By: Dr. Štefan Šumah
On the thirtieth anniversary of the death of one of the most influential minds of the twentieth century, Ludwig von Mises, a brilliant economist, and a staunch advocate of the free market, it is important to emphasise his commitment to various forms of freedom (personal and economic), which can only be achieved through limiting the role of government. While he did not deny the role of government in society, he restricted it to functions such as safeguarding life and property, enforcing contracts, and protecting against fraud.
Within the Austrian School of Economics, he vividly demonstrated the irrationality of central planning, as without market prices and entrepreneurial competition for production factors, there is no way to determine if productive resources are efficiently utilised for maximum valued benefits and minimal production costs. For him, socialist central planning, with the abolition of private property, elimination of market competition, and price regulation, meant the end of economic rationality. Together with Hayek, they already proved in the 1920s that socialism does not work, and that only the free market and competition bring about economic improvement, a wide range of freedoms, and the potential for peace and cultural progress. If the market economy works, why do we still witness “intellectuals” rebelling against reason in the twentieth and twenty-first centuries.
His logical reasoning is best exemplified in the critique of the rebellion of “intellectuals” against reason. Why is there still such an affinity among intellectuals for socialism, even though it is clear that it does not work? According to him, modern culture still contains cultural remnants of the ancient world, where there was hostility toward work and money. In that era, being a refined and sophisticated freethinker or intellectual meant that certain aspects of everyday life, including trade, barter, lending and borrowing money, and labour – the tasks of intermediaries, slaves, or servants – were considered less valuable. This continued into the Middle Ages, where scholars and artists were under the patronage of nobility or the church and could pursue their professions for their own sake, elevated above the cultural coarseness of the common man. With the advent of the market economy, they too had to start taking care of themselves, which led to resentment. The less sophisticated, less cultured, even uneducated individuals began to earn much more than them and consequently achieve higher social status than the cultural elite. This caused intellectuals to dream of a better world, a more cultured social order, and different social relationships from those supported and rewarded by the market. They became social engineers who crafted visions and planned societies that would be more to their liking, where they would be esteemed and hold positions of power and recognition. “Intellectuals” thus became advocates and planners of wonderful socialist ideas. In essence, it is (according to Mises) a revolt of the “intellectuals” against the market economy because it does not recognise status and privileges, and there are no guarantees in the market. Every individual must earn and maintain their social and economic position with one single means: by supplying products or services to other members of society more successfully than the competition. Consequently, those whose social status is threatened by the competition of others seek to exploit the government to restrict free competition, leading to interventionism or socialism.
Mises was indeed considered a contentious yet principled individual who believed that people should not merely be passive observers of society but should contribute to it. In the intellectual battle of ideas in the twentieth century, he made one of the most significant intellectual contributions by advocating for individual freedom, economic liberty, and a free-market orientation.