economic insight shows that if anyone wants bigger income or profit, he must place himself in the industry that has big demand and he must equip himself with the necessary skills required by the market. If he is not willing to do this, he cannot blame anyone for his meager income. 

At this point, Mises mentioned Justus Moser who "opened" "the long line of German authors who radically rejected the 'Western' ideas of the Enlightenment and the social philosophy of rationalism, utilitarianism and laissez faire. . . ." (p. 13). Mises explained that "one of the novel principles which aroused Moser's anger was the demand that the promotion of army officers and civil servants should depend on personal merit and ability and not on the incumbent's ancestry and noble lineage, his age and length of service" (ibid.). For Moser, a society that depends on personal merit as a requirement to success is simply unbearable. 

Free market is such a society. Those who fail resent the achievements of those who succeed. A fool releases his indignation by verbally maligning the achievers. A more refined one resorts into philosophical justification against the free market. The blame is not on the individual, but on the perverse socio-economic order called capitalism. In such a system, it is not enough to be brilliant, efficient, and industrious to be successful. Honesty and decency are punished. One must resort to trickery and deception to reach the top. Capitalism "crowns the dishonest unscrupulous scoundrel, the swindler, the exploiter, the 'rugged individualist' " (p. 14). The sophisticated thinker is glad and comforts himself that he made a better decision by choosing "virtue and poverty" over "vice and riches" (ibid.). 

2.      Cover-up for Hatred

The second psychological root for the vilification of capitalism is coming from intellectuals' hatred and envy of the success of their colleagues. In this case, resentment for capitalism is just used as a kind of "cover-up" in order that such ill-feeling will not be exposed. Mises called this "the resentment of intellectuals" (p. 15) or "mere blind" for "hatred of some successful 'colleagues' " (p. 18). 

By "intellectuals" Mises meant the "physicians" (p. 16), "lawyers and teachers, artists and actors, writers and journalists, architects and scientific research workers, engineers and chemists" (p. 17). 

Mises explained the nature of this hatred. Unlike ordinary men who do not have the opportunity to associate with those who succeed in life, the intellectuals know personally and encounter daily their colleagues who went ahead of them. In the case of ordinary men, their resentment towards the successful is directed to "abstractions" like 'management,' 'capital,' and 'Wall Street' " (p. 16). But in the case of intellectuals, it is different "because they engender hatred of concrete living beings" (ibid.). They hate capitalism because this economic system has given the status to their colleagues that they desire for themselves (ibid.). Public appreciation and high income assigned to these "winners" gave them feeling of inferiority as if they "now belong to another class of men" (p. 17). 

However, an intellectual who harbors such ill-feeling must cautiously guard himself so that no one will recognize "his resentment and envy" for they are considered as "bad manners" (ibid.). And so the remaining option is to find a "vicarious target," the "unfair" economic system known as capitalism. Mises summed up the nature of this "cover-up": 

"To understand the intellectual's abhorrence of capitalism one must realize that in his mind this system is incarnated in a definite number of compeers whose success he resents and whom he makes responsible for the frustration of his own farflung ambitions. His passionate dislike of capitalism is a mere blind for his hatred of some successful 'colleagues ' " (p. 18). 

3.      Socialites' Isolation

We now come to the third root, socialites' isolation. In order to understand this root, one must first see the difference in the concept of "society" between Europe and the United States.

In Europe, which specifically started in France, "society" is understood as a gathering of men and women who are "eminent in any sphere of activity" (p. 18). Mises identified the members of this gathering as the "statesmen and parliamentary leaders, the heads of the various departments of the civil service, publishers and editors of the main newspapers and magazines, prominent writers, scientists, artists, actors, musicians, engineers, lawyers and physicians" and "together with outstanding businessmen," "scions of aristocratic and patrician families" (ibid.). These people meet in different kinds of settings such as "dinner and tea parties, charity balls and bazaars, at first-nights, and varnishing days" (ibid.). They visit "the same restaurants, hotels and resorts" (ibid.). In their meeting, they enjoy intellectual conversation, and welcome "new ideas and ideologies" (p. 19). In this society, access is available to anyone who made great accomplishments in their field. Its distinguishing feature is the central influence of the intellectuals. 

On the other hand, the composition of "society" in the United States is different. It is exclusively composed "of the richest families" (ibid.), which the interests of most of them are playing cards, gossips, and sports rather than books and ideas or cultural matters (pp. 19-20). With such orientation, it is natural to expect that there is little communication between the intellectuals and the businessmen. The members of the society "do not meet socially the molders of public opinion and the harbingers of the ideas that will determine the future of the nation" (p. 19). 

As a result of such gap, the intellectuals "are prone to consider the wealthy businessman as a barbarian, as a man exclusively intent upon making money" (p. 20). "The men whose research has given rise to new methods of production hate the businessmen who are merely interested in the cash value of their research work" (ibid.). Such situation later developed into an unfortunate event that "a large number of American research physicists sympathize with socialism or communism" (ibid.). Since they do not know "economics and realize that the university teachers of economics are also opposed to" capitalism, there is no other attitude that can be expected from them, but resentment (ibid.). The isolation of the socialites from the intellectuals and the public made the former the object of hostility and criticism. Such exclusivism "kindles animosities which make the intellectuals inclined to favor anticapitalistic policies" (p. 21). 

4.      Conceit and Resentment of White-Collar Workers

Let us now proceed to the fourth psychological root. This time, it refers to the experience of white-collar workers. Mises described it as resentment, but I see it as more of conceit. Mises explained that a white-collar worker has "two special afflictions peculiar to his own category" (p. 21). By afflictions, Mises meant the tendency on the part of white-collar worker to overestimate the value of his work and like the "intellectuals" previously considered, he is daily exposed to the reality that some of his fellow employees have advanced in their career better than him. 

The white-collar worker due to apparent similarity, tends to equate his task with his boss', and considers his "intellectual" assignment higher than the manual workers of the firm. He cannot understand and it makes him angry to see that the manual workers receive more respect and higher salary. He considers it unfair that capitalism fails to recognize his real worth. This white-collar worker fails to see the significance of advanced mechanical and technical skills on the part of manual workers for them to have the ability to operate complicated machinery. Compare such skills to his routine "intellectual" work, he basically needs a "simple training" (p. 22). 

The above description appears so naive for someone to believe it as one of the psychological roots for the denigration of capitalism. If such idea has no basis in Lenin's work, it can easily be dismissed as mere fabrication. However, Mises claimed that such "classical expression of the clerks' conceit and their fanciful belief that their own subaltern jobs are a part of the entrepreneurial activities and congeneric with the work of their bosses is to be found in Lenin's description of the 'control of production and distribution' as provided by his most popular essay" (pp. 22-23). Mises further argued that "Lenin himself and most of his fellow conspirators never learned anything about the operation of the market economy and never wanted to" (p. 23). Their knowledge of capitalism is so distorted and they simply accepted Marx's conclusion that it is "the worst of all evils" (ibid.). 

