Socialism: An Economic and Sociological Analysis by Ludwig von Mises
Socialism: An Economic and Sociological Analysis was written by Ludwig von Mises and first published in 1922 (in Jena) under the title Die Gemeinwirtschaft: Untersuchungen über den Sozialismus. The book was published in English in 1936. It is a masterwork that is the refutation of socialism economics and a critique of the intellectual apparatus of socialist ideas. They include the corporatism and syndicalism refutation, the implicit religious doctrines that are behind the thinking of Western socialists, war socialism attack, a cultural socialist teaching critique of marriage and sex, and collectivist methodology refutation.
Socialism: An Economic and Sociological Analysis consists of five parts. In the introduction to the book, the author defines socialism as the catchword and the watchword of our day. Mises also states that the socialist idea tends to dominate the modern spirit. There are two ways that help treat the problems related to Science and Socialism. That is why one should not judge a scientific method in advance.
The first part of the book covers the issue of ownership nature, contract and violence, the theories of contract and violence, collective ownership of production means, and theories of property evaluations. The author defines the notion of ownership making difference between sociologic and juristic ownership. The latter is treated as a sociological category that empowers the use of goods. At the same time, the owner is a person “who disposes of an economic good” (Mises, 1981, p. 37). It is emphasized that, in a society that follows labor division, no one may be called an exclusive owner of production means as they render services to all who buy and sell them. Mises claimed that is it easy to misinterpret notions especially when they are used in a new concept. That is why he suggests using the notion “ownership of the means of production” (p. 42) to denote the immediate power of disposal. Attention is paid to the rights of natural law. They presuppose the restoration of “the eternal rights” (Mises, p. 53). It was also stated that private property did not exist from the beginning of humanity and was only a desirable outcome of culture that might be abolished. The idea was supported by Socialists and Marxists.
The first part reveals the aim of Socialism that lies in transferring the production means from private ownership to the organized society ownership. The State that is socialistic owns and directs all material production factors. The author emphasizes the fact that most people are not able to perceive the difference between the anarchistic and liberal ideas. It is noted that anarchism rejects all social organizations and violence as a social technique. Anarchism is “neither liberal not socialistic” (Mises, p. 57). The person who denies the anarchistic idea repudiates anarchistic ideals.
In the aforementioned part, Mises provides a detailed description of the Rights of Man and Citizens. They formed the subject of liberation wars in the 18th and 19th centuries. The rights were written under the influence of various political movements. Thus, the author claims that the Right to Existence is usually defined in various ways as it was realized by people centuries ago. This Right is closely related to the Right to Work.
A lot of attention is paid to the issue of collectivism. In conclusion, the author writes that collectivism is in favor of the socialization of the production means as it is closer to the world philosophy. However, some collectivists support private ownership because this system better serves the well-being of the social whole. A focus is made on the difference between collectivism and socialism. According to Mises, the difference between the “attitude of Collectivism and Individualism” to the social association problem is “not different from the attitude of Universalism and Nominalism” to the problem of species concept (p. 63). Thus, Collectivism has nothing to oppose to the new theory of Socialism.
The author investigates the policy of violence and contract. The domination of the violence principle is not restricted to the property sphere. All people live according to the law of the strongest and it is the negation of Law. In the philosophy of liberal socialists, people minds become aware of the overcoming violence principles by the peace principles. This is the philosophy in which the humanity gives itself an account for its actions for the first time. The author claims that this philosophy eliminates the romantic nimbus which has surrounded power.
This part also highlights the social function of democracy. It is stated that Liberalism demands the fullest freedom for the political opinion expression. In addition, it demands the constitution of the State according to the will of the majority and legislation through the representatives. The ideal of Liberalism remains the republic, and the highest political principle is the self-determination.
It is emphasized that any violent revolution costs money and blood. Human lives are sacrificed, and destruction prevents economic activity. Mises believes that democracy tends to impede material loss and accompany psychical shock. It is achieved by “making the organs of the state legally dependent on the will of the majority of the moment” (Mises, p. 73). The author describes the Russian Conservatism pointing out the Russian Tsarism and the policy of the Tsar that was approved by most Russian people. The relation between the demand for democracy and Marxist Socialism is determined by the fact that it was the ocialism of the Russians, the Germans, and other “small nations which were under the Austro-Hungarian monarchy and the empire of the Tsars” (Mises, p. 80).
The ideal of equality is described as the idea that originated as a natural law demand. There was an attempt to justify it with psychological, religious, and philosophical arguments. However, the attempt failed. All people are endowed differently by nature. That is why the demand to equally treat people cannot rely on the theory that all are equal. A lot of attempts have been made to realize the socialist ideal of society. A closer look helps understand that the higher phase of communist society is thoroughly undemocratic. Socialists seek eternal peace that should be gained by different means including those employed by democrats. It was emphasized that every absolutist makes peace by establishing an absolute domination. Such peace lasts as long as the domination is maintained.
Part two is dedicated to the economics of a socialist community. The author tries to reveal the nature of economic activity. Mises states that economic science originates in discussion of the money price of services and goods (p. 111). A rational action is highlighted in terms of the action that is based on reason. It is stated that people act only because they are not completely satisfied. All actions are the exchange of conditions. People make judgments of value choosing the action that may satisfy the urgent need or demand. In the period of an exchange economy, the value of the objective commodity exchange becomes the calculation unit. However, “money calculations have their limits” (Mises, p. 115). Calculations enable economic activity. That is why under Socialism, economic activity has no chance to exist.
