Economy, Capitalism, Socialism, Interventionism, Inflation, Freedom of Enterprise, Individual Liberties

A refreshing, very concrete, and accessible read. This collection features a series of six lectures by the famous Austrian economist and thinker to a student audience in Argentina in 1959, on timeless themes. The value of this publication lies in preserving the pedagogical character and enduring instructiveness of these lessons.

                                                1-Capitalism

In his first lesson, Ludwig von Mises takes us back to the feudal society that preceded capitalism. He reminds us that people's social status was fixed from birth until the end of their lives.

As the rural population grew, the number of pariahs (people unemployable in agricultural operations due to surplus) became a real concern, particularly in 18th-century England, which lacked an adequate social system.

It was precisely the advent of capitalism that allowed, thanks to the innovation of some of these pariahs, says the Austrian economist, the creation of mass production to satisfy the needs of the masses, instead of an industrial production previously limited essentially to expensive objects reserved for the upper classes. This is a true revolution.

In sum – and this is where the paradox is interesting – it is the capitalist principles of production that allowed modest working populations to access products manufactured in these factories. Yet, these same principles are today the object of attacks by those who are described as – or who describe themselves as – anti-capitalists, those who habitually question the morality of this system.

Similarly, their obsession with supposedly unshakeable powerful monopolies prevented them from seeing that competition has sufficiently powerful resources to always find new solutions to meet customer needs, often at lower costs. This proved true even for the railway, despite initial criticism from this point of view.

Thus, capitalism, through its dynamism and thanks to the virtues of competition, allowed an unprecedented rise in living standards, while sparking a demographic explosion, to the point that most individuals today enjoy a standard of living significantly higher than that of the rich in the 18th century.

However, the living conditions at the beginning of capitalism, as terrible as they were and as shocking as they appear to us today, do not correspond to the sharp degradation that one tends to believe through repetition, von Mises tells us.

Claims to this effect result more from falsification than anything else. The reality is that malnutrition and mortality were widespread scourges, which actually attracted populations to factories, helping to curb these phenomena.

From the beginning, the first factories took into account the needs of their workers, and the latter had better incomes than in the countryside, obtained through their own purchases made as consumers. And the condition of populations has continued to improve since then, disproving the doctrine defended by Karl Marx according to which a worker's wage would never exceed his subsistence conditions.

Similarly, a misunderstanding still persists today about savings. As Mises rightly points out, far from being sterile, it allows for financing investments, which will benefit jobs even before generating profits, knowing that "a country becomes more prosperous in proportion to the increase in capital invested per unit of population," a statement verified in facts and in the history of capitalism.

                                                  2-Socialism

In this second lesson, Mises begins by reminding us what a market economy is: a system of cooperation between individuals where the true boss is the consumer, and how economic freedom is linked to other liberties. In this sense, each individual can make their own choices, starting with how they want to integrate into society.

Those who call themselves liberals and think otherwise "do not realize that in a system where there is no market, where the regime directs everything, all these other freedoms are illusory, even if they are made into laws or written into constitutions."

To illustrate this, he uses the example of printing presses and press freedom, which could not be effective if the regime in power owned all the printing presses. This example can surprisingly make us think of what is happening today in the audiovisual field in France, where a public authority decides which media company has the right to exist through frequencies granted at its discretion. This inevitably calls into question freedom of expression.

This is where socialism comes in, in decisions that can be made by decree by a regime, with all the arbitrariness that can be behind it. This leads very far, as the regime can go as far as to control individuals' lives by determining what it deems good or bad for its citizens. It thus intrudes more and more each day into all aspects of their lives, including the control of ideas, which ends up insidiously plunging them into the greatest of servitudes, without necessarily bad intentions at the start, but the result is there.

Rather than authoritatively seeking to do good for its citizens against their will, let's give them the freedom to make mistakes, Mises tells us. And let's stick to writing books, articles, expressing opinions through speech or even preaching in the street, trying to convince them rather than repressing them.

This is the difference between slavery and freedom, he tells us: having the possibility to choose one's way of life rather than having to obey what an authority orders us to do, here a state power and police. Let's prefer instead the strength of harmonies.

Socialism is also centralized planning, an economic authority deciding all questions related to production and considering individuals as soldiers of an army, whereas the market economy favors freedom of enterprise and allows social mobility (which existed little in the pre-capitalist era) or geographical mobility.

However, no individual is omniscient, and therefore cannot claim to know better or show more ingenuity than certain creators, geniuses, or free entrepreneurs can. Because "if one has to convince a group of people who do not directly depend on the solution to a problem, one never succeeds." Moreover, within the creation process, price plays, at various levels, an essential information role that technologists who are not engaged in the production process do not master.

This also applies to non-economic problems. Thus, no more than in the economic field will a public decision-maker be able to recognize better than the public the talent of a painter, an artist, a writer, or a director.

"Consequently, all this enthusiasm for socialism on the part of the rising generation of painters, poets, musicians, journalists, actors, rests on an illusion. I mention this because these groups are among the most fanatical supporters of the socialist idea.

                                                 3-Interventionism

For Ludwig von Mises, socialism leads to a totalitarian state. Indeed, nothing is outside its sphere and jurisdiction. However, according to him, a government should limit itself to protecting individuals against violent and fraudulent attacks by gangsters and defending them against foreign enemies. In a market economy, similarly, the state's task should be limited to ensuring the proper functioning of the economy against fraud or violence within and outside the country.

Mises, however, defends himself against accusations of hating the state. Not at all, he insists, but he considers that its role should be limited to what it knows how to do, not "to direct railways or spend money on useless things."

Thus, even mixed economy systems are not a good solution. They generally create deficits in the concerned companies, covered at a pure loss by taxpayers' money.

Interventionism, for its part, goes even further. It consists of the state systematically interfering with market mechanisms. But in doing so, it disrupts them: prices, wages, interest rates, and profits alike. It thus restricts consumer supremacy and the way companies conduct their business in service of these consumers.

Its interventions are multiple, for example through price control, which is known to create shortages, then arbitrary rationing policies. The same applies to rent control, with the same effects. Worse still, interventionism can lead to a government regulating everything down to the smallest detail, as in the Nazi system, defining "what to produce, in what quantity, where to obtain raw materials and at what price, to whom to sell the products and at what price to sell them. Workers were ordered to work in a specific factory, and they received the wages that the government had decreed.