Tuesday, 12 April 2016

So, what’s socialism Bernie? Part 2: Class warfare against harmony of interests


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New voters are flocking to old-school anti-capitalists. But do they really know what they’re being asked to imbibe? And what the windbags demand they oppose? (And why does socialism appeal to so many?)

Explaining it to an Argentine audience in 1959, Ludwig Von Mises explained that the right way to begin understanding  socialism versus capitalism is to understand it as slavery versus freedom – and class warfare against a natural harmony of interests.

Here’s the important point (first made by Adam Smith):

In the market economy, everyone serves his fellow citizens by serving himself. This is what the liberal authors of the eighteenth century had in mind when they spoke of the harmony of the rightly understood interests of all groups and of all individuals of the population. And it was this doctrine of the harmony of interests which the socialists opposed. They spoke of an “irreconcilable conflict of interests” between various groups.

Yet when Karl Marx set out to give examples of this alleged “irreconcilable conflict of interests,” he could only do it by drawing examples from pre-capitalist and non-capitalist societies:

In precapitalistic ages, society was divided into hereditary status groups, which in India are called “castes.” In a status society a man was not, for example, born a Frenchman; he was born as a member of the French aristocracy or of the French bourgeoisie or of the French peasantry. In the greater part of the Middle Ages, he was simply a serf. And serfdom, in France, did not disappear completely until after the American Revolution. In other parts of Europe it disappeared even later.

But the worst form in which serfdom existed—and continued to exist even after the abolition of slavery—was in the British colonies abroad. The individual inherited his status from his parents, and he retained it throughout his life. He transferred it to his children. Every group had privileges and disadvantages. The highest groups had only privileges, the lowest groups only disadvantages. And there was no way a man could rid himself of the legal disadvantages placed upon him by his status other than by fighting a political struggle against the other classes. Under such conditions, you could say that there was an “irreconcilable conflict of interests between the slave owners and the slaves,” because what the slaves wanted was to be rid of their slavery, of their quality of being slaves. This meant a loss, however, for the owners. Therefore, there is no question that there had to be this irreconcilable conflict of interests between the members of the various classes.

One must not forget that in those ages—in which the status societies were predominant in Europe, as well as in the colonies which the Europeans later founded in America—people did not consider themselves to be connected in any special way with the other classes of their own nation; they felt much more at one with the members of their own class in other countries. A French aristocrat did not look upon lower class Frenchmen as his fellow citizens; they were the “rabble,” which he did not like. He regarded only the aristocrats of other countries—those of Italy, England, and Germany, for instance, as his equals.

The most visible effect of this state of affairs was the fact that the aristocrats all over Europe used the same language. And this language was French, a language which was not understood, outside France, by other groups of the population. The middle classes—the bourgeoisie—had their own language, while the lower classes—the peasantry—used local dialects which very often were not understood by other groups of the population. The same was true with regard to the way people dressed. When you travelled in 1750 from one country to another, you found that the upper classes, the aristocrats, were usually dressed in the same way all over Europe, and you found that the lower classes dressed differently. When you met someone in the street, you could see immediately—from the way he dressed—to which class, to which status he belonged.

If you need to find real class warfare in other words, you need to go to places other than societies that are actually capitalist.

The differences within a capitalist society are not the same as those in a socialist society. In the Middle Ages—and in many countries even much later—a family could be an aristocrat family and possess great wealth, it could be a family of dukes for hundreds and hundreds of years, whatever its qualities, its talents, its character or morals. But, under modem capitalistic conditions, there is what has been technically described by sociologists as “social mobility.” The operating principle of this social mobility, according to the Italian sociologist and economist Vilfredo Pareto, is “la circulation des élites” (the circulation of the elites). This means that there are always people who are at the top of the social ladder, who are wealthy, who are politically important, but these people—these elites—are continually changing.

This is perfectly true in a capitalist society. It was not true for a precapitalistic status society. The families who were considered the great aristocratic families of Europe are still the same families today or, let us say, they are the descendants of families that were foremost in Europe, 800 or 1000 or more years ago. The Capetians of Bourbon—who for a very long time ruled here in Argentina—were a royal house as early as the tenth century. These kings ruled the territory which is known now as the Ile-de-France, extending their reign from generation to generation. But in a capitalist society, there is continuous mobility—poor people becoming rich and the descendants of those rich people losing their wealth and becoming poor.

Today I saw in a bookshop in one of the central streets of Buenos Aires the biography of a businessman who was so eminent, so important, so characteristic of big business in the nineteenth century in Europe that, even in this country, far away from Europe, the bookshop carried copies of his biography. I happen to know the grandson of this man. He has the same name his grandfather had, and he still has a right to wear the title of nobility which his grandfather—who started as a blacksmith—had received eighty years ago. Today this grandson is a poor photographer in New York City.

