Liberalism as a Foundation of Peace and Property

Liberalism as a Foundation of Peace and Property
Profile photo of Ludwig von Mises
[This article is excerpted from Liberalism, the introduction and Chapter 1]
6. The Psychological Roots of Antiliberalism

It cannot be the task of this book to discuss the problem of social cooperation otherwise than with rational arguments. But the root of the opposition to liberalism cannot be reached by resort to the method of reason. This opposition does not stem from the reason, but from a pathological mental attitude?from resentment and from a neurasthenic condition that one might call a Fourier complex, after the French socialist of that name.

Concerning resentment and envious malevolence little need be said. Resentment is at work when one so hates somebody for his more favorable circumstances that one is prepared to bear heavy losses if only the hated one might also come to harm. Many of those who attack capitalism know very well that their situation under any other economic system will be less favorable. Nevertheless, with full knowledge of this fact, they advocate a reform, e.g., socialism, because they hope that the rich, whom they envy, will also suffer under it. Time and again one hears socialists say that even material want will be easier to bear in a socialist society because people will realize that no one is better off than his neighbor.

At all events, resentment can still be dealt with by rational arguments. It is, after all, not too difficult to make clear to a person who is filled with resentment that the important thing for him cannot be to worsen the position of his better situated fellow men, but to improve his own.

The Fourier complex is much harder to combat. What is involved in this case is a serious disease of the nervous system, a neurosis, which is more properly the concern of the psychologist than of the legislator. Yet it cannot be neglected in investigating the problems of modern society. Unfortunately, medical men have hitherto scarcely concerned themselves with the problems presented by the Fourier complex. Indeed, they have hardly been noticed even by Freud, the great master of psychology, or by his followers in their theory of neurosis, though it is to psychoanalysis that we are indebted for having opened up the path that alone leads to a coherent and systematic understanding of mental disorders of this kind.

Scarcely one person in a million succeeds in fulfilling his life’s ambition. The upshot of one’s labors, even if one is favored by fortune, remains far inferior to what the wistful daydreams of youth allowed one to hope for. Plans and desires are shattered on a thousand obstacles, and one’s powers prove too weak to achieve the goals on which one has set one’s heart. The failure of his hopes, the frustration of his schemes, his own inadequacy in the face of the tasks that he has set himself-these constitute every man’s most deeply painful experience, They are, indeed, the common lot of man.

There are two ways in which man can react to this experience. One way is indicated by the practical wisdom of Goethe:

Dost thou fancy that I should hate life,
Should flee to the wilderness,
Because not all my budding dreams have blossomed?

his Prometheus cries. And Faust recognizes at the “highest moment” that “the last word of wisdom” is:

No man deserves his freedom or his life
Who does not daily win them anew.

Such a will and such a spirit cannot be vanquished by any earthly misfortune. He who accepts life for what it is and never allows himself to be overwhelmed by it does not need to seek refuge for his crushed self-confidence in the solace of a “saving lie.” If the longed-for success is not forthcoming, if the vicissitudes of fate destroy in the twinkling of an eye what had to be painstakingly built up by years of hard work, then he simply multiplies his exertions. He can look disaster in the eye without despairing.

The neurotic cannot endure life in its real form. It is too raw for him, too coarse, too common. To render it bearable he does not, like the healthy man, have the heart to “carry on in spite of everything.” That would not be in keeping with his weakness. Instead, he takes refuge in a delusion. A delusion is, according to Freud, “itself something desired, a kind of consolation”; it is characterized by its “resistance to attack by logic and reality.” It by no means suffices, therefore, to seek to talk the patient out of his delusion by conclusive demonstrations of its absurdity. In order to recuperate, the patient himself must overcome it. He must learn to understand why he does not want to face the truth and why he takes refuge in delusions.