Lenin's idea of capitalism is so deficient. He simply depended on the information provided by his comrades when the latter prior to 1917 found "routine jobs in business firms" (ibid.) while exiles in Western and Central Europe. Mises elaborated this ignorance and summarized it as "the philosophy of the filing clerk" (p. 25): 

"As a Marxian he (referring to Lenin) was unaware of the problems the conduct of production activities has to face under any imaginable system of social organization: the inevitable scarcity of the factors of production, the uncertainty of future conditions for which production has to provide, and the necessity of picking out from the bewildering multitude of technological methods suitable for the attainment of ends already chosen those which obstruct as little as possible the attainment of other ends-i.e., those with which the cost of production is lowest. No allusion to these matters can be found in the writings of Marx and Engels. All that Lenin learned about business from the tales of his comrades who occasionally sat in business offices was that it required a lot of scribbling, recording and ciphering. Thus, he declares that 'accounting and control' are the chief things necessary for the organizing and correct functioning of society. But 'accounting and control,' he goes on saying, have already been 'simplified by capitalism to the utmost, till they have become the extraordinarily simple operations of watching, recording and issuing receipts, within the reach of anybody who can read and write and knows the first four rules of arithmetic' " (pp. 24-25). 

5.      Disgruntled Relatives of Capitalist Families

Another interesting psychological root for the vilification of capitalism can be traced from disgruntled relatives of capitalist families. Mises described them as "cousins" referring to the "brothers, cousins, nephews of the bosses, more often their sisters, widowed sisters-in-law, female cousins, nieces and so on" (p. 27). These relatives financially support various types of projects that promote anti-capitalistic mentality. They do this due to their quarrel with their "bosses" over their perceived unfairness of the amount of revenues they received from the company. They support "progressive" projects to annoy their bosses. 

The quarrel between these two groups within the capitalistic families started with the fact that not all members of the "patrician families" (referring to rich families who were able to preserve and increase their wealth through several generations due to the talents and skills of one or two of their members) possess the necessary qualities for the successful operation of big business. As a result, one or two among them are chosen as "bosses" of the company, and such arrangement created a scenario that divided the family into two categories: "bosses" and "cousins" (p. 27). 

Mises further divided the "cousins" into two groups, the useless and the achievers. Both groups "are foreign to business life and know nothing about the problems an entrepreneur has to face" and "have been brought up in fashionable boarding schools and colleges" (p. 28). Mises described the "useless" as people who "pass their time in night clubs and other places of amusement, bet and gamble, feast and revel, and indulge in expensive debauchery" (ibid.). On the other hand, the achievers are either those who became "most eminent authors, scholars and statesmen," "pioneers of new ideas" or financial donors of artists (ibid.). Mises claimed that the role of "moneyed men played in Great Britain's intellectual and political evolution has been stressed by many historians" (p. 28). 

And so this quarrel started first within the capitalistic families, but later influenced society at large. Mises recapitulated this evolution as follows: 

"The family feud between the bosses and the cousins concerns only the members of the clan. But it attains general importance when the cousins, in order to annoy the bosses, join the anticapitalistic camp and provide the funds for all kinds of 'progressive' ventures. The cousins are enthusiastic in supporting strikes, even strikes in the factories from which their own revenues originate. It is a well-known fact that most of the 'progressive' magazines and many 'progressive' newspapers entirely depend on the subsidies lavishly granted by them. These cousins endow progressive universities and colleges and institutes for 'social research' and sponsor all sorts of communist party activities. As 'parlor socialists' and 'penthouse Bolsheviks,' they play an important role in the 'proletarian army' fighting against the 'dismal system of capitalism' " (p. 30). 

6.      Entertainers' Expectation of Deliverance from Public Capriciousness

The final psychological root comes from the entertainment industry. As we all know, many entertainers live an affluent lifestyle, and so it is difficult to accept that "Hollywood and Broadway, the world-famous centers of the entertainment industry, are hotbeds of communism" (p. 31). Diverse interpretations have been offered to explain this phenomenon, but insufficient. For Mises, "they all fail to take account of the main motive that drives champions of the stage and the screen into the ranks of revolutionaries" (ibid.).

To understand this phenomenon, one must first start with a comparison between the products offered by manufacturers and the entertainers. In the case of manufacturers, they sell tangible goods, which provide to some extent a measure of stability that entertainment industry does not have. In the case of entertainers, they are primarily dependent on the wishes and capriciousness of the public. People are bored, and that is why they "buy" the entertainers' "products." But people are very difficult to please for they crave for something "new," "unexpected," and "surprising" (p. 32). Once an entertainer fails to provide what the public expect, that's the beginning of his decline. This is why those who are famous today will be forgotten tomorrow. For those in the entertainment industry, this gives them instability and uncertainty. 

Mises accepts the very nature of the public and no relief can be found to cure the uneasiness of stage performers. However, in their search for remedy, some of them think that communism will give them deliverance. Since none of them "has ever studied the writings of any socialist author and still less any serious analysis of the market economy," (ibid.) they naively believe the ideas of reputable thinkers that the evils caused by capitalism can only be wiped out by communism. 

A Social Philosophy - Two Kinds of Progressives

We were done with our summaries of chapter 1 of "Anti-Capitalistic Mentality" here and here. Now as we proceed to chapter 2 where Ludwig von Mises presented the social philosophy of an ordinary man, I just want to share six themes: the unfortunate state of economic ignorance, the continuous evolution of "material productive forces," three progressive classes, misrepresentation of capitalism, the three old powers, and the influence of socialism. 

1.      The Unfortunate State of Economic Ignorance

Interest in the study of economics was short-lived. It lasted only on the "first decades of 19th century" (p. 35). Even during the most influential period of the free market, both the masses and businessmen failed to understand its basic qualities. Sound knowledge of economics is very rare. 

The reason for this unfortunate state is not only due to the inherent difficulty of the subject that requires unusual and demanding intellectual exertion, but also due to general impressions that the study of the subject is considered "strange," "repulsive," "nonsensical," and often "viewed with suspicion" (p. 35). 

Such lamentable situation has debilitating consequences. Not only that the common man failed to see the important contribution of the free-market to mankind's economic well-being, but also he has been left defenseless and susceptible to Marxist ideas. Instead of being grateful for the role of sound economic policies due to "classical liberalism, free trade, laissez faire and capitalism" that resulted into "unprecedented technological improvements of the last two hundred years," (p. 36) he thinks big businesses as exploiters of the productivity of the working class. 

2.      Material Productive Forces' Continuous Evolution 

Corollary to the failure to account for the real cause of economic progress, our common man improperly ascribed all economic development to "natural sciences and technology" (p. 36) and he saw them as "self-acting" toward continuous development regardless of "political and economic organization of society" (ibid.). Marx followed this "popular interpretation of events and clothed it with a pseudo-philosophical veil that made it gratifying both to Hegelian spiritualism and to crude materialism" (ibid.) and developed the concept of a "self-acting" "material productive forces," which continuous evolution is considered inevitable. This doctrine was well-received. 