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The author highlights the organization of production under Socialism. He provides a detailed description and the nature of the socialization of the production means, economic calculations in the socialist community, and the economic calculation problems. In addition, Mises provides a deeper look in the artificial market as the solution of the economic calculation problem making an emphasis on productivity, profitability, gross, and net products.
The second part of the book is also dedicated to the nature of distribution under Socialism and Liberalism. It is stated that the distribution problem is a peculiar problem of Socialism. Special attention is paid to the Social dividend, the distribution principles, the distribution processes, and the distribution costs. Describing the socialism community under stationary conditions Mises states that it is the point of equilibrium to which people “conceive all forms of economic activity” (p. 163). The disutilities and satisfaction of labor as well as the joy of labor are of vital importance. Mises speaks about the selection of personnel and occupation choice stating that prostitutes chose their profession because they either like men or need money.
In this part, the author also describes the changes that happen in demand, population, amount of capital, the socialist economy, and others. However, the problems of a socialist economy under the change condition are also mentioned. Special attention is paid to the foreign relation of a socialist community with the focus on the migration problems, world and National Socialism, and foreign trade under Socialism.
The third part of the book is under the title “The Alleged Inevitability of Socialism.” Here, the author covers the notion of social evolution and socialistic chiliasm (its origin and theory). Society has been constantly progressing towards its goal. Society is constant cooperation and a “community in action” (Mises, p. 292). Conflict is treated as a factor in social evolution. Mises highlights the causes of social revolution, thoroughly characterizes Darwinism, conflict, and competition. National and racial wars are also described in details. One of the chapters is dedicated to the clash of class interests and the class war. In addition, the concept of class, estates, class war, the forms of class war, and the theory of class war are also highlighted.
The author states that, according to the materialism conception of history, human “thoughts depend on social being” (p. 352). At the same time, the second version of this conception claims that “class interest determines thought” (Mises, p. 353). It is also stated that abstract thought does not depend on the wishes. Wishes and purposes are able to regulate human actions. The author speaks about economy-thought dependence, not thought-economy one.
The capital concentration and monopoly formation as preliminary steps to socialism are also discussed in this part of the book. Mises makes an emphasis on the Marxian theory of concentration and the theory of anti-monopolistic policy. The concentration of establishments is treated by the author as the complement of the labor division.
The issue of concentration of enterprises and fortunes is discussed with the focus on the horizontal and vertical concentration of enterprises, the foundation of fortunes outside and within the market economy, and the theory of increasing poverty. In addition, the author discusses the nature of monopoly, economic effects of isolated monopolies, the significance of the monopoly, and its limits.
The fourth part of the book covers the notion of Socialism as a moral imperative. Socialism and ethics are discussed in terms of the socialist attitude to ethics, eudemonistic ethics, and a contribution to the eudemonism understanding. It is believed that the ethics of formalists “takes its differences with Eudemonism” (Mises, p. 401) while interpreting happiness as a satisfaction sensual desires. Eudemonism shows that human striving tends to be in the direction of happiness. The sacrifice of life is treated as the highest demand of society.
In addition, this part represents socialism as an emanation of asceticism making an emphasis on the ascetic point of view, socialism, and asceticism. According to the author, religion is not only church but also philosophy. It is the product of social cooperation. Religion grows historically, changes and subjects social phenomena. Mises claims that Jesus was not any social reformer and “his teachings had no moral application to life on earth” (p. 416). Jesus’s instructions are meaningful only in the light of their immediate aim.
Special attention is paid to the cultural achievements of capitalism, the ethical-aesthetic condemnation of the profit-motive, the equality if incomes, and the duty of work as a socialistic foundation. It is explained that untruthfulness and inexactness of ethical Socialism characterize it as the philosophic product of a decay period. However, the author also reveals the alleged defects of capitalist ethics.
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The fifth part of the book is “Destructionism.” It highlights the motive powers of destructionism in terms of demagogy, the nature of destructionism, and the destructionism of the literati. Here, the author provides important arguments in favor of Socialism. Democracy is described as an incomplete phenomenon. This part of the book is also dedicated to the methods of destructionism focusing on the labor legislation, trade unions, taxation, inflation, compulsory social insurance, and others.
It is concluded that nothings is “more difficult than to a clear, historical perspective of a contemporary movement” (Mises, p. 511). It is necessary do describe in detail all transformation consequences. Individual judgment helps people decide whether the society is good or bad. In case the person wants to make the society exist, private ownership in the production means should be accepted.
The book is considered to be one of the most famous arguments for Mises’s economic calculations. The author shows the socialism impossibility defending capitalism against socialism and its criticism. Absence of alternatives makes it impossible to substitute an economic calculation for market prices with a centrally planned system. Mises addresses the economic inequality issues and argues the possibility of wealth existence for long periods. The author shows that a free market system does not provide any tendency to monopoly. He also characterizes reform measures including labor legislation and social security. Thus, the book may be treated as a veritable encyclopedia of a variety of interesting and vital topics in the sphere of social sciences. The book is a unique combination of penetrating insight and historical erudition.