Individualism and the Industrial Revolution
by Ludwig von Mises
Liberals stressed the importance of the individual.
The 19th-century liberals already considered the development of the individual
the most important thing. "Individual and individualism" was the
progressive and liberal slogan. Reactionaries had already attacked this
position at the beginning of the 19th century.
The rationalists and liberals of the 18th century
pointed out that what was needed was good laws. Ancient customs that could not
be justified by rationality should be abandoned. The only justification for a
law was whether or not it was liable to promote the public social welfare. In
many countries the liberals and rationalists asked for written constitutions,
the codification of laws, and for new laws which would permit the development
of the faculties of every individual.
A reaction to this idea developed, especially in
Germany where the jurist and legal historian Friedrich Karl von Savigny
(1779–1861) was active. Savigny declared that laws cannot be written by men;
laws are developed in some mystical way by the soul of the whole unit. It isn't
the individual that thinks — it is the nation or a social entity which uses the
individual only for the expression of its own thoughts. This idea was very much
emphasized by Marx and the Marxists. In this regard the Marxists were not followers
of Hegel, whose main idea of historical evolution was an evolution toward
freedom of the individual.
From the viewpoint of Marx and Engels, the individual
was a negligible thing in the eyes of the nation. Marx and Engels denied that
the individual played a role in historical evolution. According to them,
history goes its own way. The material productive forces go their own way,
developing independently of the wills of individuals. And historical events
come with the inevitability of a law of nature. The material productive forces
work like a director in an opera; they must have a substitute available in case
of a problem, as the opera director must have a substitute if the singer gets
sick. According to this idea, Napoleon and Dante, for instance, were
unimportant — if they had not appeared to take their own special place in
history, someone else would have appeared on stage to fill their shoes.
To understand certain words, you must understand the
German language. From the 17th century on, considerable effort was spent in
fighting the use of Latin words and in eliminating them from the German
language. In many cases a foreign word remained although there was also a
German expression with the same meaning. The two words began as synonyms, but
in the course of history, they acquired different meanings. For instance, take
the word Umwälzung, the literal German translation of the Latin word
revolution. In the Latin word there was no sense of fighting. Thus, there
evolved two meanings for the word "revolution" — one by violence, and
the other meaning a gradual revolution like the "Industrial
Revolution." However, Marx uses the German word Revolution not only for
violent revolutions such as the French or Russian revolutions, but also for the
gradual Industrial Revolution.
Incidentally, the term Industrial Revolution was
introduced by Arnold Toynbee (1852–1883). Marxists say that "What furthers
the overthrow of capitalism is not revolution — look at the Industrial
Revolution."
Marx assigned a special meaning to slavery, serfdom,
and other systems of bondage. It was necessary, he said, for the workers to be
free in order for the exploiter to exploit them. This idea came from the
interpretation he gave to the situation of the feudal lord who had to care for
his workers even when they weren't working. Marx interpreted the liberal
changes that developed as freeing the exploiter of the responsibility for the
lives of the workers. Marx didn't see that the liberal movement was directed at
the abolition of inequality under law, as between serf and lord.
Karl Marx believed that capital accumulation was an
obstacle. In his eyes, the only explanation for wealth accumulation was that
somebody had robbed somebody else. For Karl Marx the whole Industrial
Revolution simply consisted of the exploitation of the workers by the
capitalists. According to him, the situation of the workers became worse with
the coming of capitalism. The difference between their situation and that of
slaves and serfs was only that the capitalist had no obligation to care for
workers who were no longer exploitable, while the lord was bound to care for
slaves and serfs. This is another of the insoluble contradictions in the
Marxian system. Yet it is accepted by many economists today without realizing of
what this contradiction consists.
According to Marx, capitalism is a necessary and
inevitable stage in the history of mankind leading men from primitive
conditions to the millennium of socialism. If capitalism is a necessary and
inevitable step on the road to socialism, then one cannot consistently claim,
from the point of view of Marx, that what the capitalist does is ethically and
morally bad. Therefore, why does Marx attack the capitalists?