Only the theory of neurosis can explain the success enjoyed by Fourierism, the mad product of a seriously deranged brain. This is not the place to adduce evidence of Fourier’s psychosis by quoting passages from his writings. Such descriptions are of interest only to the psychiatrist and, perhaps, also to people who derive a certain pleasure from reading the productions of a lewd phantasy. But the fact is that Marxism, when it is obliged to leave the field of pompous dialectical rhetoric and the derision and defamation of its opponents and to make a few meager remarks pertinent to the issue, never has anything different to advance from what Fourier, the “utopian,” had to offer. Marxism is likewise unable to construct a picture of a socialist society without making two assumptions already made by Fourier that contradict all experience and all reason. On the one hand, it assumes that the “material substratum” of production, which is “already present in nature without the need of productive effort on the part of man,” stands at our disposal in such abundance that it need not be economized; hence the faith of Marxism in a “practically limitless increase in production.” On the other hand, it assumes that in a socialist community work will change from “a burden into a pleasure”?indeed, that it will become “the primary necessity of life.” Where a superfluity of all goods abounds and work is a pleasure, it is, doubtless, an easy matter to establish a land of Cockaigne.

Marxism believes that from the height of its “scientific socialism” it is entitled to look down with contempt on romanticism and romantics. But in reality its own procedure is no different from theirs. Instead of removing the impediments that stand in the way of the realization of its desires, it too prefers to let all obstacles simply fade away in the mists of phantasy.

In the life of the neurotic the “saving lie” has a double function. It not only consoles him for past failure, but holds out the prospect of future success. In the case of social failure, which alone concerns us here, the consolation consists in the belief that one’s inability to attain the lofty goals to which one has aspired is not to be ascribed to one’s own inadequacy, but to the defectiveness of the social order. The malcontent expects from the overthrow of the latter the success that the existing system has withheld from him. Consequently, it is entirely futile to try to make clear to him that the utopia he dreams of is not feasible and that the only foundation possible for a society organized on the principle of the division of labor is private ownership of the means of production. The neurotic clings to his “saving lie,” and when he must make the choice of renouncing either it or logic, he prefers to sacrifice logic. For life would be unbearable for him without the consolation that he finds in the idea of socialism. It tells him that not he himself, but the world, is at fault for having caused his failure; and this conviction raises his depressed self-confidence and liberates him from a tormenting feeling of inferiority.

Just as the devout Christian could more easily endure the misfortune that befell him on earth because he hoped for a continuation of personal existence in another, better world, where those who on earth had been first would be last and the last would be first; so, for modern man, socialism has become an elixir against earthly adversity. But whereas the belief in immortality, in a recompense in the hereafter, and in resurrection formed an incentive to virtuous conduct in this life, the effect of the socialist promise is quite different. It imposes no other duty than that of giving political support to the party of socialism; but at the same time it raises expectations and demands.

This being the character of the socialist dream, it is understandable that every one of the partisans of socialism expects from it precisely what has so far been denied to him. Socialist authors promise not only wealth for all, but also happiness in love for everybody, the full physical and spiritual development of each individual, the unfolding of great artistic and scientific talents in all men, etc. Only recently Trotsky stated in one of his writings that in the socialist society “the average human type will rise to the heights of an Aristotle, a Goethe, or a Marx. And above this ridge new peaks will rise.”[1] The socialist paradise will be the kingdom of perfection, populated by completely happy supermen. All socialist literature is full of such nonsense. But it is just this nonsense that wins it the most supporters.

One cannot send every person suffering from a Fourier complex to the doctor for psychoanalytic treatment; the number of those afflicted with it is far too great. No other remedy is possible in this case than the treatment of the illness by the patient himself. Through self-knowledge he must learn to endure his lot in life without looking for a scapegoat on which he can lay all the blame, and he must endeavor to grasp the fundamental laws of social cooperation.


[1] Leon Trotsky, Literature and Revolution, trans. by R. Strunsky (London, 1925), p. 256.