In Marx's scheme, "the 'material productive forces' are a superhuman entity independent of the will and the actions of men" (ibid.) and operate on the basis of "inscrutable and inevitable laws of a higher power" (ibid.). These forces constantly evolve in a mysterious way, which makes mankind follow them, and restructure a suitable social organization. Out of this central motif, a philosophy of history had been developed, which is one of struggle of material productive forces for freedom from social chains. Let us read Mises' narration of Marx's tale: 

"Once upon a time, teaches Marx, the material productive forces were embodied in the shape of the hand mill, and then they arranged human affairs according to the pattern of feudalism. When, later, the unfathomable laws that determine the evolution of the material productive forces substituted the steam mill for the hand mill, feudalism had to give way to capitalism. Since then the material productive forces have developed further, and their present shape imperatively requires the substitution of socialism for capitalism. Those who try to check the socialist revolution are committed to a hopeless task. It is impossible to stem the tide of historical progress" (p. 37).

3.      Three Progressive Classes

"Leftist parties differ from one another in many ways" (ibid.) says Mises, but they unanimously agree that "progressing material improvement" is "a self-acting process" (ibid.). I think popular progressivism has been shaped by this idea together with the foregoing concept about the unstoppable nature of "historical progress" towards "socialist revolution." Henceforth, the name "progressive" is used to describe this school of thought. 

However, in correcting a faulty understanding of the free market system, Mises introduced his own concept of the progressive character of the capitalist system. Unlike, the first kind of progressivism, Mises' kind of progressivism has been concretely demonstrated through the economic contribution of "the entrepreneurs, the capitalists, and the technologists" (p. 43). Mises described them as the "three progressive classes" (p. 40) in a capitalist society. 

Let us see the role of these progressives to economic well-being. For Mises', increase in productivity is not due to labor per se but the use of better tools and machines, which made possible through "the accumulation and investment of more capital" (p. 38) through saving. In fact, "Every step forward on the way toward prosperity is the effect of saving" (p. 39). Entrepreneurs "employ the capital goods made available by the savers for the most economical satisfaction of the most urgent among the not yet satisfied wants of the consumers" (ibid.). Saving and the accumulation of capital when they surpass population growth have two advantageous results, increase of marginal productivity of labor and reduction in the price of goods. It is exactly the availability of the supply of capital that distinguishes "progressive" (which the mainstream describes as developed countries) from backward countries. 

Based on the above observation, we can evaluate the soundness of any economic policy. Any act on the part of the state or advocacy coming from interest groups that prevent these progressive classes to function freely is not really progressive, but regressive despite of the "progressive" rhetoric. Viewing from this lens, people can come up to the conclusion that interventionist and statist policies inspired by "progressive" ideas are actually anti-progressive. 

4.      Misrepresentation of Capitalism

Under a capitalist society, anyone can "join the ranks of the three progressive classes" (p. 40). "What is needed to become a capitalist, an entrepreneur or a deviser of new technological methods is brains and will power" (ibid.). 

Unfortunately, the progressive character of capitalism has been denied and widely misrepresented. "Capital accumulation, entrepreneurship and technological ingenuity did not contribute anything to the spontaneous generation of prosperity" (p. 41). Our ordinary guy prefers to believe that all the goods and services he has been enjoying "came into being by some mythical agency called progress" (ibid.). If there is any class that deserves credit with the increase in the productivity of labor, there is none other but the working class.

Exploitation is the common word to describe big business. It "skims the cream, and leaves" the crumbs "to the manual worker" (ibid.). "Consequently, 'the modern worker, instead of rising with the progress of industry, sinks deeper and deeper. . . . He becomes a pauper' " (ibid.).

Those who propagate this anti-capitalistic mentality "are praised at universities as the greatest philosophers and benefactors of mankind and their teachings are accepted with reverential awe by the millions whose homes, besides other gadgets, are equipped with radio and television sets" (p. 42). Unanimously, they proclaim: "The worst exploitation, say professors, 'labor' leaders and politicians, is effected by big business" (ibid.).

Our common man thinks that the wealth of the wealthy is the primary cause for poverty. He failed to see that the mark of big business is mass production aimed towards mass consumption, which the workers are the main consumers. He could not understand that "the entrepreneurs, the capitalists and the technologists prosper as far as they succeed in best supplying the consumers" (p. 43). 

5.      The Three Old Powers

The pioneers of classical liberalism, free market, and representative government "did not suggest the annihilation of the three old powers: the monarchy, the aristocracy and the churches" (pp. 43-44). Instead, they aimed to substitute monarchical absolutism with "parliamentary monarchy," "to abolish the privileges of the aristocrats, but not to deprive them of their titles, their escutcheons and their estates," and "to grant to everybody freedom of conscience and to put an end to the persecution of dissenters and heretics, but they were anxious to give to all churches and denominations perfect freedom in the pursuit of their spiritual objectives" (p.44). However, this vision of society did not sink well into the minds of princes, aristocrats and clergyman. Inspite of the admission of the forerunners of socialism "that under socialist totalitarianism no room would be left for what they called the remnants of tyranny, privilege and superstition," and the fact that under socialism property will be confiscated and no religious freedom will be allowed, still these three powers did not "oppose the socialist attack upon the essentials of Western civilization," and instead "virtually joined hands with" them (ibid.). Mises gave us an overview of how these three powers combine their forces against classical liberalism and capitalism: 

"The Hohenzollern in Germany inaugurated a policy that an American observer called monarchical socialism. The autocratic Romanoffs of Russia toyed with labor unionism as a weapon to fight the "bourgeois" endeavors to establish representative government.· In every European country the aristocrats were virtually cooperating with the enemies of capitalism. Everywhere eminent theologians tried to discredit the free enterprise system and thus, by implication, to support either socialism or radical interventionism. Some of the outstanding leaders of present-day Protestantism-Barth and Brunner in Switzerland, Niebuhr and Tillich in the United States, and the late Archbishop of Canterbury, William Temple-openly condemn capitalism and even charge the alleged failures of capitalism with the responsibility for all the excesses of Russian Bolshevism" (pp. 44-45).

6.      The Influence of Socialism

And so today, we find ourselves that "governments, political parties, teachers and writers, militant antitheists as well as Christian theologians are almost unanimous in passionately rejecting the market economy and praising the alleged benefits of state omnipotence" (p. 45). Only few people are able to see the danger of the marriage of these three powers with socialism. As a result, "the rising generation is brought up in an environment that is engrossed in socialist ideas" (ibid.).

Most people are blinded by ignorance, envy, and hatred, and that's why they failed to analyze "the fundamental socialist idea that the economic interests of the masses are hurt by the operation of capitalism for the sole benefit of the 'exploiters' and that socialism will improve the common man's standard of living" (p. 46). Mises argued that "people do not ask for socialism because they know that socialism will improve their conditions, and they do not reject capitalism because they know that it is a system prejudicial to their interests. They are socialists because they believe that socialism will improve their conditions, and they hate capitalism because they believe that it harms them" (ibid.). Mises added: "They are socialists because they are blinded by envy and ignorance. They stubbornly refuse to study economics and spurn the economists' devastating critique of the socialist plans because, in their eyes, economics, being an abstract theory, is simply nonsense. They pretend to trust only in experience. But they no less stubbornly refuse to take cognizance of the undeniable facts of experience" (ibid.), that the ordinary man's standard of living is higher under free market than under socialism. 

Similar erroneous conclusion is observed among under-developed countries. What is anomalous is that poor countries want to get out of poverty, and yet their chosen means is contrary to their goal. They want to achieve economic freedom, but they hamper the operation of the free market. And this is a clear indication of present success of anti-capitalistic mentality. 