Marx says part of production is appropriated by the
capitalists and withheld from the workers. According to Marx, this is very bad.
The consequence is that the workers are no longer in a position to consume the
whole production produced. A part of what they have produced, therefore,
remains unconsumed; there is "underconsumption." For this reason,
because there is underconsumption, economic depressions occur regularly. This
is the Marxian underconsumption theory of depressions. Yet Marx contradicts
this theory elsewhere.
Marxian writers do not explain why production proceeds
from simpler to more and more complicated methods.
Nor did Marx mention the following fact: About 1700,
the population of Great Britain was about 5.5 million; by the middle of 1700,
the population was 6.5 million, about 500,000 of whom were simply destitute.
The whole economic system had produced a "surplus" population. The
surplus population problem appeared earlier in Great Britain than on
continental Europe. This happened, first of all, because Great Britain was an
island and so was not subject to invasion by foreign armies, which helped to
reduce the populations in Europe. The wars in Great Britain were civil wars,
which were bad, but they stopped. And then this outlet for the surplus
population disappeared, so the numbers of surplus people grew. In Europe the
situation was different; for one thing, the opportunity to work in agriculture
was more favorable than in England.
The old economic system in England couldn't cope with
the surplus population. The surplus people were mostly very bad people —
beggars and robbers and thieves and prostitutes. They were supported by various
institutions, the poor laws,[1] and the charity of the communities. Some were
impressed into the army and navy for service abroad. There were also
superfluous people in agriculture. The existing system of guilds and other
monopolies in the processing industries made the expansion of industry
impossible.
In those precapitalist ages, there was a sharp
division between the classes of society who could afford new shoes and new
clothes, and those who could not. The processing industries produced by and
large for the upper classes. Those who could not afford new clothes wore
hand-me-downs. There was then a very considerable trade in secondhand clothes —
a trade which disappeared almost completely when modern industry began to
produce also for the lower classes. If capitalism had not provided the means of
sustenance for these "surplus" people, they would have died from
starvation. Smallpox accounted for many deaths in precapitalist times; it has
now been practically wiped out. Improvements in medicine are also a product of
capitalism.
During the 18th century, there appeared a number of
eminent authors — the best known was Adam Smith (1723–1790) — who pleaded for
freedom of trade. And they argued against monopoly, against the guilds, and
against privileges given by the king and Parliament. Secondly, some ingenious
individuals, almost without any savings and capital, began to organize starving
paupers for production, not in factories but outside the factories, and not for
the upper classes only. These newly organized producers began to make simple
goods precisely for the great masses. This was the great change that took
place; this was the Industrial Revolution. And this Industrial Revolution made
more food and other goods available so that the population rose. Nobody saw
less of what really was going on than Karl Marx. By the eve of the Second World
War, the population had increased so much that there were 60 million
Englishmen.
You can't compare the United States with England. The
United States began almost as a country of modern capitalism. But we may say by
and large that out of eight people living today in the countries of Western
civilization, seven are alive only because of the Industrial Revolution. Are you
personally sure that you are the one out of eight who would have lived even in
the absence of the Industrial Revolution? If you are not sure, stop and
consider the consequences of the Industrial Revolution.
The interpretation given by Marx to the Industrial
Revolution is applied also to the interpretation of the
"superstructure." Marx said the "material productive
forces," the tools and machines, produce the "production relations,"
the social structure, property rights, and so forth, which produce the
"superstructure," the philosophy, art, and religion. The
"superstructure," said Marx, depends on the class situation of the
individuals, i.e., whether he is a poet, painter, and so on. Marx interpreted
everything that happened in the spiritual life of the nation from this point of
view. Arthur Schopenhauer (1788–1860) was called a philosopher of the owners of
common stock and bonds. Friedrich Nietzsche (1844–1900) was called the
philosopher of big business. For every change in ideology, for every change in
music, art, novel writing, play writing, the Marxians had an immediate
interpretation. Every new book was explained by the "superstructure"
of that particular day. Every book was assigned an adjective — "bourgeois"
or "proletarian." The bourgeoisie were considered an undifferentiated
reactionary mass.