The Foundations of Liberal Policy

1. Property

Human society is an association of persons for cooperative action. As against the isolated action of individuals, cooperative action on the basis of the principle of the division of labor has the advantage of greater productivity. If a number of men work in cooperation in accordance with the principle of the division of labor, they will produce (other things being equal) not only as much as the sum of what they would have produced by working as self-sufficient individuals, but considerably more. All human civilization is founded on this fact. It is by virtue of the division of labor that man is distinguished from the animals. It is the division of labor that has made feeble man, far inferior to most animals in physical strength, the lord of the earth and the creator of the marvels of technology. In the absence of the division of labor, we would not be in any respect further advanced today than our ancestors of a thousand or ten thousand years ago.

Human labor by itself is not capable of increasing our well-being. In order to be fruitful, it must be applied to the materials and resources of the earth that Nature has placed at our disposal. Land, with all the substances and powers resident within it, and human labor constitute the two factors of production from whose purposeful cooperation proceed all the commodities that serve for the satisfaction of our outer needs. In order to produce, one must deploy labor and the material factors of production, including not only the raw materials and resources placed at our disposal by Nature and mostly found in the earth, but also the intermediate products already fabricated of these primary natural factors of production by previously performed human labor. In the language of economics we distinguish, accordingly, three factors of production: labor, land, and capital. By land is to be understood everything that Nature places at our disposal in the way of substances and powers on, under, and above the surface of the earth, in the water, and in the air; by capital goods, all the intermediate goods produced from land with the help of human labor that are made to serve further production, such as machines, tools, half-manufactured articles of all kinds, etc.

Now we wish to consider two different systems of human cooperation under the division of labor-one based on private ownership of the means of production, and the other based on communal ownership of the means of production. The latter is called socialism or communism; the former, liberalism or also (ever since it created in the nineteenth century a division of labor encompassing the whole world) capitalism. The liberals maintain that the only workable system of human cooperation in a society based on the division of labor is private ownership of the means of production. They contend that socialism as a completely comprehensive system encompassing all the means of production is unworkable and that the application of the socialist principle to a part of the means of production, though not, of course, impossible, leads to a reduction in the productivity of labor, so that, far from creating greater wealth, it must, on the contrary, have the effect of diminishing wealth.

The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production (for in regard to commodities ready for consumption, private ownership is a matter of course and is not disputed even by the socialists and communists). All the other demands of liberalism result from this fundamental demand.

Side by side with the word “property” in the program of liberalism one may quite appropriately place the words “freedom” and “peace.” This is not because the older program of liberalism generally placed them there. We have already said that the program of present-day liberalism has outgrown that of the older liberalism, that it is based on a deeper and better insight into interrelationships, since it can reap the benefit of the advances that science has made in the last decades. Freedom and peace have been placed in the forefront of the program of liberalism, not because many of the older liberals regarded them as coordinate with the fundamental principle of liberalism itself, rather than as merely a necessary consequence following from the one fundamental principle of the private ownership of the means of production; but solely because freedom and peace have come under especially violent attack from the opponents of liberalism, and liberals have not wanted to give the appearance, through the omission of these principles, that they in any way acknowledged the justness of the objections raised against them.

2. Freedom

The idea of freedom has become so ingrained in all of us that for a long time no one dared to call it into question. People were accustomed always to speaking of freedom only with the greatest of reverence; it remained for Lenin to call it a “bourgeois prejudice.” Although the fact is often forgotten today, all this is an achievement of liberalism. The very name of liberalism is derived from freedom, and the name of the party in opposition to the liberals (both designations arose in the Spanish constitutional struggles of the first decades of the nineteenth century) was originally the “servile.”

