Von Mises on Socialism
We have looked at some quotes from President Reagan about freedom and socialism. Ludwig Von Mises, namesake of the Ludwig von Mises Institute, is known as the father of the new or modern Austrian School of Economics. One of his students and contemporaries, F. A. Hayek, won the 1974 Nobel Prize in economics. Von Mises wrote one of the definitive economic works on socialism. Here are a few quotes:
Capitalism has raised the standard of life among the masses to a level which our ancestors could not have imagined. Interventionism and efforts to introduce Socialism have been working now for some decades to shatter the foundations of the world economic system. We stand on the brink of a precipice which threatens to engulf our civilization. Whether civilized humanity will perish forever or whether the catastrophe will be averted at the eleventh hour and the only possible way of salvation retraced—by which we mean the rebuilding of a society based on the unreserved recognition of private property in the means of production—is a question which concerns the generation destined to act in the coming decades, for it is the ideas behind their actions that will decide it.
To the masses the catchwords of Socialism sound enticing and the people impetuously desire Socialism because in their infatuation they expect it to bring full salvation and satisfy their longing for revenge. And so they will continue to work for Socialism, helping thereby to bring about the inevitable decline of the civilization which the nations of the West have taken thousands of years to build up. And so we must inevitably drift on to chaos and misery, the darkness of barbarism and annihilation.
Our whole civilization rests on the fact that men have always succeeded in beating off the attack of the re-distributors. But the idea of re-distribution enjoys great popularity still, even in industrial countries. If we wish to save the world from barbarism we have to conquer Socialism, but we cannot thrust it carelessly aside.
It is the aim of Socialism to transfer the means of production from private ownership to the ownership of organized society, to the State. The socialistic State owns all material factors of production and thus directs it. This transfer need not be carried out with due observance of the formalities elaborated for property transfers according to the law... Limitation of the rights of owners as well as formal transference is a means of socialization. If the State takes the power of disposal from the owner piecemeal, by extending its influence over production; if its power to determine what direction production shall take and what kind of production there shall be, is increased, then the owner is left at last with nothing except the empty name of ownership, and property has passed into the hands of the State.
I know only too well how hopeless it seems to convince impassioned supporters of the Socialist Idea by logical demonstration that their views are preposterous and absurd. I know too well that they do not want to hear, to see, or above all to think, and that they are open to no argument.
Society lives and acts only in individuals; it is nothing more than a certain attitude on their part. Everyone carries a part of society on his shoulders; no one is relieved of his share of responsibility by others. And no one can find a safe way out for himself if society is sweeping towards destruction. Therefore everyone, in his own interests, must thrust himself vigorously into the intellectual battle. None can stand aside with unconcern; the interests of everyone hang on the result. Whether he chooses or not, every man is drawn into the great historical struggle, the decisive battle into which our epoch has plunged us.
Whether society shall continue to evolve or whether it shall decay lies—in the sense in which causal determination of all events permits us to speak of freewill—in the hand of man. Whether Society is good or bad may be a matter of individual judgment; but whoever prefers life to death, happiness to suffering, well-being to misery, must accept society. And whoever desires that society should exist and develop must also accept, without limitation or reserve, private ownership in the means of production.
To recognize the social utility of private property one must
first be convinced of the perniciousness of every other system. That this is
the substance of the great fight between Capitalism and Socialism becomes
evident when we realize that the same process is taking place in other spheres
of moral life.
Ludwig Von Mises,
1932.
Von Mises lacks President Reagan's eloquence. But by way of review and comparison, here are a few of President Reagan's quotes:
Ronald Reagan on Socialism
1964 Goldwater Speech: "Regardless of their sincerity, their humanitarian motives, those who would sacrifice freedom for security have embarked on this downward path. Plutarch warned, "The real destroyer of the liberties of the people is he who spreads among them bounties, donations and benefits." The Founding Fathers knew a government can't control the economy without controlling people. And they knew when a government sets out to do that, it must use force and coercion to achieve its purpose...If all of this seems like a great deal of trouble, think what's at stake...There can be no security anywhere in the free world if there is no fiscal and economic stability within the United States. Those who ask us to trade our freedom for the soup kitchen of the welfare state are architects of a policy of accommodation... We will preserve for our children this, the last best hope of man on earth, or we will sentence them to take the first step into a thousand years of darkness."