Don't think it is possible for a man to practice all
his life a certain ideology without believing in it. The use of the term
"mature capitalism" shows how fully persons, who don't think of
themselves as Marxian in any way, have been influenced by Marx. Mr. and Mrs.
Hammond, in fact almost all historians, have accepted the Marxian
interpretation of the Industrial Revolution.[2] The one exception is Ashton.[3]
Karl Marx, in the second part of his career, was not
an interventionist; he was in favor of laissez-faire. Because he expected the
breakdown of capitalism and the substitution of socialism to come from the full
maturity of capitalism, he was in favor of letting capitalism develop. In this
regard he was, in his writings and in his books, a supporter of economic
freedom.
Marx believed that interventionist measures were
unfavorable because they delayed the coming of socialism. Labor unions
recommended interventions and, therefore, Marx was opposed to them. Labor
unions don't produce anything anyway and it would have been impossible to raise
wage rates if producers had not actually produced more.
Marx claimed interventions hurt the interests of the
workers. The German socialists voted against [Otto von] Bismarck's social
reforms that he instituted circa 1881 (Marx died in 1883). And in this country
the Communists were against the New Deal. Of course, the real reason for their
opposition to the government in power was very different. No opposition party
wants to assign so much power to another party. In drafting socialist programs,
everybody assumes tacitly that he himself will be the planner or the dictator,
or that the planner or dictator will be intellectually completely dependent on
him and that the planner or dictator will be his handyman. No one wants to be a
single member in the planning scheme of somebody else.
These ideas of planning go back to Plato's treatise on
the form of the commonwealth. Plato was very outspoken. He planned a system
ruled exclusively by philosophers. He wanted to eliminate all individual rights
and decisions. Nobody should go anywhere, rest, sleep, eat, drink, wash, unless
he was told to do so. Plato wanted to reduce persons to the status of pawns in
his plan. What is needed is a dictator who appoints a philosopher as a kind of
prime minister or president of the central board of production management. The
program of all such consistent socialists — Plato and Hitler, for instance —
planned also for the production of future socialists, the breeding and
education of future members of society.
During the 2,300 years since Plato, very little
opposition has been registered to his ideas. Not even by Kant. The
psychological bias in favor of socialism must be taken into consideration in
discussing Marxian ideas. This is not limited to those who call themselves
Marxian.
Marxians deny that there is such a thing as the search
for knowledge for the sake of knowledge alone. But they are not consistent in
this case either, for they say one of the purposes of the socialist state is to
eliminate such a search for knowledge. It is an insult, they say, for persons
to study things that are useless.
Now I want to discuss the meaning of the ideological
distortion of truths. Class consciousness is not developed in the beginning,
but it must inevitably come. Marx developed his doctrine of ideology because he
realized he couldn't answer the criticisms raised against socialism. His answer
was, "What you say is not true. It is only ideology. What a man thinks, so
long as we do not have a classless society, is necessarily a class ideology —
that is, it is based on a false consciousness." Without any further
explanation, Marx assumed that such an ideology was useful to the class and to
the members of the class that developed it. Such ideas had for their goal the
pursuit of the aims of their class.
Marx and Engels appeared and developed the class ideas
of the proletariat. Therefore, from this time on the doctrine of the
bourgeoisie is absolutely useless. Perhaps one may say that the bourgeoisie
needed this explanation to solve a bad conscience. But why should they have a
bad conscience if their existence is necessary? And it is necessary, according
to Marxian doctrine, for without the bourgeoisie, capitalism cannot develop.
And until capitalism is "mature," there cannot be any socialism.
