Leading the Revival of Individualism & Self Reliance

Posts

Mises Knew That Capitalism is for Everyone

/in /by

“Liberal” and “capitalism” are not terms typically associated with each other today. This is largely because “liberal” is now so widely associated with progressivism, an ideology that espouses anti-capitalist beliefs.

Progressives falsely get the credit as being the philanthropists of the political world.  And to many, capitalism appears to be the antithesis of humanitarianism, crushing the people and subjecting them to the whims of the wealthy and entrepreneur class. But in reality, capitalism is the ideology for all. And it has been one of the only real tools against global poverty and stagnation.

What Is Capitalism?

In the introduction of his book Liberalism, Mises refers to capitalism as follows:

“A society in which liberal principles are put into effect is usually called a capitalist society, and the condition of that society, capitalism.”

As discussed previously, Mises explains that true and classical liberalism encompasses free markets, cosmopolitanism, and limited government intervention. But above all things, capitalism has made the world a better place by allowing innovation of all kinds to improve the lives of individual beings.

Because of capitalism, countless jobs have been created that have helped improve the lives of many. Thanks to the scientific improvements that have come as a result of free market capitalism, people are living longer. Diseases that once wreaked havoc are now eradicated. Likewise, technological advances have made the world a more convenient place to live while also allowing larger quantities of products to be made at lower costs and at quicker speeds.

Capitalism has allowed wealth to be created while also creating abundant value in the lives of all those who reap the benefits of innovation: which is every single actor involved in the market process, both consumer and creator.

Mises reflects on this phenomenon by saying:

“However, it requires only a moment’s reflection to realize that the fruits of all technological and industrial innovations make for an improvement in the satisfaction of the wants of the great masses.”

But it isn’t only those who subscribe to Austrian economics who understand how free market capitalism enriches the lives all those it impacts.

The band U2’s frontman Bono has never been shy about flaunting his philanthropic work in developing nations. In his political life, he has been a huge advocate for progressive policies. However, in 2013 he admitted that during the course of his work he learned that it was not foreign aid that helped lift individuals out of poverty.

When reflecting on his work in Africa, Bono said:

“Aid is just a stopgap. Commerce [and] entrepreneurial capitalism take more people out of poverty than aid. We need Africa to become an economic powerhouse.”

Unfortunately, there are still many who, for one reason or another, refuse to see the situation clearly. Instead of associating capitalism with flourishing nations, they equate it only with suffering and wealth inequality.

As Mises says:

“Nevertheless, as a result of the zealous propaganda of the anti-liberal parties, which twists the facts the other way round, people today have come to associate the ideas of liberalism and capitalism with the image of a world plunged into ever increasing misery and poverty.”

Liberalism Is for Everyone

One of the most commonly heard arguments against liberalism and capitalism is that it favors only a select few. But nothing could be further from the truth. As Mises is sure to point out:

“Liberalism is not a policy in the interest of any particular group, but a policy in the interest of all mankind. It is, therefore, incorrect to assert that the entrepreneurs and capitalists have any special interest in supporting liberalism.”

Also lost on many is the fact that each person is directly benefiting from the entrepreneur and the capitalist they condemn. No matter how much you pretend to hate consumerism almost everyone, save the extreme minimalist, has experienced brand loyalty to some extent. And with each innovation put forth by an entrepreneur willing to take risks, the consumer benefits. At the end of the day, everybody wins.

Mises writes:  

“It hardly occurs to anyone, when he forms his notion of a capitalist, that a social order organized on genuinely liberal principles is so constituted as to leave the entrepreneurs and the capitalists only one way to wealth, viz., by better providing their fellow men with what they themselves think they need.”

Giving one specific example of how individuals have benefitted from markets, Mises reminds the reader that without them, consumers would not have near limitless access to sugar.

“No reference is made to the fact that capitalism has placed a delectable luxury as well as a food, in the form of sugar, at the disposal of the great masses.”