Before the rise of liberalism even high-minded philosophers, founders of religions, clerics animated by the best of intentions, and statesmen who genuinely loved their people, viewed the thralldom of a part of the human race as a just, generally useful, and downright beneficial institution. Some men and peoples are, it was thought, destined by nature for freedom, and others for bondage. And it was not only the masters who thought so, but the greater number of the slaves as well. They put up with their servitude, not only because they had to yield to the superior force of the masters, but also because they found some good in it: the slave is relieved of concern for securing his daily bread, for the master is obliged to provide him with the necessities of life. When liberalism set out, in the eighteenth and the first half of the nineteenth century, to abolish the serfdom and subjection of the peasant population in Europe and the slavery of the Negroes in the overseas colonies, not a few sincere humanitarians declared themselves in opposition. Unfree laborers are used to their bondage and do not feel it as an evil. They are not ready for freedom and would not know how to make use of it. The discontinuation of the master’s care would be very harmful to them. They would not be capable of managing their affairs in such a way as always to provide more than just the bare necessities of life, and they would soon fall into want and misery. Emancipation would thus not only fail to gain for them anything of real value, but would seriously impair their material well-being.

What was astonishing was that one could hear these views expressed even by many of the slaves whom one questioned. In order to counter such opinions, many liberals believed it necessary to represent as the general rule and even on occasion to depict in an exaggerated manner the exceptional cases in which serfs and slaves had been cruelly abused. But these excesses were by no means the rule. There were, of course, isolated instances of abuse, and the fact that there were such cases was an additional reason for the abolition of this system. As a rule, however, the treatment of bondsmen by their masters was humane and mild.

When those who recommended the abolition of involuntary servitude on general humanitarian grounds were told that the retention of the system was also in the interest of the enslaved, they knew of nothing to say in rejoinder. For against this objection in favor of slavery there is only one argument that can and did refute all others-namely, that free labor is incomparably more productive than slave labor. The slave has no interest in exerting himself fully. He works only as much and as zealously as is necessary to escape the punishment attaching to failure to perform the minimum. The free worker, on the other hand, knows that the more his labor accomplishes, the more he will be paid. He exerts himself to the full in order to raise his income. One has only to compare the demands placed on the worker by the tending of a modern tractor with the relatively small expenditure of intelligence, strength, and industry that just two generations ago was deemed sufficient for the enthralled ploughmen of Russia. Only free labor can accomplish what must be demanded of the modern industrial worker.

Muddleheaded babblers may therefore argue interminably over whether all men are destined for freedom and are as yet ready for it. They may go on contending that there are races and peoples for whom Nature has prescribed a life of servitude and that the master races have the duty of keeping the rest of mankind in bondage. The liberal will not oppose their arguments in any way because his reasoning in favor of freedom for all, without distinction, is of an entirely different kind. We liberals do not assert that God or Nature meant all men to be free, because we are not instructed in the designs of God and of Nature, and we avoid, on principle, drawing God and Nature into a dispute over mundane questions. What we maintain is only that a system based on freedom for all workers warrants the greatest productivity of human labor and is therefore in the interest of all the inhabitants of the earth. We attack involuntary servitude, not in spite of the fact that it is advantageous to the “masters,” but because we are convinced that, in the last analysis, it hurts the interests of all members of human society, including the “masters.” If mankind had adhered to the practice of keeping the whole or even a part of the labor force in bondage, the magnificent economic developments of the last hundred and fifty years would not have been possible. We would have no railroads, no automobiles, no airplanes, no steamships, no electric light and power, no chemical industry, just as the ancient Greeks and Romans, with all their genius, were without these things. It suffices merely to mention this for everyone to realize that even the former masters of slaves or serfs have every reason to be satisfied with the course of events after the abolition of involuntary servitude. The European worker today lives under more favorable and more agreeable outward circumstances than the pharaoh of Egypt once did, in spite of the fact that the pharaoh commanded thousands of slaves, while the worker has nothing, to depend on but the strength and skill of his hands. If a nabob of yore could be placed in the circumstances in which a common man lives today, he would declare without hesitation that his life had been a beggarly one in comparison with the life that even a man of moderate means can lead at present.

This is the fruit of free labor. It is able to create more wealth for everyone than slave labor once provided for the masters.

