Mises: The Anti-Capitalist Mentality (1956)
I'm going to reprint Chapter 1 of this essay. It is Mises' attempt to explain why so many people who owe their increased standard of living to capitalism, would work to destroy it, both on The Right and The Left. The entire essay is available for free.
1. THE SOVEREIGN CONSUMER
The characteristic feature of modern capitalism is mass production of goods destined for consumption by the masses. The result is a tendency towards a continuous improvement in the average standard of living, a progressing enrichment of the many. Capitalism deproletarianizes the “common man” and elevates him to the rank of a “bourgeois.”
On the market of a capitalistic society the common man is the sovereign consumer whose buying or abstention from buying ultimately determines what should be produced and in what quantity and quality. Those shops and plants which cater exclusively or predominantly to the wealthier citizens’ demand for refined luxuries play merely a subordinate role in the economic setting of the market economy. They never attain the size of big business. Big business always serves—directly or indirectly—the masses.
It is this ascension of the multitude in which the radical social change brought about by the Industrial Revolution consists. Those underlings who in all the preceding ages of history had formed the herds of slaves and serfs, of paupers and beggars, became the buying public, for whose favor the businessmen canvass. They are the customers who are “always right,” the patrons who have the power to make poor suppliers rich and rich suppliers poor.
There are in the fabric of a market economy not sabotaged by the nostrums of governments and politicians no grandees and squires keeping the populace in submission, collecting tributes and imposts, and gaudily feasting while the villeins must put up with the crumbs. The profit system makes those men prosper who have succeeded in filling the wants of the people in the best possible and cheapest way. Wealth can be acquired only by serving the consumers. The capitalists lose their funds as soon as they fail to invest them in those lines in which they satisfy best the demands of the public. In a daily repeated plebiscite in which every penny gives a right to vote the consumers determine who should own and run the plants, shops and farms. The control of the material means of production is a social function, subject to the confirmation or revocation by the sovereign consumers.
This is what the modern concept of freedom means. Every adult is free to fashion his life according to his own plans. He is not forced to live according to the plan of a planning authority enforcing its unique plan by the police, i.e., the social apparatus of compulsion and coercion. What restricts the individual’s freedom is not other people’s violence or threat of violence, but the physiological structure of his body and the inescapable nature‑given scarcity of the factors of production. It is obvious that man’s discretion to shape his fate can never trespass the limits drawn by what are called the laws of nature.
To establish these facts does not amount to a justification of the individual’s freedom from the point of view of any absolute standards or metaphysical notions. It does not express any judgment on the fashionable doctrines of the advocates of totalitarianism, whether “right” or “left.” It does not deal with their assertion that the masses are too stupid and ignorant to know what would serve best their “true” needs and interests and need a guardian, the government, lest they hurt themselves. Neither does it enter into a scrutiny of the statements that there are supermen available for the office of such guardianship.
2. THE URGE FOR ECONOMIC BETTERMENT
Under capitalism the common man enjoys amenities which in ages gone by were unknown and therefore inaccessible even to the richest people. But, of course, these motorcars, television sets and refrigerators do not make a man happy. In the instant in which he acquires them, he may feel happier than he did before. But as soon as some of his wishes are satisfied, new wishes spring up. Such is human nature.
Few Americans are fully aware of the fact that their country enjoys the highest standard of living and that the way of life of the average American appears as fabulous and out of reach to the immense majority of people inhabiting non-capitalistic countries. Most people belittle what they have and could possibly acquire, and crave those things which are inaccessible to them. It would be idle to lament this insatiable appetite for more and more goods. This lust is precisely the impulse which leads man on the way toward economic betterment. To content oneself with what one has already got or can easily get, and to abstain apathetically from any attempts to improve one’s own material conditions, is not a virtue. Such an attitude is rather animal behavior than conduct of reasonable human beings. Man’s most characteristic mark is that he never ceases in endeavors to advance his well-being by purposive activity.
However, these endeavors must be fitted for the purpose. They must be suitable to bring about the effects aimed at. What is wrong with most of our contemporaries is not that they are passionately longing for a richer supply of various goods, but that they choose inappropriate means for the attainment of this end. They are misled by spurious ideologies. They favor policies which are contrary to their own rightly understood vital interests. Too dull to see the inevitable long-run consequences of their conduct, they find delight in its passing short-run effects. They advocate measures which are bound to result finally in general impoverishment, in the disintegration of social cooperation under the principle of the division of labor, and in a return to barbarism.
There is but one means available to improve the material conditions of mankind: to accelerate the growth of capital accumulated as against the growth in population. The greater the amount of capital invested per head of the worker, the more and the better goods can be produced and consumed. This is what capitalism, the much abused profit system, has brought about and brings about daily anew. Yet, most present-day governments and political parties are eager to destroy this system.
Why do they all loathe capitalism? Why do they, while enjoying the well-being capitalism bestows upon them, cast longing glances upon the “good old days” of the past and the miserable conditions of the present-day Russian worker?