But still, even though these types of examples are provided with frequency, many tend to blame capitalism for all the ills and inequalities of the world.

“The links in the chain of reasoning by which antiliberal demagogy succeeds in laying upon liberalism and capitalism the blame for all the excesses and evil consequences of antiliberal policies are as follows: One starts from the assumption that liberal principles aim at promoting the interests of the capitalists and entrepreneurs at the expense of the interests of the rest of the population and that liberalism is a policy that favors the rich over the poor.”

We have already seen that this is entirely untrue. Not only do consumers benefit from new products, but with each new market innovation comes the need for new jobs. The concept of the invisible hand directly touches on this matter. Even if the entrepreneur did not intend to do a great service to his community, he does so by creating consumer value, as well as jobs, in pursuit of profit.

Therefore, these liberal policies that allow more entrepreneurial creation with fewer government restrictions do not just benefit the entrepreneurs and the wealthy. Each individual who profits, either through employment or consumer satisfaction, is a beneficiary of capitalism.

Another problem with how capitalism is perceived by others is that many who sometimes claim to be advocates for the system, or lack thereof, are anything but.

“Then one observes that many entrepreneurs and capitalists, under certain conditions, advocate protective tariffs, and still others—the armaments manufacturers—support a policy of “national preparedness”; and, out of hand, one jumps to the conclusion that these must be “capitalistic” policies.”

But Mises explains:

“If many entrepreneurs today advocate protective tariffs, this is nothing more than the form that antiliberalism takes in their case.”

But even though there is so much evidence to the contrary, there are still anti-liberals who have made it their life’s mission to fight free market capitalism at every corner. But for this, the great Mises also has an explanation, one that will be explained in the next installment.

Mises Knew That the Division of Labor Promotes Peace

/in /by

War is absolutely devastating. There is no dancing around that fact. Not only is it responsible for the loss of countless human lives, it also leaves an immeasurable amount of physical and emotional destruction in its wake.

Opponents of war may decry war until they are blue in the face, begging those in power to consider its human costs. But these cries almost always fall upon deaf ears, as history has tragically demonstrated.

When it comes to politicians and war, the ends always justify the means, even when those means are human lives. And while human life is sacred, this truth alone has never been enough to convince global leaders to seek an agenda of peace rather than one of destruction.

But the market has taught us that incentives work. So instead of relying on a method that has not done much to deter war over the centuries, why not try an argument that plays to the interests of those in power?

As Mises explains in Liberalism, the most impactful argument against war comes in the form of a basic economic principle from which we each benefit: the division of labor.

He writes:

“How harmful war is to the development of human civilization becomes clearly apparent once one understands the advantages derived from the division of labor. The division of labor turns the self-sufficient individual into the ζῷον πολιτικόν (social animal) dependent on his fellow men, the social animal of which Aristotle spoke.”

The Division of Labor

The division of labor plays a huge role in each of our lives. Every time we go to the supermarket or the office, we are seeing the division of labor in action. Since each individual is gifted with different comparative advantages, it makes sense that each would specialize in the field where their contribution is most efficient and thus, most useful. This is why some of us are farmers while others are lawyers. And it is this system that has given us a market robust with choice.

As Mises explains:

“If a number of men work in cooperation in accordance with the principle of the division of labor, they will produce (other things being equal) not only as much as the sum of what they would have produced by working as self-sufficient individuals, but considerably more.”

If I really wanted to, I could spend my time being a jack-of-all-trades, attempting to supply all my basic necessities for myself. But this would make it almost impossible to master more than one specific trade. So instead of growing my own food, sewing my own clothes, or building my own home, I rely on others who have specialized in each of these fields. By doing so, I free up my time so that I am able to focus on my own unique set of skills and talents.

The division of labor is so important to civilization that Mises writes, “All human civilization is founded on this fact. It is by virtue of the division of labor that man is distinguished from the animals.” And while the division of labor may separate us from nature’s wild creatures, there is nothing more animalistic than war, as Mises also notes:

“War, carnage, destruction, and devastation we have in common with the predatory beasts of the jungle; constructive labor is our distinctively human characteristic.”