I like how Mises ended this chapter. It hurts, but I think his words are accurate: 

"People may disagree on the question of whether everybody ought to study economics seriously. But one thing is certain. A man who publicly talks or writes about the opposition between capitalism and socialism without having fully familiarized himself with all that economics has to say about these issues is an irresponsible babbler" (p. 47).

Socialists' Novels and Plays: The Dogmatism of Progressivism

I got the idea for the title of this article from chapter 3 of Ludwig von Mises' book, "The Anti-Capitalistic Mentality." In this chapter, Mises discussed about the "Literature Under Capitalism" under six separate sections where he mentioned about "The 'Social' Novels and Plays" in section 6 and the phrase "progressive dogmatist" (p. 61) under "The Bigotry of the Literati" in section 5. In this article, I plan to focus on the last two sections particularly the fifth one, and just give brief comments on the first four sections. 

1.      The First Four Sections

After giving the basic feature of capitalism, Mises introduced that a broad market for literary products occurred with the advent of capitalism. Such market did not exist prior to the advent of capitalism. As a result of this development, a new profession emerged, people who make a living from writing.

Under feudalism, one vital prerequisite to devote time in writing was financial independence. It was never a source of livelihood. Writing "was a noble pursuit of wealthy people, of kings, grandees and statesmen, of patricians and other gentlemen of independent means," and "it was practiced in spare time by bishops and monks, university teachers and soldiers" (p. 50). Mises discussed this under section 1. 

Sections 2 to 4 deserve brief attention. In section 2, Mises explained the meaning of "Success on the Book Market." By this, he distinguished between popular reception of the writer and the dissenter. The books of the dissenter are considered of primary importance, but the public fails to appreciate their value. Majority of the people does not buy such books perhaps because the dissenter is "by necessity anti-authoritarian and anti-governmental, irreconcilably opposed to the immense majority of his contemporaries" (p. 51).

When we come to section 3, "Remarks about the Detective Stories," Mises mentioned that the emergence of this literary genre was a result of anti-capitalistic mentality. Investigations have been made to explain this phenomenon. Mises thinks that the works of Professor W. O. Aydelotte was the most profound among those investigations. Professor Aydelotte found the value of detective story in providing a reader who failed in his ambition an avenue to identify himself with the detective in exposing the misdeeds of those at the top, who are crooked, but rewarded in a capitalist society. 

"Freedom of the Press" is the subject in section 4. Here I stumbled for the first time with two important books on civil liberty, "John Milton's Areopagitica, 1644, and John Stuart Mills' On Liberty, 1859" (p. 55). According to Mises, private property is a necessary prerequisite for freedom of the press to exist; it cannot exist under a socialist society. In a free society, "Everybody is free to abstain from reading books, magazines, and newspapers he dislikes and to recommend to other people to shun these books, magazines, and newspapers" (p. 56). But to threaten people "in case they should not stop patronizing certain publications and their publishers" (ibid.) is an indication that a society is heading towards socialism. 

2.      Socialists' Novels and Plays

In section 6, "The 'Social' Novels and Plays," Mises describes that since both the public and the authors are under the spell of socialism, the usual plot of popular novels and plays evolves around the evil of capitalism. Class conflict is a favorite theme where the wickedness of the exploiting class is punished and the virtue of the exploited class is exalted. Two classes of authors write about this type of novels and plays, those who were raised in a "bourgeois" background and those who came from a "proletarian" family. 

Mises observed that due to the "elite" background of the first class of authors, "the environment in which they place the characters of their plays and novels is strange" (p. 66). And this happens despite of the fact, that this class conducts prior research. On the other hand, the second class of authors doesn't need such research for "they can draw from their own experience" (p. 69). 

The methodology of the first class of authors has already been predetermined. "They know beforehand what they will discover" (p. 67). They select materials that confirmed their prior notion, and avoid those outside of their preconception. They have been trained to think that capitalism is evil. "Their novels and plays are designed as case studies for the demonstration of this Marxian dogma" (p. 67).

The error among this class is that they misrepresent what's really going on in the society. Due to socialistic mindset, they are incapable to see that economic deprivation of the poor is due to "the absence of capitalism, the remnants of the pre-capitalistic past or the effects of policies sabotaging the operation of capitalism" (ibid.). They could not understand that capitalism is exactly the economic system that could wipe "out penury as much as possible" (ibid.). They omitted the fact that a "proletariat" is not only a worker, but also a consumer. 

The claim that these authors simply write the pure facts of society is not true. "They interpret these facts from the point of view of the teachings of Marx, Veblen and the Webbs. This interpretation is the gist of their writings, the salient point that characterizes them as pro-socialist propaganda" (p. 69). "Everything they convey in their books depends on the validity of the socialist tenets and pseudo-economic constructions" (ibid.). 

Turning to the second class of authors, their personal experience shows a different data from those of the socialists. They have proven from their own experience that industrious and skilled workers can climb up to the social ladder. They know the reason for their success. And as they meet the "bourgeois," they now realize that the resentment of the socialists is wrong. They discover that many of the businessmen "are self-made men who, like themselves, started poor" (p. 70). After this discovery, if this class of writer persists "in writing what is in fact pro-socialist homiletics, they are insincere. Their novels and plays are unveracious and therefore nothing but trash. They are far below the standards of the books of their colleagues of 'bourgeois' origin who at least believe in what they are writing" (ibid.).

The businessmen are the favorite target of socialist writers. They usually associate them with the " 'financial gangsters' " and " 'robber barons' " taken from history books (p. 71). And when it comes to private life, businessmen are perceived as barbarians, gamblers, and drunkards (p. 72). They spend their days at the race tracks and their nights in night clubs and with their mistresses (ibid.). This is the popular picture of American businessmen in novels and plays. 

3.      The Dogmatism of Progressivism 

In the early part of chapter 3, under the first section, Mises described the "literati" as the "people making a living from writing" (p. 49). In standard English dictionary, the word refers to "persons of scholarly or literary attainments" or the "intellectuals." Here under section 5, I understand the term as pertaining to the "progressives" or the socialists. 

The original sub-title of section 5 is "The Bigotry of the Literati." Under this section, Mises discussed about the internal strife among three dominant schools, and then he singled out the "progressives," and then he finally identified three fundamental errors in the idea of those who advocate for "mixed economy."

1. Internal Strife. Mises was referring to communists, socialists, and interventionists as the three dominant schools during his time. He argued that these three schools together with diverse sects under them were quarreling against each other. Such quarrel diverts the attention from the basic dogmas that are common among them, which are centralized economic planning and various statist economic policies. "On the other hand, the few independent thinkers who have the courage to question these dogmas are virtually outlawed, and their ideas cannot reach the reading public" (p. 58). This indicates the success of the propaganda machineries of the "progressive" "in enforcing its taboos" (ibid.). At this point, Mises mentioned a very unusual and unpopular concept. He talks about the dominance of "the intolerant orthodoxy of the self-styled 'unorthodox' schools" (ibid.). He describes it further as " 'unorthodox' dogmatism" (ibid.).