3. Peace

There are high-minded men who detest war because it brings death and suffering. However much one may admire their humanitarianism, their argument against war, in being, based on philanthropic grounds, seems to lose much or all of its force when we consider the statements of the supporters and proponents of war. The latter by no means deny that war brings with it pain and sorrow. Nevertheless, they believe it is through war and war alone that mankind is able to make progress. War is the father of all things, said a Greek philosopher, and thousands have repeated it after him. Man degenerates in time of peace. Only war awakens in him slumbering talents and powers and imbues him with sublime ideals. If war were to be abolished, mankind would decay into indolence and stagnation.

It is difficult or even impossible to refute this line of reasoning on the part of the advocates of war if the only objection to war that one can think of is that it demands sacrifices. For the proponents of war are of the opinion that these sacrifices are not made in vain and that they are well worth making. If it were really true that war is the father of all things, then the human sacrifices it requires would be necessary to further the general welfare and the progress of humanity. One might lament the sacrifices, one might even strive to reduce their number, but one would not be warranted in wanting to abolish war and to bring about eternal peace.

The liberal critique of the argument in favor of war is fundamentally different from that of the humanitarians. It starts from the premise that not war, but peace, is the father of all things. What alone enables mankind to advance and distinguishes man from the animals is social cooperation. It is labor alone that is productive: it creates wealth and therewith lays the outward foundations for the inward flowering of man. War only destroys; it cannot create. War, carnage, destruction, and devastation we have in common with the predatory beasts of the jungle; constructive labor is our distinctively human characteristic. The liberal abhors war, not, like the humanitarian, in spite of the fact that it has beneficial consequences, but because it has only harmful ones.

The peace-loving humanitarian approaches the mighty potentate and addresses him thus: “Do not make war, even though you have the prospect of furthering your own welfare by a victory. Be noble and magnanimous and renounce the tempting victory even if it means a sacrifice for you and the loss of an advantage.” The liberal thinks otherwise. He is convinced that victorious war is an evil even for the victor, that peace is always better than war. He demands no sacrifice from the stronger, but only that he should come to realize where his true interests lie and should learn to understand that peace is for him, the stronger, just as advantageous as it is for the weaker.

When a peace-loving nation is attacked by a bellicose enemy, it must offer resistance and do everything to ward off the onslaught. Heroic deeds performed in such a war by those fighting for their freedom and their lives are entirely praiseworthy, and one rightly extols the manliness and courage of such fighters. Here daring, intrepidity, and contempt for death are praiseworthy because they are in the service of a good end. But people have made the mistake of representing these soldierly virtues as absolute virtues, as qualities good in and for themselves, without consideration of the end they serve. Whoever holds this opinion must, to be consistent, likewise acknowledge as noble virtues the daring, intrepidity, and contempt for death of the robber. In fact, however, there is nothing good or bad in and of itself. Human actions become good or bad only through the end that they serve and the consequences they entail. Even Leonidas would not be worthy of the esteem in which we hold him if he had fallen, not as the defender of his homeland, but as the leader of an invading army intent on robbing a peaceful people of its freedom and possessions.

How harmful war is to the development of human civilization becomes clearly apparent once one understands the advantages derived from the division of labor. The division of labor turns the self-sufficient individual into the dependent on his fellow men, the social animal of which Aristotle spoke. Hostilities between one animal and another, or between one savage and another, in no way alter the economic basis of their existence. The matter is quite different when a quarrel that has to be decided by an appeal to arms breaks out among the members of a community in which labor is divided. In such a society each individual has a specialized function; no one is any longer in a position to live independently, because all have need of one another’s aid and support. Self-sufficient farmers, who produce on their own farms everything that they and their families need, can make war on one another. But when a village divides into factions, with the smith on one side and the shoemaker on the other, one faction will have to suffer from want of shoes, and the other from want of tools and weapons. Civil war destroys the division of labor inasmuch as it compels each group to content itself with the labor of its own adherents.

