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20140823 Mises, Ludwig – Liberty and Property



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Capitalism is the only form of society that proved to support individual liberty and material prosperity. The movement to socialism created by state dependent layer of society: intellectuals and bureaucrats who seek to retain and increase their control over resources at the expense of people who create these resources. This movement would not only fail to deliver a higher level of prosperity promised by its leaders, but would also deprive people of liberty.



Part I: “At the end of the eighteenth century there were prevailed two notions of liberty, each of them very different from what we have in mind today referring to liberty and freedom.”

The first notion of liberty originating from Greek philosopher was notion of liberty for qualified individuals, necessarily a minority of population, who are full-rights citizens with others being they slaves or non-citizens not deserving it. This was liberty within a group (state) to define group wide decisions and actions.


Landed aristocracy as defense against royal absolutism developed the second notion of liberty – liberty of individual (aristocrat) from the king (state) or any other group.

 Part II: “The pre-capitalistic system of production was restrictive. Its historical basis was military conquest.”

The capitalism expanded the second notion of liberty to property owners as necessary condition of managing their property in productive way and produce goods and services for everybody. It greatly increased amount of resources available, but moved them out of control of aristocracy and its clients: professional intellectuals and bureaucrats, making these two groups mortal enemies of the new method of production and society arrangements.

 Part III: “What vitiates entirely the socialists’ economic critique of capitalism is their failure to grasp the sovereignty of the consumers in the market economy.”

Intellectually the idea of socialism is result of poor understanding of working of capitalism, specifically of the fact that workers are also consumers and due to competition any squeeze on workers compensation comes back to workers as decrease in consumer prices. By combining all productive resources under state control, socialism substitutes sovereignty of customer with sovereignty of dictator as it was demonstrated by real live socialism implementation in all its forms either by Russian Communists or German Nazis.


Part IV: “It was different in the esoteric discussions among the inner circles of the great conspiracy. There the initiated did not dissemble their intentions concerning liberty.”

Socialists philosophically oppose liberty even if they speak about it all the time. They use the Newspeak as defined by Orwell using usual words to express completely opposite meaning of these words as they where traditionally used. They support freedom when they are not in power to propagate their ideas, but once in power, they declare that discussion is over and suppress all intellectual freedoms.

 Part V: “Romantic philosophy labored under the illusion that in the early ages of history the individual was free and that the course of historical evolution deprived him of his primordial liberty.”

The romantic notion of liberty as natural condition is plainly untrue. Liberty is not possible without resources so the only time in history when big numbers of people were free even relatively is when capitalism is main mode of society. As soon as resources shifted from individual property to government control, liberty starves and dies without resources.

 Part VI: “However, one does not exhaustively describe the sweeping changes that capitalism brought about in the conditions of the common man if one merely deals with the supremacy he enjoys on the market as a consumer.”

Another huge benefit of capitalism is that it allows individuals save money and direct them to whatever investment they consider the best giving them liberty to define direction of economic development in the way that benefits them most. All socialist schemas including welfare state tend to waste and misallocate resources denying individuals liberty to enjoy results of their savings.

 Part VII: “The distinctive principle of Western social philosophy is individualism. It aims at the creation of a sphere in which the individual is free to think, to choose, and to act without being restrained by the interference of the social apparatus of coercion and oppression, the State.”

Individualism of western society and capitalism form of production produced tremendous wealth and improvement in lives including the great expansion of individual liberty to do what individual wants to do. Any move away from capitalism into direction of either Nazi or Communist utopias would inevitably limit individual freedom and bring material decrease in quality of live.


I find it interesting that at least partial explanation of socialism attractiveness explained by poor understanding of capitalism with its competition and market prices that led to nearly worshipping attitude to such relatively insignificant feature as planning and popular believe among educated people that socialism would deliver superior economic performance. The history very convincingly demonstrated that even after complete failure of real socialism as economic system the socialist ideas morphed into ideas of big government and welfare state. The state dependent intellectuals and bureaucrats cannot anymore promote economic efficiency of big government, but they did not give up. Instead of socialism with its state monopoly on everything they now agree to leave private enterprise, but they want to control it to maximum extent via regulations and distribute produced goods and services the way they considered the most fair and efficient, mainly meaning distribution to their own benefit. I think it would be as distractive as their original ideas of full socialism, but the destruction would be slow moving disaster consistently decreasing quality of life for vast majority of people.

 In order to avoid it we need to find a way to bring to capitalist side all these people who are not competitive in free market economy. Otherwise they will support welfare state despite the misery it brings to them because they do not see any real way to become competitive and without it they are afraid to loose even this miserable income they get from food stamps and such.

The equal, unalienable, and marketable rights on natural resources would make this people independent from bureaucrats and intellectuals of welfare state and make them instant property owners and supporters of capitalism.


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