2. The Progressives. "Unorthodox dogmatism" is Mises' summary description of the taboos of progressivism. He described it as "self-contradictory and confused mixture of various doctrines incompatible with one another" (ibid.). Concerning sources of dogmas, it is eclectic "at its worst, a garbled collection of surmises borrowed from fallacies and misconceptions long since exploded. It includes scraps from many socialist authors, both 'utopian' and 'scientific Marxian,' from the German Historical School, the Fabians, the American Institutionalists, the French Syndicalists, the Technocrats. It repeats errors of Godwin, Carlyle, Ruskin, Bismarck, Sorel, VebIen and a host of less well-known men" (pp. 58-59).

The basic dogma of progressivism declares that economic deprivation of the masses is an outcome of unjust social institutions based on private property that gave birth to capitalism. Under this economic system, the masses are doomed to poverty, and only the selfish interests of "rugged individuals" or "greedy exploiters" are being served. And therefore, it is the role of the State to intervene in economic affairs to create prosperity for all and convert profit motive into service motive (p. 59). It further teaches that "central planning is inevitable" for it is "in accordance with the inexorable laws of historical evolution" (ibid.). 

The progressives advocate "credit expansion and increasing the amount of money in circulation, minimum wage rates to be decreed and enforced either by the government or by labor union pressure and violence, control of commodity prices and rents and other interventionist measures" (p. 60). These measures have long been refuted by economists, and "no 'progressive' pseudo-economist ever tried to" answer those arguments (ibid.). Here is Mises' summary analysis: 

"Credit expansion results in the recurrence of economic crisis and periods of depression. Inflation makes the prices of all commodities and services soar. The attempts to enforce wage rates higher than those the unhampered market would have determined produce mass unemployment prolonged year after year. Price ceilings result in a drop in the supply of commodities affected" (ibid.). 

The progressives' basic accusation "against capitalism is that the recurrence of crisis and depressions and mass unemployment are its inherent features" (ibid.). Exposing these economic problems as products of government intervention silence the progressives, and since they cannot give a credible response to "economists, they try to conceal them from the people and especially also from the intellectuals and the university students. Any mentioning of these heresies is strictly forbidden. Their authors are called names, and the students are dissuaded from reading their 'crazy stuff' " (pp. 60-61). 

Concerning the "moderate" position of the progressives, it emerges as a result of contention about the distribution of profit between the "management" and the working class. The intellectuals took advantage that "the majority of the working class is moderate enough not to indulge in excessive radicalism" (p. 61). And so the essence of the progressives' moderate stance is to go for "mixed economy" characterized by central planning, welfare state, and socialism (ibid.). Notice how Mises described the subtle role of the literati:

"In this controversy the intellectuals who allegedly do not belong to either of the two opposite camps are called to act as arbiters. They-the professors, the representatives of science, and the writers, the representatives of literature-must shun the extremists of each group, those who recommend capitalism as well as those who endorse communism. They must side with the moderates. They must stand for planning, the welfare state, socialism, and they must support all measures designed to curb the greed of management and to prevent it from abusing its economic power" (pp. 61-62). 

Based on the foregoing observation, Mises and those who advocate policies rooted in sound economic analysis are considered heretics. What's difficult to believe is the noise created by the above intellectuals who are advocating for economic reforms and their audacity to call themselves "progressives." Due to their refusal to submit their proposal to economic scrutiny, they are unaware that the answers they propose are far worse than the problems they aim to solve. 

3. Three Fundamental Errors. Instead of giving a detailed analysis of the mentioned "moderate" stance, Mises just focused on giving an overview of the three fundamental errors inherent in it. 

The first mistake is related to the erroneous diagnosis of the nature of ideological problem in our time. "The great ideological conflict of our age" (p. 62) says Mises is neither about the distribution of business profit, nor about class warfare. Instead, it is about the struggle "concerning the choice of the most adequate system of society's economic organization" (ibid.). Mises explains the nature of this struggle: 

"The question is, which of the two systems, capitalism or socialism, warrants a higher productivity of human efforts to improve people's standard of living. The question is, also, whether socialism can be considered as a substitute for capitalism, whether any rational conduct of production activities, i.e., conduct based on economic calculation, can be accomplished under socialist conditions" (ibid.).

This is the reason why I think Mises described the progressives as dogmatic. They do not want to subject socialism under economic investigation. For them, the issue has long been settled "that capitalism is the worst of all evils and socialism the incarnation of everything that is good" (ibid.) And any "attempt to analyze the economic problems of a socialist commonwealth is considered as a crime of lese majeste" (ibid.). 

The second error is the failure to see the similarity of the economic system of both socialism and communism. Yes, it is true that under socialism, the "anticommunist bourgeois" are not assassinated and that the secret documents of a nation is not submitted to a "superior" socialist nation. In this instance, socialism is more moderate than communism. But besides this, there is no difference between the two especially when it comes "to the ultimate goal of political action;" both socialism and communism are aiming for "public control of all the means of production" (p. 63). 

The confusing aspect in the similarity of economic system of both socialism and communism is the hostility between them. Mises elaborated both the commonality and the nature of hostility between these two systems. Concerning commonality: 

"The two terms, socialism and communism, are synonyms. The document which all Marxian socialists consider as the unshakable foundation of their creed is called the Communist Manifesto. On the other hand, the official name of the communist Russian empire is Union of the Socialist Soviet Republics (U.S.S.R.)" (ibid.).

"Neither do the terms 'planning' and 'welfare state' as they are used in the language of economists, statesmen, politicians and all other people signify something different from the final goal of socialism and communism. Planning means that the plan of the government should be substituted for the plans of the individual citizens. It means that the entrepreneurs and capitalists should be deprived of the discretion to employ their capital according to their own designs and should be obliged to comply unconditionally with the orders issued by a central planning board or office. This amounts to the transfer of control from the entrepreneurs and capitalists to the government." (p. 64).

And then about hostility between them:

"The antagonism between the present-day communist and socialist parties does not concern the ultimate goal of their policies. It refers mainly to the attitude of the Russian dictators to subjugate as many countries as possible, first of all the United States. It refers, furthermore, to the question of whether the realization of public control of the means of production should be achieved by constitutional methods or by a violent overthrow of the government in power" (pp. 63-64). 

Therefore, expecting that socialism with its central planning and welfare program will provide us a better economic system than the one offered by communism is believing in a false hope. It is a serious mistake, and contrary to the message of the progressives, it is not a remedy to communism.

The third error is the naive belief about the possibility of a third economic system resulting from a combination of both socialism and capitalism. Affirming this possibility springs from an ignorance to understand the real nature of both socialism and capitalism. They "are two distinct patterns of social organization" (pp. 64-65) for socialism is based on public control of the means of production, whereas capitalism can only exist if "private control of the means of production" is protected. There cannot be a reconciliation between these two. Economists call this form of economic system as "interventionism" (p. 65) and for Marx and Engels, when they "advocated definite interventionist measures, they did not mean to recommend a compromise between socialism and capitalism" (ibid. ). Mises perceives them as stepping stones on the way to "the establishment of full communism" (ibid.). Therefore, "the social and economic philosophy of the progressives is a plea for socialism and communism" (p. 66). "Mixed economy" or "a middle-of-the-road solution" (p. 65) does not exist. Expecting it to be so is to believe in illusion. 