If the possibility of such hostilities had been considered likely in the first place, the division of labor would never have been allowed to develop to the point where, in case a fight really did break out, one would have to suffer privation. The progressive intensification of the division of labor is possible only in a society in which there is an assurance of lasting peace. Only under the shelter of such security can the division of labor develop. In the absence of this prerequisite, the division of labor does not extend beyond the limits of the village or even of the individual household. The division of labor between town and country-with the peasants of the surrounding villages furnishing grain, cattle, milk, and butter to the town in exchange for the manufactured products of the townsfolk—already presupposes that peace is assured at least within the region in question. If the division of labor is to embrace a whole nation, civil war must lie outside the realm of possibility; if it is to encompass the whole world, lasting peace among nations must be assured.

Everyone today would regard it as utterly senseless for a modern metropolis like London or Berlin to prepare to make war on the inhabitants of the adjacent countryside. Yet for many centuries the towns of Europe kept this possibility in mind and made economic provision for it. There were towns whose fortifications were, from the very beginning, so constructed that in case of need they could hold out for a while by keeping cattle and growing grain within the town walls.

At the beginning of the nineteenth century by far the greater part of the inhabited world was still divided into a number of economic regions that were, by and large, self-sufficient. Even in the more highly developed areas of Europe, the needs of a region were met, for the most part, by the production of the region itself. Trade that went beyond the narrow confines of the immediate vicinity was relatively insignificant and comprised, by and large, only such commodities as could not be produced in the area itself because of climatic conditions. In by far the greater part of the world, however, the production of the village itself supplied almost all the needs of its inhabitants. For these villagers, a disturbance in trade relations caused by war did not generally mean any impairment of their economic well-being. But even the inhabitants of the more advanced countries of Europe did not suffer very severely in time of war. If the Continental System, which Napoleon I imposed on Europe in order to exclude from the continent English goods and those coming from across the ocean only by way of England, had been enforced even more rigorously than it was, it would have still inflicted on the inhabitants of the continent hardly any appreciable privations. They would, of course, have had to do without coffee and sugar, cotton and cotton goods, spices, and many rare kinds of wood; but all these things then played only a subordinate role in the households of the great masses.

The development of a complex network of international economic relations is a product of nineteenth-century liberalism and capitalism. They alone made possible the extensive specialization of modern production with its concomitant improvement in technology. In order to provide the family of an English worker with all it consumes and desires, every nation of the five continents cooperates. Tea for the breakfast table is provided by Japan or Ceylon, coffee by Brazil or Java, sugar by the West Indies, meat by Australia or Argentina, cotton from America or Egypt, hides for leather from India or Russia, and so on. And in exchange for these things, English goods go to all parts of the world, to the most remote and out-of-the-way villages and farmsteads. This development was possible and conceivable only because, with the triumph of liberal principles, people no longer took seriously the idea that a great war could ever again break out. In the golden age of liberalism, war among members of the white race was generally considered a thing of the past.

But events have turned out quite differently. Liberal ideas and programs were supplanted by socialism, nationalism, protectionism, imperialism, etatism, and militarism. Whereas Kant and Von Humboldt, Bentham and Cobden had sung the praises of eternal peace, the spokesmen of a later age never tired of extolling war, both civil and international. And their success came only all too soon. The result was the World War, which has given our age a kind of object lesson on the incompatibility between war and the division of labor.

Profile photo of Ludwig von Mises

Ludwig von Mises was one of the most notable economists and social philosophers of the twentieth century. In the course of a long and highly productive life, developed an integrated, deduct­ive science of economics based on the fundamental axiom that in­dividual human beings act purposively to achieve desired goals. Even though his economic analysis itself was "value-free" — in the sense of being irrelevant to values held by economists — Mises concluded that the only viable economic policy for the human race was a policy of unrestricted laissez-faire, of free markets and the unhampered exercise of the right of private property, with government strictly limited to the defense of person and property within its territorial area.

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