Reframing the Conversation

The argument in favor of human dignity may strike a blow to the hearts of many, but it has never been enough to deter the powerful and power-hungry from waging war. But one thing the powerful understand well is self-interest, and therein lies the key to an effective anti-war argument.

Mises writes:

“There are high-minded men who detest war because it brings death and suffering. However much one may admire their humanitarianism, their argument against war, in being based on philanthropic grounds, seems to lose much or all of its force when we consider the statements of the supporters and proponents of war.”

This is why Mises proposes reframing the debate. For the warmonger, unconcerned or at least unfazed by the human toll of war, conflict does have political benefits. For these warmongers, as Mises writes:

“War is the father of all things, said a Greek philosopher, and thousands have repeated it after him. Man degenerates in time of peace. Only war awakens in him slumbering talents and powers and imbues him with sublime ideals. If war were to be abolished, mankind would decay into indolence and stagnation.”

And while humanity may not rank high on the state’s hierarchy of values, trade, commerce, and luxurious foreign imports most certainly do. In truth, war is the destroyer of all things and the market is the creator. Since conflict interferes with the free exchange of goods and service among those on opposite sides, it serves only to hurt all parties involved.

Mises touches on this when he says:

“Self-sufficient farmers, who produce on their own farms everything that they and their families need, can make war on one another. But when a village divides into factions, with the smith on one side and the shoemaker on the other, one faction will have to suffer from want of shoes, and the other from want of tools and weapons.”

As has already been discussed, few people pursue isolated production (“autarky”), simply because it is not in our best interest to do so. Our lives would be filled with labor and toil with no room left for much else. To go back to such an existence in our modern world would be unthinkable. And yet war is always on the table, when that too should be seen as a completely unreasonable especially when considering our economic reliance on other countries.

We Need Each Other

There is a misconception that liberals are atomistic in their worldview. But liberals understand better than anyone that isolation would benefit nobody. Understanding the importance of the division of labor reminds us how much value others bring into each of our lives, even if indirectly. And it makes us realize that war should be avoided at all costs.

As Mises writes:

“In order to provide the family of an English worker with all it consumes and desires, every nation of the five continents cooperates. Tea for the breakfast table is provided by Japan or Ceylon, coffee by Brazil or Java, sugar by the West Indies, meat by Australia or Argentina, cotton from America or Egypt, hides for leather from India or Russia, and so on.”

And in our modern world, this economic interdependence is even more intense than in Mises’ day. The fact of the matter is that many, if not most, of our electronics are made abroad. As Americans we enjoy these products not really absorbing what “made in China” really means.

If we were to go to war with an electronic manufacturing giant like China, imports from that country into the United States would stop. Sure, we may not feel the sting immediately, but as soon as you look to replace your old smartphone, and find the new model to be no better yet twice as expensive, you would soon realize how much we rely on our foreign allies for products we use on a daily basis.

As Mises says:

“At the beginning of the nineteenth century by far the greater part of the inhabited world was still divided into a number of economic regions that were, by and large, self-sufficient…The development of a complex network of international economic relations is a product of nineteenth-century liberalism and capitalism. They alone made possible the extensive specialization of modern production with its concomitant improvement in technology.”

Peace Creates

War only destroys. Peace, on the other hand, creates. As a line from a song in the Broadway musical, Rent exclaims, “The opposite of war isn’t peace, it’s creation.”

Peace is what has allowed us to each specialize in one area, while benefiting from the division of labor. Peace is what has given the world access to the precious treasures of foreign nations. Can you imagine a life without spices imported from abroad or various food items? If not for peace and trade, the United States may have never tasted chocolate, and what a tragedy that would have been!

And this is something even politicians can appreciate.

