5-11-2016 by Ludwig von Mises
The progressive intellectual looks upon capitalism as the most ghastly of all evils. Mankind, he contends, lived rather happily in the good old days. But then, as a British historian said, the Industrial Revolution “fell like a war or a plague” on the peoples. The “bourgeoisie” converted plenty into scarcity. A few tycoons enjoy all luxuries. But, as Marx himself observed, the worker “sinks deeper and deeper” because the bourgeoisie “is incompetent to assure an existence to its slave within his slavery.”
Still worse are the intellectual and moral effects of the capitalist mode of production. There is but one means, the progressive believes, to free mankind from the misery and degradation produced by laissez-faire and rugged individualism, viz., to adopt central planning, the system with which the Russians are successfully experimenting. It is true that the results obtained by the Soviets are not yet fully satisfactory. But these shortcomings were caused only by the peculiar conditions of Russia. The West will avoid the pitfalls of the Russians and will realize the Welfare State without the merely accidental features that disfigured it in Russia and in Hitler Germany.
Such is the philosophy taught at most present-day schools and propagated by novels and plays. It is this doctrine that guides the actions of almost all contemporary governments. The American “progressive” feels ashamed of what he calls the social backwardness of his country. He considers it a duty of the United States to subsidize foreign socialist governments lavishly in order to enable them to go on with their ruinous socialist ventures. In his eyes the real enemy of the American people is Big Business, that is, the enterprises which provide the American common man with the highest standard of living ever reached in history. He hails every step forward on the road toward all-round control of business as progress. He smears all those who hint at the pernicious effects of waste, deficit spending and capital decumulation as reactionaries, economic royalists and Fascists. He never mentions the new or improved products which business almost every year makes accessible to the masses. But he goes into raptures about the rather questionable achievements of the Tennessee Valley Authority, the deficit of which is made good out of taxes collected from Big Business.
The most infatuated expositors of this ideology are to be found in the university departments of history, political science, sociology and literature. The professors of these departments enjoy the advantage, in referring to economic issues, that they are talking about a subject with which they are not familiar at all. This is especially flagrant in the case of historians. The way in which the history of the last two hundred years has been treated is really a scandal. Only recently eminent scholars have begun to unmask the crude fallacies of Lujo Brentano, the Webbs, the Hammonds, Tawney, Arnold Toynbee, Elie Halévy, the Beards and other authors. At the last meeting of the Mont Pèlerin Society the occupant of the chair of economic history at the London School of Economics, Professor T. S. Ashton, presented a paper in which he pointed out that the commonly accepted views of the economic developments of the nineteenth century “are not informed by any glimmering of economic sense.” The historians tortured the facts when they concocted the legend that “the dominant form of organization under industrial capitalism, the factory, arose out of the demands, not of ordinary people, but of the rich and the rulers.”
The truth is that the characteristic feature of capitalism was and is mass production for the needs of the masses. Whenever the factory with its methods of mass production by means of power-driven machines invaded a new branch of production, it started with cheap goods for the broad masses. The factories turned to the production of more refined and therefore more expensive merchandise only at a later stage, when the unprecedented improvement which they had caused in the masses’ standard of living made it reasonable to apply the methods of mass production to better articles as well. Big business caters to the needs of the many; it depends exclusively upon mass consumption. In his capacity as consumer the common man is the sovereign whose buying or abstention from buying decides the fate of entrepreneurial activities. The “proletarian” is the much-talked-about customer who is always right.
The most popular method of deprecating capitalism is to make it responsible for every condition which is considered unsatisfactory. Tuberculosis, and, until a few years ago, syphilis, were called diseases of capitalism. The destitution of scores of millions in countries like India, which did not adopt capitalism, is blamed on capitalism. It is a sad fact that people become debilitated in old age and finally die. But this happens not only to salesmen but also to employers, and it was no less tragic in the pre-capitalistic ages than it is under capitalism. Prostitution, dipsomania and drug addiction are all called capitalist vices.
Whenever people discuss the alleged misdeeds of the capitalists, a learned professor or a sophisticated artist refers to the high income of movie stars, boxers and wrestlers. But who contributes more to these incomes, the millionaires or the “proletarians”?
It must be admitted that the worst excesses in this propaganda are not committed by professors of economics but by the teachers of the other social sciences, by journalists, writers and sometimes even by ministers. But the source from which all the slogans of this hectic fanaticism spring is the teachings handed down by the “institutionalist” school of economic policies. All these dogmas and fallacies can be ultimately traced back to allegedly economic doctrines.
[Originally Titled “How Modern History Is Taught,” excerpted from Planning for Freedom: and Twelve other Essays and Addresses]