Ludwig von Mises: The Critical Surgeon Against The Anti-Capitalist Mentality

By Victor Ji //

If you have spent time in most mainstream universities you would probably notice that many hold a hostile attitude toward the social system we spend our everyday life in: capitalism. If we take one step back and examine the origin of such a popular sentiment of resentment, we are sure to notice more subtleties than the simple call for equity, and no one does this job better than the economist and philosopher Ludwig Von Mises.

Ludwig Von Mises is perhaps the most famous economist of the Austrian school, who, when compared with regular economists, has a much more philosophical twist. Mises is known for his integration of Praxeology, the idea of explaining human behavior fundamentally as purposive rational behaviors, into the observation and analysis of socio-economic behavior of humankind.  In other words, he takes a philosophical approach rather than the popular quantitative method. 

In the following essay, we will attempt to understand the way in which Mises dives into the core of what he calls “anti-capitalist mentality” and how he explains its origin and composition.

To understand why and how Mises will be approaching the subject of anti-capitalist mentality, we must first understand his stance on capitalism in general. In short, Mises is pro-capitalism with a sound economic-political theory in mind rather than being a plain instinctive conservative. The core Misesan proposition for capitalism is embedded in the idea of “the sovereign consumer.” The philosophy students in general should be familiar with Adam Smith’s theory of the division of labor: we know that under the core of capitalistic production arises from the very fact of production interdependence henceforth of the division of labor. Under the division of labor, each of us is able to specialize in a task that we are best at rather than indulging in a whole series of basic planting and foraging in order to provide for our biological sustenance. For if we only spend our productive hours in basic sustenance-maintaining activities, we would not have any surplus productivity as a society and civilization to advance ourselves. However, this division of the labor system is not without its imperfections. The most common criticism that the division of labor receives is that it dehumanizes the laboring man, making them something akin to a human robotic arm, repeating the same tedious task day after day even though (in modern times) they might be the suit-wearing man living in a high skyscraper. 

Nonetheless, being a unconventional thinker, Mises approaches the issue from the opposite side: the division of labor, if we look beyond the process of production and onto the bigger picture, we notice that what determine the output of production is not the baseless whim of the capitalists but rather the demand of the consumers.  Compared with the medieval times where beyond the basic sustenance of the subjects, whatever remaining productivity of the society exists(as a result of the division of labor) goes into the fancy imagination of the aristocrats (the remnants of which still stand tall upon the land of Europe today, for instance the palaces such as Versailles), in the modern capitalist age for the first time in human history the wishes of the common folks actually matter. In other words, the production process, however grueling it might be at face value, serves the needs and desires of the common consumers, that is me and you. The profit system, no matter how many denounce it as being a symbol of greed and materialistic corruption, actually is a common measure of how well can each organized production unit (in the form of a corporation) in fulfilling the wants of the society in the cheapest and most efficient way. 

Then one might wonder, if everything about the capitalist production process is so awesome then why do we constantly see polemics against it in all venues of academic and social life? Mises explains it in two main aspects: the collapse of status-society and the forthcoming of frustrated personal ambition in the face of objective economic choice, and the divorce of intellectual elites from the economic elites in social life.

The collapse of the status society comes with the advancement of capitalism. One of the main criticisms that the intellectuals have leveraged against capitalism is that it dissolved the organic bonds of society (one of cooperation) into amorphous masses (meaning of competition), and subsequently transformed our age into one where money, not honor, reigns supreme. However, if we were to trace one step back in logic, money reigns means demand reigns, and whose demand is that? Was it the demand (or to better phrase it order) from the kings and queens and nobles like it was during the medieval times? No! The supreme status of money merely represents that the demand of the people as a collective stands above other narrower forms of human will like an edict of the ruling monarch. With the coming of capitalism, the status  society collapses naturally; people are no longer sorted according to their birth status but how much they can provide for their human brethrens in the production process.

However there is one drawback from the collapse of such status based orders—and that is the curse of social mobility. In social discussions we typically think of social mobility as a purely good thing (well, at least from the macro-quantitative scales) but Mises invites us to consider the hidden side of social mobility more closely. In capitalistic society, most terms are merit-based; if you are ambitious and capable and work hard you are almost guaranteed to move forward in life. Nonetheless, the resources are not infinite. If one person moves forward and is propelled to occupy a higher position in the social hierarchy, then we are bound to see that someone else has 1) failed to get that particular position in contention or 2) been forced to swallow his defeat. Mises thinks that we are all at the end of the day concerned with the self, that means when we realize that we have screwed up and are not able to get ahead, resentment naturally grows. For many, such resentment easily multiplies in degrees and magnitude and eventually turns into the total denunciation of the very system that offered him the potential to be socially mobile yet failed to realize such upward mobility in reality. Social mobility means mobility downward just as much as it means mobility upwards, and even if there is no such economic downward movement on a micro level, the foes who lost the competition will still foster jealousy—one of the primal human sins. This, reasons Mises, represents one form of human resentment toward the system itself—the origin of anti-capitalist mentality as such. 

The second chief reason for the over-blown resentment toward capitalism, reasons Mises, is from the divorced social intercourse between the intellectual elites and economic elites. In a modern society undergirded with division of labor, the directing group of the exchange and trade became a separate character from the directing group of the moral-epistemological rule. The good is no longer solely represented by a ruling class who is thought to embody all the virtues. In the modern age the intellectuals are supposed the guardian of the collective consciousness, the brain and mouth of the general populace with the capitalists being the veins that carry the blood flow from one organ to another and to keep the body of humanity alive. Nevertheless, the veins and the brain gradually draft apart. There are no more intellectual’s salons where all the top professionals from each industry come together to discuss the affairs of the world. The growing force of capital gently places the capitalists at the top of the food chain and the production and distribution process at the heart of everything. Therefore, even though the collective consciousness is still in the hands of the intellectuals, they no longer hold their seats amongst the elite ring of society as they did in old times.

Such conditions, reasons Mises, leads the intellectuals to gradually realize that their interests are against that of the capitalists, which in turn leads to their vigorous polemics against capitalism—the progression of which even further erodes the rule of the intellect.

I have not exhausted the sharp analysis made by Mises about the general psychological discontent about capitalism and their potential origins, yet it is always refreshing just to look at some familiar issue from a vastly different perspective than the mainstream one. It is vital for us to look into the popular sentiment with a more watchful, analytical glance to avoid falling into the trap of groupthink.

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