Happiness, Materialism, and Injustice: The Three Non-Economic Objections to Capitalism

Chapter 4 of "Anti-Capitalistic Mentality" can be divided under two categories. Though Mises gave the chapter the title "The Non-Economic Objections to Capitalism," I see that only the first three sections speak about the subject. The subject of the remaining two sections is liberty, and so I think, it is suitable to treat them in a separate article. 

In this article, I intend to describe as concise as possible the three objections popularly used to discredit capitalism as an economic system. The three objections touch important matters in life such as happiness, materialism, and injustice. 

1.      Happiness and Capitalism

Capitalism, with its promise of material well-being cannot make people happy. Mises' first objection deals with this subject of happiness, and he puts it in a way similar to this: Possession of the latest gadgets does not make people happy, and besides, there are lots of people who do not have those gadgets.

Mises did not question the validity of the proposition. He actually agrees with it. However, he could not see the connection of the proposition to the so-called "faults" of capitalism. 

Mises admits that market products do not make people fully happy, but they make people happier compared to their situation prior to the purchase of the products. He also adds that other forms of happiness exist and here he identifies "Buddhist mendicants" (p. 74) as examples, but to make them as models for the majority of people would be ridiculous for such life was unbearable to many.

Mises mentioned that "drop in infant mortality" is "one of the most remarkable achievements of capitalism" (ibid.). And perhaps none would object that infant mortality is a cause of human unhappiness. And so we can say that the achievement of capitalism in dropping infant mortality removes one of the cause of people's unhappiness. Again, though the result does not give people complete happiness, but compared to the prior state of society where infant mortality is high, people today are happier. 

Before closing the section, Mises brought up a related objection that not all people are benefited by "technological and therapeutical innovations" (ibid.) as if it is the mistake of capitalism that this thing is not happening. Mises considered this objection absurd for changes in society do not happen instantly. They are pioneered by innovators and only later on that the larger society gradually follows. 

2.      Materialism and Capitalism

Capitalism promotes "mean materialism" (p. 75). Even though the complainers accept that capitalism has improved the material well-being of mankind, they grumble that the minds of men were diverted from superior pursuits in life to inferior ones. They say that materialism tends to give attention only on the needs of the body, and neglects the needs of the soul and of the mind (Ibid.). Capitalism causes the "decay of the arts," and produces nothing but "trash" (ibid.). 

Mises' response to this is quite long. He first accepted that evaluating art is not easy due to its subjective nature. And then he introduced a penetrating analysis of educated men afflicted by hypocrisy due to their lip-service given to art, and yet they despised living and promising artists. Among these men, Mises singled out John Ruskin and identified the latter together with Carlyle, the Webbs and Bernard Shaw as "gravediggers of British freedom, civilization and prosperity" (p. 76). The reason why Mises focused on Ruskin is due to the influence of the latter's idea in propagating contempt for capitalism (an economic system that Mises said Ruskin did not understand) by describing it as "a bad economic system," and as a system that "has substituted ugliness for beauty, pettiness for grandeur, trash for art" (ibid.).

And then Mises refuted the argument that capitalism gives mankind nothing but trash. It is only prejudice that blinds someone not to see that capitalism does not lack in terms of artistic accomplishments. Mises mentioned names of great musicians, novelists, poets, painters, and sculptors who made excellent achievements under capitalism. 

Mises agrees that only in one respect that the argument is correct, and that is, if we compare the architectural accomplishments under capitalism with "immortal" structures like the "pyramids, Greek temples, Gothic cathedrals, churches and palaces of the Renaissance" (p. 78). Of course, there are valid reasons for such superiority. One of them is the conservatism of the churches that kills innovation. And still another, the passing away of dynasties and aristocracies. With their disappearance, the drive to build new palaces also disappeared. Also in terms of wealth, the capitalists' wealth cannot be matched to the wealth of royalties. These made the capitalists incapable to afford those "luxurious construction" (p. 79).

And still another response related to this "trash argument" is the failure to distinguish between ancient furniture and cheap goods produced by big businesses. Ancient furnitures that are preserved in museums are "collectors' items," whereas the goal of big businesses "was to produce as cheaply as possible without any regard to aesthetic values" (ibid.). Mises concluded that as "capitalism had raised the masses' standard of living, they turned step by step to the fabrication of things which do not lack refinement and beauty" (ibid.).

3.      Injustice and Capitalism

A succinct way to put this objection: Capitalism promotes social injustice, and therefore must be discarded and replaced. 

The detractors' idea of justice is based on the concept that nature provides abundant resources sufficient for all. The only obstacle is the unjust capitalist system that promotes greed and inequality. The role therefore of both the church and State is vital to arrest these evils and to equally distribute resources for all.  

The primary trouble with the above idea of justice is that it ignores scarcity, which is a fundamental economic reality. And not only that, apart from man's use of reason, there is no way for him to protect himself from the threat to human life displays by the operation inherent in nature. The truth is, the expansion of wealth is not natural. It is an outcome of the division of labor, which is a product of human reason.

Mises did not believe in the existence of either "divine or natural principle of justice" (p. 80), and so to him it does not make sense to appeal to this idea of justice for the distribution of wealth. For Mises, the important thing is not the fair allocation of natural resources, but the growth of social institutions that give people the ability to expand production to meet human needs (pp. 80-81).

And then Mises proceeds to refute the position of World Council of Churches particularly in reference to its 1948 declaration based on the mentioned idea of justice. Mises argued that the WCC misrepresented capitalism due to its failure to understand the nature of capital. Mises also argued that blaming the West for the poverty of Asia and Africa is based on economic ignorance. It is not the fault of the West if the backward countries are unwilling to adopt the economic system that explains the wealth of the former. In fact, if one will closely examine the economic policies of these countries, you will see that these policies discourage foreign investment, the employment of more advanced technologies for production, and the growth of domestic capital. What underdeveloped countries need, argues Mises is "private enterprise and the accumulation of new capital, capitalists and entrepreneurs." The solution therefore is not the mentioned idea of justice, but the substitution of sound economic policies for unsound ones. It is not the "vague concept of justice that raised the standard of living of the common man." Instead, it is "the activities of men dubbed as 'rugged individualists' and 'exploiters.' "

At this point, to avoid misinterpretation, I will rely heavily on the actual quotations taken from the book. These quotations deal with the nature of capital, production, and wage rate. 

1. Concerning the Nature of Capital. In dealing with this topic, Mises explained the basic ideas surrounding the subject of capital and the relationship between capital and population growth. 

Here is Mises' exposition focusing on the generation, maintenance, and the benefits derived from the use of capital in production processes:

"The only source of the generation of additional capital goods is saving. If all the goods produced are consumed, no new capital comes into being. But if consumption lags behind production and the surplus of goods newly produced over goods consumed is utilized in further production processes, these processes are henceforth carried out by the aid of more capital goods. All the capital goods are intermediary goods, stages on the road that leads from the first employment of the original factors of production, i.e., natural resources and human labor, to the final turning out of goods ready for consumption. They all are perishable. They are, sooner or later, worn out in the processes of production. If all the products are consumed without replacement of the capital goods which have been used up in their production, capital is consumed. If this happens, further production will be aided only by a smaller amount of capital goods and will therefore render a smaller output per unit of the natural resources and labor employed. To prevent this sort of dissaving and disinvestment, one must dedicate a part of the productive effort to capital maintenance, to the replacement of the capital goods absorbed in the production of usable goods" (p. 84).