Liveblogging Mises’ Economic Classic, “Liberalism”

/in /by

Having set a goal to read all the economic classics I never got around to, Mises’ Liberalism was high on my reading list. Utterly exhausted yet intrigued after liveblogging F.A. Hayek’s The Road to Serfdom, I was ready for a change of writing style while still exploring the roots of classical liberalism.

In the introduction of his work, Liberalism Mises beautifully explains a few things liberalism is and a few things it is not. Specifically, he touches on the role material welfare plays in classical liberalism.

Since many tend to associate free market liberalism with greed and an emphasis on material wealth, he explains that liberalism “does not promise men happiness and contentment, but only the most abundant possible satisfaction of all those desires that can be satisfied by the things of the outer world.”

Unlike other schools of economic thought that appeal solely to emotions when crafting policy, true liberalism seeks to abolish the causes of suffering, rather than the “suffering” itself. After all, the suffering is merely a symptom of a greater problem. Speaking to this Mises writes:

“All that social policy can do is to remove the outer causes of pain and suffering; it can further a system that feeds the hungry, clothes the naked, and houses the homeless. Happiness and contentment do not depend on food, clothing, and shelter, but, above all, on what a man cherishes within himself.”

And this is the true beauty of liberalism. While the government may shelter, clothe, and feed many through the welfare system, none of these items adequately help an individual truly pursue what makes them happy nor will it satisfy the longings of their soul.

A lack of clothing, food, and shelter are not solved by the welfare state’s existence. Likewise, an individual’s future will not be secured simply because the government gives them temporary comforts. For a person’s life to really be improved or successful, they must be free to pursue their own passions absent government intervention.

As Mises writes:

“We can only ask them to let us go our way undisturbed, just as we do not hinder them from getting to heaven in their own fashion. Let them shut themselves up in their cells, away from men and the world, in peace. The overwhelming majority of our contemporaries cannot understand the ascetic ideal. But once one rejects the principle of the ascetic conduct of life, one cannot reproach liberalism for aiming at outer well-being.”

Rationalism

Another misconception held by opponents of true liberalism is the focus on rational thinking.

As Mises points out:

“Liberalism is usually reproached, besides, for being rationalistic. It wants to regulate everything reasonably and thus fails to recognize that in human affairs great latitude is, and, indeed, must be, given to feelings and to the irrational generally—i.e., to what is unreasonable.”

Liberalism may always be rational, but human beings are not perfectly wise, and this is perfectly consistent with liberalism. As Mises says, “Liberalism does not say that men always act intelligently, but rather that they ought, in their own rightly understood interest, always to act intelligently.”

Many intelligent people smoke even though it is bad for their health. Mises comments on this phenomenon saying, “‘I want to do what is harmful for my health even though it may be unreasonable,’ hardly anybody would regard his conduct as commendable.”

And yet, policymakers do this all the time. They champion folly by protecting it through legislation. They promise a safety net for ill-conceived choices rather than letting natural consequences serve as a teacher.

But liberalism most certainly does not ignore the flaws inherent to the human race. Instead, it understands that human nature is what it is and individuals frequently act in ways antithetical to their own ends. But instead of merely sugarcoating it and making excuses for irrational thinking, liberalism asks individuals to take responsibility for their behavior.

By noting how we are frequently imprudent actors, we can correct and cater our choices to more desirable ends. Mises says, “Liberalism is not a completed doctrine or a fixed dogma. On the contrary: it is the application of the teachings of science to the social life of man.”

The Aim of Liberalism

Critics like to accuse classical liberals of only looking out for the interests of certain wealthy groups. However, this is simply not the case. When liberalism is examined through the lens of history we see that it was the only ideological school of thought that sought to lift all of mankind to higher standards of living.

Many will juxtapose classical liberalism with socialism claiming that the latter is the only ideology which really aims at helping all of mankind. But Mises knew better.