According to Marx, bourgeois economics, sometimes
called "apologetics for bourgeois production," aided them, the
bourgeoisie. The Marxians could have said that the thought the bourgeoisie gave
to this bad bourgeois theory justified, in their eyes, as well as in the eyes
of the exploited, the capitalist mode of production, thus making it possible
for the system to exist. But this would have been a very un-Marxist
explanation. First of all, according to Marxian doctrine, no justification is
needed for the bourgeois system of production; the bourgeoisie exploit because
it is their business to exploit, just as it is the business of the microbes to
exploit. The bourgeoisie don't need any justification. Their class
consciousness shows them that they have to do this; it is the capitalist's
nature to exploit.
A Russian friend of Marx wrote him that the task of
the socialists must be to help the bourgeoisie exploit better and Marx replied
that that was not necessary. Marx then wrote a short note saying that Russia
could reach socialism without going through the capitalist stage. The next
morning he must have realized that, if he admitted that one country could skip
one of the inevitable stages, this would destroy his whole theory. So he didn't
send the note. Engels, who was not so bright, discovered this piece of paper in
the desk of Karl Marx, copied it in his own handwriting, and sent his copy to
Vera Zasulich (1849–1919), who was famous in Russia because she had attempted
to assassinate the police commissioner in St. Petersburg and been acquitted by
the jury — she had a good defense counsel. This woman published Marx's note,
and it became one of the great assets of the Bolshevik Party.
The capitalist system is a system in which promotion
is precisely according to merit. If people do not get ahead, there is
bitterness in their minds. They are reluctant to admit that they do not advance
because of their lack of intelligence. They take their lack of advancement out
on society. Many blame society and turn to socialism.
This tendency is especially strong in the ranks of
intellectuals. Because professionals treat each other as equals, the less
capable professionals consider themselves "superior" to
nonprofessionals and feel they deserve more recognition than they receive. Envy
plays an important role. There is a philosophical predisposition among persons
to be dissatisfied with the existing state of affairs. There is
dissatisfaction, also, with political conditions. If you are dissatisfied, you
ask what other kind of state can be considered.
Marx had "antitalent" — i.e., a lack of
talent. He was influenced by Hegel and Feuerbach, especially by Feuerbach's
critique of Christianity. Marx admitted that the exploitation doctrine was
taken from an anonymous pamphlet published in the 1820s. His economics were
distortions taken over from [David] Ricardo (1772–1823).[4]
Marx was economically ignorant; he didn't realize that
there can be doubts concerning the best means of production to be applied. The
big question is, how shall we use the available scarce factors of production.
Marx assumed that what has to be done is obvious. He didn't realize that the
future is always uncertain, that it is the job of every businessman to provide
for the unknown future. In the capitalist system, the workers and technologists
obey the entrepreneur. Under socialism, they will obey the socialist official.
Marx didn't take into consideration the fact that there is a difference between
saying what has to be done and doing what somebody else has said must be done.
The socialist state is necessarily a police state.
The withering away of the state was just Marx's
attempt to avoid answering the question about what would happen under
socialism. Under socialism, the convicts will know that they are being punished
for the benefit of the whole society.
Notes
[1] English legislation relating to public assistance
for the poor, dating from the Elizabethan era and amended in 1834 in order to
institute nationally supervised uniform relief.
[2] J.L. and Barbara Hammond, authors of the trilogy
The Village Labourer (1911), The Town Labourer (1917), and The Skilled Labourer
(1919).
[3] T.S. Ashton, The Industrial Revolution 1760-1830
(London: Oxford University Press, 1998 [1948, 1961]).
[4] On the Principles of Political Economy and
Taxation (London: John Murray, 1821 [1817]).
[5] Capital: A Critique of Political Economy, III
(Chicago: Charles H. Kerr, Chicago, 1909), pp. 17, 530–677ff.
[6] Ibid.,
p. 696.
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