"Capital is not a free gift of God or of nature. It is the outcome of a provident restriction of consumption on the part of man. It is created and increased by saving and maintained by the abstention from dissaving" (ibid.).

Neither have capital or capital goods in themselves the power to raise the productivity of natural resources and of human labor. Only if the fruits of saving are wisely employed or invested, do they increase the output per unit of the input of natural resources and of labor. If this is not the case, they are dissipated or wasted" (pp. 84-85).

"The accumulation of new capital, the maintenance of previously accumulated capital and the utilization of capital for raising the productivity of human effort are the fruits of purposive human action. They are the outcome of the conduct of thrifty people who save and abstain from dissaving. . . ." (p. 85). 

Turning to the relationship between capital growth and population growth, Mises explained:  

"Neither capital (or capital goods) nor the conduct of the capitalists and entrepreneurs in dealing with capital could improve the standard of living for the rest of the people, if these non-capitalists and non-entrepreneurs did not react in a certain way. If the wage earners were to behave in the way which the spurious "iron law of wages" describes and would know of no use for their earnings other than to feed and to procreate more offspring, the increase in capital accumulated would keep pace with the increase in population figures. All the benefits derived from the accumulation of additional capital would be absorbed by multiplying the number of people" (p. 85). 

"Consequently, in the countries of capitalistic civilization, the increase of capital accumulated outruns the increase in population figures. To the extent that this happens, the marginal productivity of labor is increased as against the marginal productivity of the material factors of production. There emerges a tendency toward higher wage rates. The proportion of the total output of production that goes to the wage earners is enhanced as against that which goes as interest to the capitalists and as rent to the land owners" (p. 86).

2. Concerning Production and Wage Rate. Here, two further subjects are elaborated: a necessary distinction between general productivity and marginal productivity, and the role of capital in the growth of productivity. 

Mises distinguished between general productivity of labor and marginal productivity of labor:

"To speak of the productivity of labor makes sense only if one refers to the marginal productivity of labor, i.e., to the deduction in net output to be caused by the elimination of one worker. Then it refers to a definite economic quantity, to a determinate amount of goods or its equivalent in money. The concept of a general productivity of labor as resorted to in popular talk about an allegedly natural right of the workers to claim the total increase in productivity is empty and indefinable. It is based on the illusion that it is possible to determine the shares that each of the various complementary factors of production has physically contributed to the turning out of the product" (ibid.).

Mises explained the question between labor and capital as the primary cause for the increase in productivity and wage rate: 

"What is required to raise, in the absence of an increase in the number of workers employed, the total amount of . . . industrial output is the investment of additional capital that can only be accumulated by new saving. It is those saving and investing to whom credit is to be given for the multiplication of the productivity of the total labor force" (p. 87).

"What raises wage rates and allots to the wage earners an ever-increasing portion out of the output which has been enhanced by additional capital accumulation is the fact that the rate of capital accumulation exceeds the rate of increase in population" (p. 88).

"That the increase in wage rates does not depend on the individual worker's "productivity," but on the marginal productivity of labor, is clearly demonstrated by the fact that wage rates are moving upward also for performances in which the "productivity" of the individual has not changed at all" (ibid.).

"All pseudo economic doctrines which depreciate the role of saving and capital accumulation are absurd. What constitutes the greater wealth of a capitalistic society as against the smaller wealth of a non-capitalistic society is the fact that the available supply of capital goods is greater in the former than in the latter. What has improved the wage earners' standard of living is the fact that the capital equipment per head of the men eager to earn wages has increased. It is a consequence of this fact that an ever-increasing portion of the total amount of usable goods produced goes to the wage earners. None of the passionate tirades of Marx, Keynes and a host of less well known authors could show a weak point in the statement that there is only one means to raise wage rates permanently and for the benefit of all those eager to earn wages-namely, to accelerate the increase in capital available as against population. If this be "unjust," then the blame rests with nature and not with man" (p. 89).

George Sorel and the "Anti-Communist" Liberals

In reading the final chapter of the book, "The Anti-Capitalistic Mentality," again I stumble with another strange term similar to what I found in chapter 3. In that chapter, Mises mentioned about "progressive dogmatist" (p. 61), which is difficult to reconcile for "dogmatism" would mean the stop of the continuity of progress, and on the other hand, a progressive would mean inimical to dogmatism. That is, if you take these terms at face value. However, after reading Mises, we know that those terms mean different at present from the context that they were used during Mises' time. 

The strange term that I encounter this time is " 'anti-communist' liberals." You notice that the term "anti-communist" is enclosed within open and close quotation marks, which means that it is not really anti-communist, but actually, a subtle term to hide communism in order to continually propagate it. And adding to the confusion is the way Mises connected "anti-communism" with liberalism. Again, at face value, true anti-communism and liberalism go hand in hand for both are hostile to tyranny, and it appears that both also advocate liberty. But this is not the case in the way Mises exposed the term here in chapter 5. 

George Sorel is also unknown to me. This is the first time I heard about his name. To close a book mentioning his name in four out of thirteen paragraphs shows that understanding the influence of this man in the flow of thought during Mises' time is really important. It serves as a connecting link after the time of Mises, which includes our time. 

1.      Man's Quest for Permanence and Utopia

And so Mises began the concluding chapter of the book by identifying man's quest for permanence and utopian dream. For Mises, this quest is contrary to reality for life is characterized by continuous change and such immovable being does not exist. Moreover, Mises also opposes any utopian idea for that would mean "an end to history" and reaching "a final and permanent calm" (p. 106). 

Mises thinks that he understands human nature in his quest for permanence. Many do not prefer change for it threatens their sense of security and it calls for adjustment and flexibility. In terms of the market and intellectual development, change "hurts vested interests and threatens traditional ways of production and consumption" and "it annoys all those who are intellectually inert and shrink from revising their modes of thinking" (pp. 106 -107).

Mises captures this idea of man's quest for stability and permanence under the term "conservatism" (p. 107). To him, this "is contrary to the very nature of human acting" (ibid.), and yet "it has always been the cherished program of the many" (ibid.). And so he labels the conservative as reactionary, and applies the latter term beyond "the aristocrats and priests," and includes "the guilds of artisans blocking entrance into their field to newcomers," "the farmers asking for tariff protection, subsidies and 'parity prices,' " and "the wage earners hostile to technological improvements and fostering featherbedding and similar practices" (ibid.).

In the midst of continuous change, we find entrepreneurs in its center stage. No wonder, this true progressive class receives attacks from "the literati and the Bohemian artists" and the latter dismissed the former as a class of people who are not interested in intellectual pursuit, but profit. Mises refuted this baseless assertion and argued that the intellectual capabilities of the entrepreneurs are more superior "than the average writer and painter" and "many self-styled intellectuals" (ibid.). This is because they lack knowledge and ability "to develop and to operate successfully a business enterprise" (ibid.). 