He writes:

“Historically, liberalism was the first political movement that aimed at promoting the welfare of all, not that of special groups. Liberalism is distinguished from socialism, which likewise professes to strive for the good of all, not by the goal at which it aims, but by the means that it chooses to attain that goal.”

Continuing with this theme he says:

“Liberalism is not a policy in the interest of any particular group, but a policy in the interest of all mankind. It is, therefore, incorrect to assert that the entrepreneurs and capitalists have any special interest in supporting liberalism.”

The real aim of liberalism then, is to improve the lives of all individuals by letting them create value by living their lives according to the dictates of their own conscience. Liberalism allows individuals to plan for their own lives, instead of letting the state do it in their stead.

Liberalism is the reason why mankind has had access to groundbreaking innovations that have increased life spans, reduced global poverty, and made our lives more convenient along the way.

As Mises writes:

“In order to appreciate what liberalism and capitalism have accomplished, one should compare conditions as they are at present with those of the Middle Ages or of the first centuries of the modern era.”

Anti-liberalism promotes policies that would cause society to regress toward more primitive conditions. It is ironic then that today’s anti-liberal “liberals” call themselves “progressive.”

liberalism, classical liberalism, individualism

It’s Time to Reclaim the Meaning of Liberalism

/in /by

Liveblogging F.A. Hayek’s The Road to Serfdom was a journey unlike many others. While it may sound like hyperbole, I can say with full certainty that I learned more from Hayek’s critically acclaimed book than I did from my undergrad economics courses.

Intrigued by the wisdom I gained and determined to keep momentum and excitement for reading economic texts, I made the decision to tackle another economic philosopher: Ludwig von Mises.

Human Action may have been the most commonly chosen work of Mises to jump right into, I decided instead on another one of his classics. As someone who tends to to take a more radical view of classical liberalism than the great F.A. Hayek, I decided that in order to fully understand Mises’ take on the matter, I would have to go to the source. And this is what led me to the decision to tackle Liberalism.

To anyone familiar only with the modern meaning of the term liberalism, they may think it synonymous with “progressive.” Yet, nothing could be farther from the truth. Liberalism has been hijacked in many capacities and distorted to mean something contrary to its origins. 19th century liberalism, the kind proclaimed by philosophers like Adam Smith, Frederic Bastiat, and Ludwig von Mises is about the freedom to live without government constraint.

Today, it is typically associated with those who advocate for government intervention in almost every aspect of their lives. But the time has come to reclaim this term and restore it to its original meaning.

Reclaiming Liberalism

While we have experienced varying degrees throughout history, true liberalism has actually never existed. Mises recognized this in the introduction of his book when he says:

“Only with some exaggeration can one say that the world once lived through a liberal era. Liberalism was never permitted to come to full fruition.”

And yet, even with these lighter versions of liberalism, the world was able to achieve more for humanity than any other construct known to man. Thanks to liberalism, a human was no longer bound to the conditions of his birth. Anyone with a dream, talent, and perseverance was able to pursue his own happiness and create value as he saw fit.

This phenomenon that allowed mankind to be in control of their own fate also allowed men to create in ways that were not thought of before. And because of these market innovations, infant mortality rates decreased, material wealth increased, and education became accessible to more people.

Liberalism broke the chains that had bound mankind to dependency for centuries. As Mises says thanks to the spread of liberal ideas, “The barriers that had in earlier ages separated lords and serfs had fallen.”

But instead of liberalism being associated with self-sufficiency and the ability of human beings to live free from arbitrary state regulation, liberalism has now been associated with those who call for extreme government intervention.

In fact, those who have now adopted the title of “liberal” are anything but. Instead of advocating for a market that organically and spontaneously functions based on demand, these modern “liberals” call for governments to “level the playing field.”

It is for this reason that reading Mises’ Liberalism today is so important. Before the term “liberal” can be properly understood, it needs to be reexamined by studying its roots. Liberalism changed the world, but to understand how it was able to do so, we need to ensure that its rightful definition is restored.

Write for CFI