Other people, who were poor at the time this photographer’s grandfather became one of Europe’s biggest industrialists, are today captains of industry. Everyone is free to change his status. That is the difference between the status system and the capitalist system of economic freedom, in which everyone has only himself to blame if he does not reach the position he wants to reach.

The most famous industrialist of the twentieth century up to now is Henry Ford. He started with a few hundred dollars which he had borrowed from his friends, and within a very short time he developed one of the most important big business firms of the world. And one can discover hundreds of such cases every day.

Every day, the New York Times prints long notices of people who have died. If you read these biographies, you may come across the name of an eminent businessman, who started out as a seller of newspapers at street corners in New York. Or he started as an office boy, and at his death he was the president of the same banking firm where he started on the lowest rung of the ladder. Of course, not all people can attain these positions. Not all people want to attain them. There are people who are more interested in other problems and, for these people, other ways are open today which were not open in the days of feudal society, in the ages of the status society.

‘Status’ in a true capitalist society is earned – earned by serving one’s fellow citizens by which one serves oneself. This harmony of interests between free men and women becomes in the socialist commonwealth a disharmony  – inevitably setting the interests of citizens against each other.

The issue of slavery versus freedom explains why socialism is fundamentally immoral.

The issue of class warfare against harmony of interests explains the root of its impracticality. And on this, more later …

(To be continued)


  • “When you say that government should outlaw some economic inequality in practice, you’ve already endorsed all-out Communism or socialism, in principle."
    Long Live Economic Inequality! – Michael Hurd, LIVING RESOURCES CENTER
  • “As I said here recently, no man is an island and neither should we be. In a free society, we each gain an incalculable boon from the existence of others. … In a free society, all the many benefits to be gained from others are non-sacrificial ones. Advancement, wealth-production, love and friendship... all derive not from plunder and conquest, but by cooperation and voluntary exchange.”
    Cue Card Libertarianism - Harmony of interests – NOT PC
  • “This is the big lesson that economics can give to philosophers: that the world is not made up of the ‘fundamental antagonisms’ between people that some philosophers find everywhere... 
        “What economics can teach philosophers is that other human beings need neither be a burden nor a threat, neither a hell nor a horror but a blessing.
        “This is the greatest lesson economics can teach: that in a society making peaceful cooperation possible we each gain from the existence of others.
    ”What a great story to tell!”
    CUE CARD ECONOMICS: Economic Harmonies, and The Miracle of Breakfast – NOT PC
  • “’Did it ever occur to you... that there is no conflict of interests among men, neither in business nor in trade nor in their most personal desires — if they omit the irrational from their view of the possible and destruction from their view of the practical? There is no conflict, and no call for sacrifice, and no man is a threat to the aims of another — if men understand that reality is an absolute not to be faked, that lies do not work, that the unearned cannot be had, that the undeserved cannot be given, that the destruction of a value which is, will not bring value to that which isn’t.’”
    Some thoughts on the harmony of men's interests – Ayn Rand, NOT PC
  • “Economic progress is the leading manifestation of yet another major institutional feature of capitalism: the harmony of the rational self-interests of all men, in which the success of each promotes the well-being of all.
        The basis of capitalism’s harmony of interests is the combination of freedom and rational self-interest operating in the context of the division of labour, which is itself their institutional creation.”
    Quote of the Day: The leading cause of economic progress … – George Reisman, NOT PC
  • “’Where, then, do we stand? As we know, socialism is calculational chaos. Rational appraisement and allocation are eternally elusive. It is a gigantic negative-sum game in which each player quickly grabs a piece of the pie, and all the while the pie shrinks before the players' eyes. The welfare/warfare state, the interventionist state, is no improvement. Each intervention begets yet another. Bureaucracy is the only "industry" guaranteed to experience growth. Each new regulation taxes the private sector, relentlessly shifting resources out of the hands of the productive, and into the hands of the unproductive. Capitalism is the only positive-sum game in town.
        “’In short, the case against capitalism is indefensible. It is smoke and mirrors. It is rooted in envy and malice. It is fueled by a stunning ignorance of sound economics, which is part and parcel of a broader rejection of reason itself. These anti-capitalists, these New Barbarians will — if they get their way — finally destroy not only capitalism, but also education, science, technology, literature, art, individual rights, prosperity, in fact, civilisation itself...’”
    Anti-capitalist barbarianism – Larry Sechrest, NOT PC


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