The appearance of the above type of critics is a common and unfortunate development under a capitalistic society. Mises describes them as "nuisance" (ibid.), and wishes something be done to wipe out their superficial criticism in order that their ideas could not harm anyone. However, Mises does not want to resort to such action for he doubts that it could really root out these pseudo intellectuals. Instead, it would certainly restrict the liberty of those who are genuinely creative and innovative, and that would harm the larger society. And so Mises accepted that the existence of this breed of intellectuals is part of the price that humanity "must pay lest the creative pioneers be prevented from accomplishing their work" (p. 108). 

2.      The Influence of George Sorel

All the foregoing observation led to the appearance of George Sorel and the "anti-communist" liberals, which according to Mises is the price we must pay in a free society. Mises described the ideas of George Sorel as "the most pernicious ideology of the last sixty years" (p. 109). By this, he was referring to Sorel's "syndicalism" and "action directe" (ibid.). Notice how Mises explained the influence of George Sorel:

"Generated by a frustrated French intellectual, it soon captivated the literati of all European countries. It was a major factor in the radicalization of all subversive movements. It influenced French royalism, militarism and anti-Semitism. It played an important role in the evolution of Russian Bolshevism, Italian Fascism and the German youth movement which finally resulted in the development of Nazism. It transformed political parties intent upon winning through electoral campaigns into factions which relied upon the organization of armed bands. It brought into discredit representative government and 'bourgeois security,' and preached the gospel both of civil and of foreign war. Its main slogan was: violence and again violence. The present state of European affairs is to a great extent an outcome of the prevalence of Sorel's teachings" (ibid.). 

This is a sad picture and such a costly price to pay for the maintenance of a free society. This reveals the low state the intellectuals had fallen during Mises' time, and I am afraid still lingers up to our time. 

Mises described Sorel as "anti-intellectual," and "opposed to cool reasoning and sober deliberation" (ibid.). The important thing for Sorel is "the act of violence for the sake of violence" (ibid.). Sorel developed a philosophy of destruction "for the sake of destruction!" (p. 110). His advice: "Do not talk, do not reason, kill!" (ibid.).

And yet Mises blamed neither Sorel nor "his disciples, Lenin, Mussolini, and Rosenberg" for the propagation of the philosophy of violence (ibid.). The influence of this disastrous ideology became widespread due to the absence of critical examination of its faults and excesses. Objections came late and still lacked courage and precision. Out of this scenario, a new "intellectual" movement emerged, the appearance of "anti-communist" liberalism. 

3.      The Emergence of "Anti-Communist" Liberalism

Mises' school of thought rightly deserves such title. However, this title is not reserved for him, but he used it to describe a group of "intellectuals" that came out of the reaction due to the excesses of Sorelism. By exposing the identity of this group, I cannot avoid asking: Is this not the very air that we breath today? If it is, how should we call the attitude of dismissing Mises as irrelevant?

Mises marked this group as "a sham anti-communist front," "fake anti-communism," and characterized its aim as "communism without those inherent and necessary features of communism which are still unpalatable to Americans" (pp. 110-112). This group makes "an illusory distinction between communism and socialism" (p. 111). The proponents of "anti-communist" liberalism use aliases such as "central planning" and "welfare state." "In short: they pretend to fight communism in trying to convert people to the ideas of the Communist Manifesto" (ibid.). 

Mises further depicts the activities of this group as follows: 

"They pretend to reject the revolutionary and dictatorial aspirations of the 'Reds' and at the same time they praise in books and magazines, in schools and universities, Karl Marx, the champion of the communist revolution and the dictatorship of the proletariat, as one of the greatest economists, philosophers and sociologists and as the eminent benefactor and liberator of mankind. They want to make us believe that untotalitarian totalitarianism, a kind of a triangular square, is the patent medicine for all ills" (p. 112).

Another pair of unusual terms: "untotalitarian totalitarian" and "triangular square." This group of intellectuals is really very "creative" and "innovative." They invent concepts, which are non-existent. Mises claimed that if not for the "creativity" of this "anti-communist" liberals, communism and socialism would have collapsed in the West due to the failure of Russian and all socialist experiments. And besides, all "anti-movements" offer nothing workable, but a negative program. There's no chance that an ideology focusing on criticism and attacks will succeed, except in introducing disorder and chaos. A positive program is vital, and people must fight for something constructive, not just simply renounce evil. The free market economy is the remaining and only option that works in the real world. 

4.      Personal Response

After digesting the book, you can assess whether Mises really achieved his objective, whether he is really successful in exposing the roots and the destructive results of anti-capitalistic mentality. Personally, though the book is dated, still it helps me understand the basic operation of the free market and the reasons for hostility against it, and it also helps me analyze the erroneous foundation of mainstream ideas. 

Concerning intellectual contribution, Mises describes things, which I think are true to biblical presuppositions as far as natural revelation and common grace are concerned. I just don't have time now to give concrete examples for that would require a separate time for study. However, his concepts of justice, liberty, denial of stability and future utopia, and reason are contrary to biblical revelation. He thinks that "divine justice" does not exist. He also did not go beyond the Greeks and the Romans in his concept of liberty. For Mises, liberty is primarily based on the free market, which of course rooted in the individual. Moreover, Mises also did not accept any idea of permanence or concept of future utopia. As far as the content of the book is concerned, his understanding of human history is a continuous process. I think, his idea of reason as autonomous played a big role for this contradiction. 

I am not sure whether Mises is a deist or an atheist. If he is an atheist, his denial of a "divine" idea of justice is beyond his basic presupposition. It is not within his jurisdiction to say anything about it. The same thing is true with his concept of liberty. Furthermore, both Jewish tradition and Christianity have much to say about liberty, and Mises failed to mention about them except of course the section on "three old powers" where he mentioned that churches joined forces with the forerunners of socialism (pp. 43-45). However, Christianity is far broader than the official churches. Moreover, during the time of Reformation, Christianity played a significant role in recovering the right of private judgment, which is the essence of personal liberty. I suspect that the silence in this matter is either due to Mises' atheistic assumptions or perhaps he subsumed both Jewish and Christian concept of liberty under his consideration of Greeks and Romans along with the Renaissance and Enlightenment. 

Focusing on liberty, a Dutch theologian, Herman Bavinck in his book "Philosophy of Revelation," distinguished between two kinds of liberty, Christian and revolutionary; they are not one and the same. These two kinds of liberty have separate roots. Christian liberty was recovered by new Protestantism led by Luther, whereas revolutionary liberty can be traced back to old Protestantism inspired by Erasmus, which was part of the 16th century Renaissance, and had finally come into maturity in the 18th century during the so-called Age of Reason or the Enlightenment. And then Deism, which originated from England finally declared the complete emancipation of "the world from God, reason from revelation, and will from grace” (p. 7). I think Mises' concept of liberty though not revolutionary in the sense that he advocates violence, has its root in this movement for his idea of liberty exists apart from the existence of God and the reality of revelation.

Reference: Mises, L. (2008). The Anti-Capitalistic Mentality. Auburn, Alabama: The Ludwig von Mises Institute. 122 pages.