1976 Restoring America: "The fact is, we'll never build a lasting economic recovery by going deeper into debt at a faster rate than we ever have before...There's only one cause for inflation, government spending more than government takes in...Ah, but they tell us, 80 percent of the budget is uncontrollable. It's fixed by laws passed by Congress...
1981 First Inaugural: "But great as our tax burden is, it has not kept pace with public spending. For decades, we have piled deficit upon deficit, mortgaging our future and our children's future for the temporary convenience of the present. To continue this long trend is to guarantee tremendous social, cultural, political, and economic upheavals...It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government...We are not, as some would have us believe, doomed to an inevitable decline...I do believe in a fate that will fall on us if we do nothing....
1985 Second Inaugural: "We must never again abuse the trust of working men and women, by sending their earnings on a futile chase after the spiraling demands of a bloated Federal Establishment. You elected us in 1980 to end this prescription for disaster, and I don't believe you reelected us in 1984 to reverse course...Beyond that, we must take further steps to permanently control Government's power to tax and spend. We must act now to protect future generations from Government's desire to spend its citizens' money and tax them into servitude when the bills come due. America must remain freedom's staunchest friend, for freedom is our best ally. And it is the world's only hope, to conquer poverty and preserve peace."
The Record
Before asking, "where to from here," it is worth knowing where the money went:
Jim Puplava tied together a number of complex economic factors in his series that discusses the possibility of a Perfect Financial Storm that could be headed our way. The component parts that could affect Jim's perfect storm scenario are tracked and archived. No one can predict the future; understanding the past is tough enough. But if you step back far enough, these three charts provide a bird's eye view of what socialism has done to our economy over the last 50 years. I would suggest that when all of the various complex factors that play significant roles in the Perfect Financial Storm are reduced to the lowest common denominator that socialism in the United States and its obligatory loss of individual freedom is the common denominator. I think a little common sense and these three charts prove it.
Socialism is the economic equivalent of cancer and it is killing the United States. Politicians seeking re-election are the cause and the sole means of spread. It is a common practice when people want to describe a high degree of difficulty in accomplishing a task to compare it to another task, "..like getting an act of Congress." As difficult as it may be to change a law, history says that repealing a law takes "difficult" to the next level. We have already drunk the Kool-aid. Social Security has been law for almost seventy years and the Medicare Act turns 39 this year. It is worth reviewing the quotes above. They can be summarized in five words, "Our future is at stake."
Future articles in this series are going to discuss the conflict between capitalism and socialism in an effort to understand the consequences that we might expect if socialism is not defeated. The graphs above clearly indicate that socialism has the upper hand; God forbid that this is a stranglehold. At the present time, socialism is cast in concrete by acts of Congress. All that is required for the evil of socialism to triumph is for good men to do nothing. Understanding how we came to this point, understanding who should be held accountable and how, understanding who to trust and understanding who can get us out of this mess and how, could and should prove to be instrumental in dealing with the crises that appear to be headed our way.
I would like to thank Financial Sense Online and the Puplavas for allowing me to present these ideas on their website. These are controversial ideas with potentially far reaching consequences that could affect many people. There are a number of things that I want to cover and can be expected to get wrong. My crystal ball is no better than yours and my understanding of past events may be wrong or the historic records used may be incorrect. I do not offer these as excuses, but rather as a warning to use your own judgment as to whether you find this series credible or not. But please understand this, if the charts above accurately reflect America's balance sheet, and if I am even remotely close to being in the ballpark, we have our work cut out for us if we are to avoid or weather the storm. I would also like to thank Mike Hodges at the Grandfather's Economic Report for the use of his charts and I would like to thank the folks at Market Observations for the use of their charts.