Wednesday, March 20, 2013

A Liberalism of Convenience

A Liberalism of Convenience:
The Strange Case of Ludwig [von] Mises

by Carl Stoll

Ludwig von Mises says that the government can do no right, i.e., every government  intervention in the market must reduce the degree of competition. However he provides no argument to warrant this conclusion. Furthermore, he chides an author who proposes such a thing. Ludwig von Mises is on record on several occasions throughout his career as opposing government  intervention to increase competitiveness of markets.

Von Mises asserts that for a market to be competitive there is no need to supervise the competitors to make sure that they abide by the rules of fair competition.  The same passage can be construed to mean that competitiveness is not an important attribute of a market.[1]   Von Mises furthermore states that only monopolies created by the state are bad. Monopolies created by private parties are unobjectionable. All in all, von Mises persistently defies the ethos  of classical liberal economics. The entire concept of fair play and abiding by the rules is beyond his comprehension. He’s not a liberal. Instead he's an opponent of the state. But he does not justify his opposition to the state on moral grounds.  He's against state intervention even when it yields only benefits and no drawbacks. More precisely he refuses to consider, he rules out a priori  the possibility of government intervention increasing competitiveness or rendering any other benefit.

He requires compliance with  the rules of competitiveness  only when these rules hamper the action of the state. When the rules limit the freedom of private parties, he's against the rules. I suspect that somewhere von Mises explains that not just ANY private party is eligible, but only those who fulfil certain conditions  ….(you can imagine the rest).

Von Mises is a mere opportunist. His attachment to classical economics is mere show. He is an aristocrat who despises plebeians.  In the early 20th century a wave of statism swept over the world, assuming various disguises: Fascism, Communism, various sorts of authoritarian régime. Von Mises was not opposed to Fascism as such. On the contrary he welcomed Fascism in Austria when Fascism was useful in oppressing the Austrian working classes. He opposed Fascism only to the extent that Fascism hampered the free market. His specific argument was that when trade unions are so strong, the free market can no longer function!  Accordingly the  moment the free market cannot function there is no longer any reason to oppose Fascism.

As a matter of fact, I read somewhere that von Mises was an economic adviser, perhaps even the principal economic adviser, of the Austro-Fascist dictator Engelbert Dollfuss, who ruled from 1930 until 1934. However I have not seen any record of the advice he gave Dollfuss, or any account of Dollfuss’ economic policy, for that matter.   In general terms, Dollfuss tended toward the typical Fascist thing, which was opposed to international commerce, in favor of high customs duties. However that need not mean that  von Mises encouraged those tendencies. As a matter of fact I doubt it very much. But I will abstain from all speculation until I have been able to examine this period of von Mises’ career more carefully.  

Furthermore, when I state that von Mises associated with Fascists, I must stress the fact that Austro-Fascism was a fairly benign strain of authoritarianism, with a strong Catholic streak.[2] Dollfuss established many concentration camps in Austria, but there was no forced labor and there is no record of anyone having ever been killed or mistreated in the Austro-Fascist concentration camps. Thus there can be no question of associating von Mises with a terror régime like that of the Nazis or with Franco’s Spain.. Nonetheless I'm sure von Mises grunted with satisfaction in 1934 when he heard that the Social Democratic insurgency had been crushed.

[1] Von Mises wavers back and forth between two arguments:  in some places he justifies the market  on utilitarian grounds – I hold these statements to be mere lip service to liberalism, since they are expounded in the abstract. However when the time comes when he should apply utilitarian standards to denounce anti-competitive behavior,  he refuses to do so and instead chuckles indulgently on seeing injustice done. “Boys will be boys!” he seems to imply.

[2]  On the other hand, a neighboring country, Croatia, was likewise governed a few years later, by a  Catholic oriented authoritarian régime that was brutal eyond belief.: Ante Pavelic killed almost  one million civilians (mostly Serbs, Jews and Gypsies) in his concentration camps run by renegade Franciscan monks.  

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